Where it’s cheaper to buy than rent in Sydney
AS many as one in five Sydney homeowners are costing themselves thousands, and the very real chance to own their own home, by opting to rent rather than paying off a mortgage.
NSW
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AS many as one in five Sydney homeowners are costing themselves thousands, and the very real chance to own their own home, by opting to rent rather than paying off a mortgage.
With the average mortgage repayments dramatically cheaper than 10 years ago up to a third of homebuyers in some areas of Sydney, have found themselves better off financially, after choosing a mortgage over renting. But when you crunch the numbers many more should be following them as interest rates continue to tumble to record lows.
According to a report from home lender Aussie, in 17.4 per cent of Sydney suburbs it is cheaper to service a mortgage than to pay rent for units.
However, for the growing number of homeowners who want to buy in regional areas or interstate, The Aussie Rent v Buy Study has revealed that in more than half (52.2 per cent) of our nations’ suburbs it is cheaper to pay down a mortgage than pay rent on an house, up from 39.9 per cent a year ago. For apartments it is cheaper to own than rent in 59.1 per cent of Australian suburbs.
The figures are based on a three-year fixed rate of 2.35 per cent but don’t take into account Tuesday’s rate cut which has made owning a home an even more attractive proposition.
“It’s been a tough year for the average mum and dad but they are seeing more opportunity out there than ever to buy their own home and that is being driven by interest rates,” Aussie CEO James Symond said.
“People are looking at these homes and realising that in many cases the alternative [renting] is a more expensive proposition.
“The cost of real estate has not really gone down but property has become more accessible.”
Amid ongoing concern about housing affordability, the Aussie study, backed by data provider by CoreLogic, found that repaying a mortgage in our capital cities is dramatically cheaper than it was 10 years ago.
Based on average discounted variable loan rates, the average owner of a house is paying $809 a month less than they were in 2010 and $272 less than in 2017. For units, the average homeowner is paying $272 a month that 10 years ago and based on a three-year fixed rate, saving up to $777 per month when compared to 2017.
All rental costs are based on the median rental valuation and mortgage repayments on a 10 per cent deposit.
Mortgage rates are based on indicator lending rates reported by the RBA.
Locations on the fringe of Sydney’s metropolitan areas tend to be where it is cheaper to buy than rent for apartments, including Warwick Farm, Fairfield, Campbelltown, Leumeah, Mount Druitt and Jamisontown.
While for houses, the Central Coast region is a stand out when it comes to the smallest difference between paying a mortgage and renting.
“More renters are looking to transition to homeownership,” The Agency CEO Matt Lahood said.
“This has been driven by the record low interest rates and a slight reduction in prices in certain areas. Throughout COVID-19 buyer demand has remained high due to the record-low interest rates and access to affordable finance.
“There has also been an attractive incentive driving first home buyers with the government’s First Home Loan Deposit Scheme, this is assisting more renters transition to homeownership.”
‘STUPID NOT TO’
Sign-writer Enzo Montana can’t believe there isn’t a flood of buyers following his path to home ownership.
After crunching the numbers on his own rent versus buy scenario, the 41-year-old, who owns his own business Montana Signs, committed fully to home ownership. He purchased land in the up-and-coming but relatively unknown Jordan Springs in western Sydney and his dream home is close to completion.
“You would be stupid not to take advantage of what is going on with interest rates,” he said.
“In terms of affordability, paying off a mortgage is at as good a level as it has justever been. We wanted a certain lifestyle and a certain type of home and with renting you’re never going to get that.
“It’s also about leaving something for our children in the future. To help them get into the market when the time comes.”
Mr Montana is now readying to move into his dream two-storey home, complete with a swimming pool and home theatre.
He engaged Nick Rigas, property partner at The Agency, to help him with his search.
“I’m getting so many calls from buyers saying ‘have you got this, have you got that’ who are ready to go,” Mr Rigas said.
“It has been a while since the market has been like that. There is great confidence in the market with buyers. People are doing their sums and liking what they come up with.
“If you want to own your own home, buckle down and embrace it. You have to remember, it’s not cheap to rent either.”
TOP SUBURBS WHERE IT IS CHEAPER TO PAY A MORTGAGE THAN RENT
UNITS
Warwick Farm
30km west of Sydney’s CBD, Warwick Farm is well serviced by the train network, via the inner west, Bankstown and Cumberland. The Hume Highway is the main arterial road in and out. The median unit price is $360,000.*
Jamisontown
56km from the CBD, Jamisontown sits adjacent to the Nepean River in the Greater Western Sydney Region. Penrith is the local train station, Busways runs services through the suburb and the main road of Mulgoa Rd, connects to the rest of Sydney and the Blue Mountains via the M4. The median unit price is $377,500
Liverpool
The major city centre of south western Sydney, Liverpool is well served for private transport via the M7, M5 and Liverpool Rd. Bus and train provide easy access to Parramatta and the Sydney CBD. The median units price is $410,000
Leumeah
39km south-west of the Sydney CBD, family-friendly Leumeah sits in Campbelltown local government area. Leumeah station is serviced by the Airport and South railway lines with both a local public and high school. The median unit price is $395,000
Mount Druitt
38km west of the CBD, Mount Druitt sits in the Blacktown local government area. An express train service regularly connects with the city and Parramatta. A light rail feasibility study is being undertaken in the area. The median unit price is $405,000
Fairfield
23km from the Sydney CBD, Fairfield boasts a number of commercial and residential developments of medium and high density. Fairfield Station services Parramatta and the city and has a major bus interchange adjacent. The median unit price is $409,750.
Campbelltown
53km from the CBD, Campbelltown is a another residential and commercial hub in western Sydney. The Hume Highway links the suburb to much of the city, as does the rail network. The median unit price is $437,000.
HOUSES
The Greater Sydney/Central Coast regions of Lake Haven (median house price: $543,750), San Remo ($445,000), Charmhaven ($485,000), Blue Haven ($515,000) and Watanobbi ($490,000) lead the way for those areas where it is cheaper to pay down a mortgage on a house than rent.
*According to realestate.com.au