The Reserve Bank of Australia has released a new wonkish report which attempts to determine whether Australia’s housing market is fairly valued compared with renting, based on a comparison of the financial cost of renting a home versus the cost of owning a similar dwelling, whereby the latter depends on the purchase price, real mortgage rates, repairs, council rates, transaction costs, and expected price appreciation.
The RBA basically concludes that Australian housing is more or less currently “fairly valued” if house prices continue to grow at the average rate experienced over the past 60 years:
