Sydney offering better options for renters
More than 60 per cent of Sydneysiders who bought properties in the past 25 years would have been financially better off renting and investing their money in the local stockmarket instead.
An analysis by EY of the stockmarket and Sydney property prices across the city’s 43 local government areas between 1994 and now found that in 62 per cent of like-for-like cases, it was financially advantageous – over a 10-year period – for would-be buyers to take the amount of money needed for a 20 per cent deposit for an apartment in a particular area, invest it in a leveraged ASX200 fund (with a margin loan at 50 per cent loan-to-value ratio) and to rent a similar property in the same location instead.
The study yields some interesting results. For example, a renter in the upmarket and leafy local council area of Woollahra between 1998 and 2008 who invested in shares was $608,000 better off than a buyer over the same 10-year period. A decade later, between 2007 and 2017, the buyer would come out on top, but not by as much – $304,000.
In the inner-west area of Marrickville, renters who moved into an apartment in 2004 and maintained a leveraged position in the sharemarket for 10 years had a $115,000 advantage but those who bought a unit three years later in 2007 would have been $209,000 better off than those renting.