This is where it’s cheaper to buy than rent in Sydney

Almost a quarter of homes are cheaper to own than rent, despite skyrocketing interest rates, according to a new report. This is where.

Nearly a quarter of NSW homes have become cheaper to own than rent, even at current lofty interest rates and prices, due to staggering rises in the cost of rent over the past year.

That’s the finding of a new PropTrack report which explored the different outcomes for renters and first home buyers across every suburb in the country.

The report revealed 24.3 per cent of all homes across the state would be less expensive for a first home buyer to pay off each week at current mortgage rates and prices than renting.

Most of these homes were apartments in higher density areas spread around Sydney.

About 42 per cent of all Harbour City units were deemed cheaper to own than rent, compared to only 1.4 per cent of Sydney houses.

Apartments in Parramatta are generally cheaper to own than rent, the study showed.

PropTrack economist Paul Ryan said the lower costs of buying (compared to renting) in some areas was the result of “extreme rent growth”, with national rents growing at double the rate of inflation over the past year.

“It’s a challenging period for both renters and buyers but generalised price inflation has been higher for rents in a lot of areas,” he said.

Suburbs with the biggest imbalance between rents and mortgage costs for comparable homes were Botany, in Sydney’s south, and Auburn and Parramatta in the city’s west.

Just over 70 per cent of properties in Botany were cheaper to own than rent, while in Parramatta and Auburn the proportion was 55 per cent and 63 per cent, respectively.

“Those areas have all seen a lot of unit development. If you’re a first home buyer with the choice to buy or rent in those areas, if it’s a unit, you’re generally better off,” Mr Ryan said.

PropTrack economist Paul Ryan rent rises have been extreme over the past year.

The study used PropTrack’s automated lender-grade estimates of the current price of buying and renting homes and calculated the total cost of owning or renting each home for the next 10 years.

It factored in the associated costs of buying and renting, including council rates, maintenance and stamp duty. The assumption was that the buyer went into the transaction armed with a 20 per cent deposit.

The study comes as additional modelling released from property group SQM Research showed Sydney home prices were likely to stagnate or even fall next year.

Widespread falls in rent were not anticipated due to continued high migration into Sydney, coupled with vacancy rates at record lows.

Areas that have been redeveloped over recent years such as Botany have more homes that are cheaper to own.

There was even room for rents to keep growing due to slowing building completions, said SQM Research director Louis Christopher.

“Current building approval numbers plus dwellings under current construction as published by the Australian Bureau of Statistics (ABS), strongly suggest the nation will have the lowest completion rate since 2012,” Mr Christopher said.

“This ongoing imbalance between demand and supply will continue to put upward pressure on rents around the country.”

Mr Ryan said he expected conditions over the next year to constantly evolve.

“Looking to 2024, higher interest rates will challenge housing affordability for many. This may slow price growth and rebalance buying conditions across the market.”

Originally published as This is where it’s cheaper to buy than rent in Sydney