Rent or buy: buying a home builds more wealth than renting

Verdict

Not established

Owners hold far more wealth than renters in the US, Great Britain and Australia, and a long-run study of 16 economies finds that housing returned about as much as shares with less variation, yet the gap can reflect who becomes an owner as well as what ownership does (inference by this audit). In this audit's example, buying came out ahead only when price growth passed a threshold (0.89 to 3.54 per cent a year at a rent of 5 per cent of the price) that differs by country and by the rent paid, and the primary studies reach different conclusions for different periods, which leaves this claim, like gold's, with its test unfinished.

The cost, from the book's own figures. At 2 per cent a year price growth the owner finishes 10 years behind the renter by $68,711 in the US and A$90,597 in Australia, and ahead by £34,258 in the UK, so taking the claim as stated hides a result that turns on price growth, rent and the mortgage rate.