Should you buy or rent a house in Perth

Deciding whether to buy or rent is a big decision. There is a plethora of conflicting information available and almost anyone you ask is likely to have a strong opinion on the subject.

With so many competing viewpoints, it can be understandably confusing for property seekers to determine whether it’s more beneficial for them to buy a home or rent instead.

Market conditions can impact decisions

The Perth property market has been in a unique position for the last couple of years, with softer market conditions experienced in both the residential sales and rental markets simultaneously. Historically, when one sector of Perth’s property market was experiencing a downturn, the other was on the up.

This isn’t the case now, with both markets the most affordable they have been for a long time, thus benefiting both buyers and tenants. Improved affordability in both sectors certainly adds to the confusion.

REIWA Curtin Buy-Rent Index

To help Perth property seekers make informed decisions, REIWA and Curtin University have collaborated on a ‘Buy-Rent Index’. The Index is a useful tool that helps West Australians determine the best time to buy or rent in the Perth metro region, based on past and current trends in the economic climate.

The quarterly Index is an ongoing collaboration between REIWA and Curtin that uses formulated economic assumptions to help identify the annual house price growth rate required for home ownership to be considered more financially advantageous than renting.

The results of the June quarter 2017 Buy-Rent Index 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 more financially beneficial than renting. To put that into perspective, Perth’s annual median house price growth rate since 2002 has been 6.9 per cent.

While REIWA is not in the business of predicting the future, long term trends are helpful in establishing patterns in the market. The REIWA Curtin Buy-Rent Index shows the Perth housing market has presented good opportunity for asset growth over the last 15 years. This, combined with current market conditions, suggests there is good value in choosing to purchase an established dwelling in Perth at the moment.

Ultimately the decision to buy or rent is an individual one, dependant on a multitude of personal and financial circumstances. If you’re tossing up whether to buy or rent, I highly suggest speaking with a local REIWA agent to discuss the pros and cons of buying and renting before making a decision.

View the REIWA-Curtin Buy Rent Index