From the Desk

You’ve seen the viral posts: rent in one column, mortgage repayments in the other, gasp at the gap. Here’s the problem: almost every one of those comparisons is wrong.

The “average rent” figure comes from what’s listed for rent, which skews heavily toward units and cheaper stock. The “average mortgage” figure comes from median house prices. So the post compares renting a 2-bed apartment with buying a 4-bed house, and calls it apples with apples. It isn’t.

The only fair question is: for the SAME property, what does renting it cost versus buying it? Using rental yields, you can price both sides of the same house. When you run it that way, the gap between renting and buying shrinks dramatically from the viral version, and in some cities it nearly closes.

Then add the parts each side leaves out. Buying carries costs renting doesn’t: rates, insurance, maintenance, stamp duty. Renting carries the one cost that dwarfs them all: every dollar builds someone else’s equity, your rent rises forever, and you never finish paying. A mortgage ends. Rent doesn’t.

Not the monthly comparison, but three things: how long you’ll stay (under 5 years, renting often wins on transaction costs alone), whether you’d genuinely invest the difference (almost nobody does, the mortgage is forced savings), and whether you can get in at all, and with 100% loan structures, getting in needs less cash than most people think.

In today’s buyers’ market, with more stock and less competition than we’ve seen in years, the “buy” side of this equation is the strongest it’s looked in a long time for anyone planning to stay put.

Want the rent vs buy numbers run on YOUR situation instead of a meme? Message BOSS. 0476 111 000, tom@bossmoney.com.au, or DM.