I'm a 40 y.o. renter, and I've been exploring this question too. My family lives in another of those ridiculously priced housing markets, and buying even a condo here would set back our FI goal by several years.
There are two "seminal" blog posts I really like about renting vs. buying: one by GCC
and the other by Financial Samurai
. You should absolutely read both. Unfortunately, they reach opposite conclusions, which shows that the question is legitimately difficult even for the most savvy analysts out there.Here
(on page 1) is a historical chart of Australian home price growth. It shows that housing is indeed rising faster than inflation, but not by much - roughly 3 percent in real terms.
Given this outcome, and considering the cost of home ownership (maintenance, taxes, extra work, ...), your equity is clearly better off in the stock market than in home ownership over the long term, and if you don't live beyond your means you'll have no problem buying into the market sometime in the future.
You can see there's a lot of volatility though. Naturally, any period where house prices are rising rapidly will make real estate investors giddy and renters anxious.
The story for homeowners / real property investors in the U.S. is even more grim. On average, they are not beating inflation
If I have to make a long-term prediction regarding where housing prices will go, My bet would be on the average outcome - not on the recent trend in places like Sydney. That is, I'm siding with GCC's conclusion over Financial Samurai's. Therefore, the plan is to continue renting and increasing our stash. When we reach an age where we value stability over flexibility, we should be able to find an attractive location to buy into.