Sydney cost of housing analysis: Are renters or buyers better off?

The Aussie dream of owning your home may not be as prudent a financial decision as you’d think.

Alarming new analysis has revealed close to two in five Sydney tenants would actually be better off financially if they continued to rent rather than buy.

This was provided the tenants lived in a pricier home buying market such as Sydney’s upper north shore and pumped the savings from renting into exchange-traded funds (ETFs).

These findings were based on simulations by FTI Consulting that compared the outcomes of buyers and renters in multiple Sydney suburbs to determine who came out ahead financially.

FTI ran the numbers on over 7,500 scenarios, measuring 42 local government areas in Greater Sydney, The Central Coast and the Illawarra.

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FTI analysis of ABS data.

FTI Consulting managing director Lars Rognlien said the findings showed “homeownership is not the only pathway to financial security.

Mr Rognlien said a key finding was that the act of buying a home encourages much higher savings discipline through mortgage repayments.

Even if a typical renter were to invest in shares they are less likely to leverage that investment in the same way that a homebuyer would, he said.

The analysis showed that renters were more likely to perform better in Ku-ring-gai, Camden, Mosman and Hunters Hill, while buyers came out ahead in Campbelltown, Blacktown, Newcastle and Fairfield.

“One of the key differences is the rate of house price growth. In Mosman, house prices have increased less over that period. In the Western suburbs, prices have grown more strongly which is quite a challenge for renters to come out ahead,” Mr Rognlien said.

Mr Rognlien said the analysis does not aim to make predictions about whether buying or renting is a better strategy rather, it is to shift the focus of the debate on housing affordability away from barriers to buying a first home and towards the cost of housing more generally.

“It’s really about having that savings discipline, its not so much about whether you buy a house or not and really about how you spend the money that you do spend,” Mr Rognlien said.

FTI analysis of ASX and ABS data

In 2024 to 2025, about 20 per cent of households in the rental market were low-income households in financial stress, compared with fewer than 15 per cent of homeowners with a mortgage.

While 35 per cent of renters fell into the lowest quartile of social and economic disadvantage, fewer than five per cent of mortgage holders do.

Another focus was on policies assisting those buying.

“A lot of policies in the recent years have been about encouraging first-home buyers to be able to buy their first house while the actual affordability and housing crisis is really effecting a different people who are struggling to pay for rent and they are not the same people who are on the cusp of buying a house,” Mr Rognlien said.

“I feel there is a difference between what politicians are wanting to achieve and what they actually do achieve.

“There is a big group of Australians that are doing it tough in terms of being able to pay for rent and they won’t really be effected by these policies that are being introduced.”

FTI Consulting’s Lars Rognlien.

Mr Rognlien shared some insight into the Home Guarantee Scheme due to expand in October.

“(It will) probably push up house prices and won’t make any differences to those who are struggling to pay rent,” he said.

The analysis insight suggests housing affordability policies could be more effective if they place greater emphasis on expanding off-market rental options, such as affordable and social housing, to support those in greatest need.

Access to effective, tax efficient retirement savings options should also be broaden, the study concluded.

According to Rognlien, housing should be treated as a human right and building social and affordable housing to support those in need.

“I think we’ve done a big failure over the last 50 or 60 years in producing the building of social housing,” he said. “A safe, stable and secure home should be a human right.”

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