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REIWA and Curtin University have released a Buy-Rent Index, a tool that helps determine the best time to buy or rent in the Perth metro region, based on past and current trends in the economic climate.
The Index, which will be released on a quarterly basis, is based on formulated economic assumptions that help identify the annual house price growth rate required for home ownership to be financially advantageous over renting.
The June quarter 2017 figures indicate the median house price in Perth would need to appreciate by 4.3 per cent annually over the next 10 years for the purchase of a house to be considered financially viable over renting at the median rent. Since 2002, Perth’s annual growth rate in the median house price has been 6.9 per cent.
REIWA CEO Neville Pozzi said the Institute was thrilled to have collaborated with Curtin University to help educate and inform the public on the costs and benefits of home ownership versus renting.
“Curtin’s vast academic knowledge has enabled us to harness our research capabilities to produce this helpful tool. In the current economic and property climate, we recognise it can be difficult for West Australians to determine whether or not they should buy or rent. This Index will provide prospective home owners and renters with an insight into whether it is a good time to buy or rent based on trends in the current market.
“We look forward to continuing to collaborate with Curtin University on this Index and future projects for the benefit of West Australians,” Mr Pozzi said.
Mr J-Han Ho, a Property Researcher and Senior Lecturer in the School of Economics and Finance at Curtin Business School, said the Index aimed to help Perth households make an informed decision about buying or renting a home.
“We understand the difficulties of housing affordability and therefore hope the Buy-Rent Index will make it a little easier for households to make an informed decision,” Mr Ho said.
“Many households only focus on the location and price of the property when looking to buy, but this shows there are many other factors that need to be considered including interest rates, opportunity cost of capital and the property being a long-term investment. Buying at the right time can achieve a superior outcome to buying in the right location.”
Figures for the September quarter Buy-Rent Index will be released late December 2017.