Sydney, NSW suburbs where it’s cheaper to buy than rent

Exclusive analysis has revealed the Sydney and NSW suburbs where it’s cheaper to buy than rent. Are you costing yourself big time? This is where.

Renters would be financially better off buying than renting in these Sydney suburbs.

By now it’s no surprise that Sydney’s real estate landscape is ablaze, leaving both renters and buyers struggling with soaring prices.

However, an exclusive Compare the Market analysis has revealed there are 11 Greater Sydney suburbs where it’s become cheaper to buy than rent.

The analysis has compared median monthly rental prices, loan sizes and median house prices with a 20 per cent deposit.

Those living in apartments in Western Sydney suburbs Lakemba, Auburn, Harris Park, Rosehill, Regents Park and Mays Hill, would be paying more in rent than those who were paying off a mortgage.

Hayley Brooks recently purchased a unit for cheaper than what it is to rent. Picture: Sam Ruttyn

Units in Sydney’s South West were also found to be cheaper for mortgage holders than renters in Wiley Park, Bankstown and Warwick Farm.

One inner Sydney suburb also met the criteria, in Mascot, the median monthly mortgage repayment stood at $4041, while renting cost $4,267.5.

There were 31 areas where houses were cheaper to buy than rent across regional NSW, including Lismore, Gundagai, Casino, Grafton, Deniliquin and Gunnedah.

Compare the Market’s property expert Andrew Winter said rising interest rates and soaring property prices mean that most buyers coming into the market today will spend more on their mortgage repayments than they would on their monthly rent.

“But owning a property still has advantages if you have a deposit saved and can afford to meet the repayments. In the vast majority of cases, if you hold on for a decade or two, you’ll reap rewards in equity,” he said.

A Lakemba unit that recently sold for $380,000. Lakemba was listed as a suburb where rents were more expensive than mortgage repayments.

Comparing lenders and choosing a competitive home loan rate can make a big difference in mortgage affordability, according to Mr Winter.

“Consider stress testing your budget against higher interest rates. Banks and lenders will generally apply a 3% serviceability buffer for you but it’s important to make sure that you could still afford your repayments should your circumstances change, if you lost your job, or if you ever had a financial emergency.”

PropTrack economist Paul Ryan said although it renting may be pricier than servicing a mortgage in some of these suburbs, that may not suit everyone's circumstances.

“You have to put down a deposit, you have to pay council rates and strata rates if it's a unit as well – these are broader decisions then just paying the monthly mortgage repayments,” he said.

Mascot units also cost more to rent than buy.

“Renting is a stepping stone to buying, but for lots of people it's the best option in certain stages of their life or career,” he said.

Mr Ryan said certain regional areas would be effected by seasonal and transient work like mining towns, as well as rental yields were often higher on smaller properties because of demand.

“Smaller properties suit a lot of renters more, whether that’s younger people renting for the first time or expats, that may be travelling and only living in Sydney or regional areas temporarily,” he added.

CEO of B.Invested, Nathan Birch, said there are pockets all across the nation where you can find properties that rent out for more than paying off the mortgage will cost.

B.Invested founder Nathan Birch, said there were certain pockets in Sydney that you could still buy for less than they rent out.

“Its about finding those inconsistencies, not every property goes up (in price) and it takes a while for the flow on effect to come on,” he said.

Mr Birch said some of the areas that have seen high rental growth but slower house price growth were often regions with significant migrant populations, many of who are recent arrivals or lack eligibility to purchase a property.

As interest rates have gone up many peoples servicing capacity has reduced, pushing them into cheaper markets, he added.

Hayley Brooks recently purchased a unit in Punchbowl for $290,000. Picture: Sam Ruttyn

“If we look at Lakemba or Punchbowl, units were selling for $300k and renting for $300 a week which was okay, but as interest rates have gone up it has made it harder for a lot of people to buy so more people are renting, pushing those rental prices up to $400-$500.”

Hayley Brooks recently engaged B Invested to help her purchase a unit in Western Sydney for $290,000, which rented out for $400 a week.

“I assumed that I wouldn’t be able to purchase in and around Sydney for those prices,” she said.

“I think sometimes there are anomalies in the market and you can pick up on them,” she said.

“I have friends that purchased in Harris Park which is cheaper than in Parramatta even though it’s the next suburb over. They didn’t see the value in that two years ago,” she said.

“There are just some pockets in Sydney that haven’t seen the (buying) price increase that the rest of the city is experiencing.”

Originally published as Sydney, NSW suburbs where it’s cheaper to buy than rent