Melbourne renters could save hundreds if they buy in these suburbs | Compare the Market
Compare the Market has revealed the Melbourne suburbs where monthly mortgage repayments are cheaper than monthly rental costs. SEE WHERE TO BUY.
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Melbourne tenants could save up to $660 a month paying a mortgage on a unit instead of renting it.
But families needing a house have to go to regional Victoria for a better deal as an owner than as a renter.
Compare the Market data and insights from real estate guru Andrew Winter shows mortgage repayments on an apartment, assuming the buyer put down a 20 per cent deposit, were less expensive than monthly rental costs in 10 suburbs by at least $290 a month.
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They include Abbotsford, Docklands, North Melbourne, Travancore, Notting Hill and Box Hill.
And in regional Victoria, tenants could save up to $281 a month by purchasing a house in suburbs like Morwell, Mooroopna and Portland, and up to $445 buying a unit in areas such as Mildura, Echuca and Shepparton.
Compare the Market property expert Andrew Winter said rising interest rates and soaring property prices meant most buyers coming into the market today would spend more on their mortgage repayments than they would on monthly rent.
“But owning a property still has advantages if you have a deposit saved and can afford to meet the repayments,” Mr Winter said.
“In the vast majority of cases, if you hold on for a decade or two, you’ll reap rewards in equity.
“If you’re lucky, you might be able to find a property where the distance between rental payments and mortgage repayments is close; but in many cases, you’ll need to stretch your budget a bit further to make it work.”
He added that comparing lenders and choosing a competitive home loan rate could make a big difference in mortgage affordability, especially now the Reserve Bank wasn’t expected to move on the cash rate for some time.
AXTON Finance principal mortgage broker Clinton Waters said prospective first-home buyers were beginning to recognise that their pathway to property ownership was not necessarily going to be a house and land.
“Young tenants particularly are looking at unit lifestyles; it gives a foothold in the property market in an area that has amenity and infrastructure,” Mr Waters said.
“And the amount of stock that’s been available on the market for units has swelled a little bit with the exodus of Victorian property investors.”
He added that many tenants were finding they’d be better off paying a mortgage at 6 per cent instead of continuing to pay rent, especially because interest rates had most likely hit their peak.
“We’re definitely seeing a little more inquiry from these types of scenarios,” Mr Waters said.
But he warned that while there were some pockets close to the CBD where units seemed more affordable, buyers shouldn’t be fooled by hidden costs like body corporation fees that could be “horrendously expensive”.
The Property Bureau buyer’s advocate Alastair Mairs said tenants in their 20s were better off living in a sharehouse and saving rather than purchasing in a high-density apartment block like what was on offer in much of the CBD and Travancore.
“Those properties have been built for a decade or more and haven’t performed,” Mr Mairs said.
“If you can live in sharehouses or you can push out a couple of suburbs or make some sacrifices now, you can definitely save and have opportunities rather than rushing and jumping into something like one of these apartments in Southbank.”
However, he said purchasing a home was unique to every buyer, as an older tenant who simply wanted a long-term place to live should consider more affordable options.
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