What’s better for the bottom line - renting or owning a house?

Tuesday, 3 February 2026

When you look at the home ownership v rental argument in purely non-emotional terms, it’s unlikely there’s a pot of gold at either end of the rainbow, Martin Hawes argues.

Martin Hawes is a financial writer and presenter, and has written 25 personal finance books. He writes a weekly column.

OPINION: Are we better to rent or own a house? Although I do not have comprehensive data, my answer would be that from a financial point of view there is probably very little difference between renting and owning; owning your home will not make you rich, but for other reasons, it is still most likely the right thing to do.

The housing market is an opaque market and very difficult to research. It would be easy enough to record our own costs (interest, rates, insurance, maintenance). We would know what we paid for the house and what we sold it for. If you kept good records, you could easily enough see the financial outcome of owning the house.

However, if we wanted to study the housing market as a whole, there are major difficulties. We would need to get figures for thousands of houses, and they are simply not available: for example, the costs for maintenance and improvements that people do are not publicly available information. We would have to make an approximation of what is spent by most people and that could be a bit rough and ready. We could try to do a survey but that might be fraught as well: few people keep detailed, comprehensive records of what they have spent on a house.

Even when houses have been well maintained, the kitchens and bathrooms in particular often need doing up every 10-20 years because they look tired and old-fashioned. Major amounts can be spent on them. Again, there are no public records for someone trying to research.

Even if we accept that renting is cheaper than home ownership most of the time, there are some significant more intangible factors to consider, writes Martin Hawes.

There are problems even when we try to get a handle on what long-term capital gains are. The purchase price and sales price are a matter of public record, and we might try to use average (or median) house sales. However, these figures do not always take account of quality: a house that was bought 20 years ago would not be the same quality as one purchased today (fewer houses with double glazing, fit outs of kitchens and bathrooms are better today, insulation is better etc). Looking at average (or median) sales prices over time may not be an answer.

There are plenty of studies available which try to take a snapshot of costs to compare renting and owning. These usually have an allowance for maintenance which may or may not be correct and they ignore capital gains.

Studies, both internationally and in New Zealand, largely agree that at most times it is cheaper to rent than it is to own. Even this is tricky: when we compare renting vs owning, are we sure that the rental properties are the same quality as the owned houses?

Nevertheless, I think it reasonable to assume that at most times renting is cheaper than owning from a cost point of view.

However, before we all immediately try to sell our houses to rent them back again, there are some other factors:

Ownership gives us security of tenure. Unlike many European countries, in New Zealand there are very few rentals (maybe none) that have 30-year leases. Talk to tenants who have tried to rent long term, and you will always hear grumbling about being moved on (with kids being plucked out of school and lots of other disruptions).
Capital gain on property is probably smaller than many people think, but over long periods of time, ownership does build some wealth.
The mortgage provides a disciplined savings plan – a dollar toward debt reduction is just as good as a dollar saved.
Home ownership guards against major rental hikes or house price booms.
The cash that is saved by renting instead of owning must be well invested. Although that sounds easy it is not – moreover, saving that difference requires discipline, whereas repaying a mortgage is enforced by the bank.

Since I was a student I have owned rather than rented. There have been some houses that I have lived in where I have said (mostly joking) that I would be happy selling the house with a side agreement to lease it back. Financially that would probably have been a better deal. However (and here is the rub) I doubt very much that I would have done it.

I think it a good thing that house prices and interest rates are down because it gives young people half a chance at home ownership – they should put aside that renting may be better financially and try to use this time to buy.

I know that I never would have sold a house and leased it back: there is, after all, a question of sentiment – ownership just feels good.

Martin Hawes is not a financial adviser and the information and opinions here should not be taken as financial advice.