Where it’s cheaper to buy than rent in Victoria
It’s cheaper to pay off a mortgage than rent in a raft of regional Victorian locations, and 12 Melbourne unit markets, as rent rises bite. SEARCH YOUR SUBURB.
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It’s cheaper to pay off a mortgage than rent in a raft of regional Victorian locations, and 12 Melbourne unit markets, as rent rises bite.
Albion units are the best for local tenants to gain the most from buying in the city, according to Finder data and analysis, which reveals more than 100 house and unit markets across the state where average rents are higher than monthly loan repayments.
Affordable towns Ouyen, Murtoa, Warracknabeal and Donald top the list for the biggest potential savings, but units in popular South Geelong also feature at number six.
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There, the median monthly rent of $1516 is about $500 more than the average monthly mortgage repayment of $1043 at an 80 per cent loan-to-value ratio.
Unit markets in Melton South, Travancore, Notting Hill and Roxburgh Park rounded out the top five for savings in Melbourne.
The Finder data also considers all suburbs at a 90 per cent loan-to-value ratio, which significantly shrinks the statewide list to 57 markets where it’s cheaper to pay off a mortgage.
PropTrack economist Angus Moore said markets mentioned in the list were also some of the best insulated from impending interest rate rises due to their affordability.
“Rate rises are going to affect everyone, but those with smaller mortgages will have a smaller increase in repayments,” he said.
“If you’re looking to buy, the difference between your current rent and repayments is not the only thing you should consider. Owning a home brings with it rates, maintenance, water bills and, depending on your circumstance, strata fees potentially if it's a unit.
“But it also brings the potential of capital gain, prices can go up, and mortgage repayments are not just the cost of owning a home because you are paying off your principal.”
Regional Victoria’s median asking rent has rocketed 15.2 per cent over the past two years including an 8.6 per cent rise in the past year, according to PropTrack figures as at April.
Melbourne’s 2.4 per cent rise over the most recent 12-month period has brought it back to pre-pandemic level.
Finder home loans editor Richard Whitten noted the biggest barrier to buying was the deposit.
But government schemes guaranteeing deposits of as little as a 5 per cent — or 2 per cent for single parents — could help many Victorians get into the market.
“When you’re home-hunting, look for an apartment or townhouse rather than a house if you need to bring down your budget,” Mr Whitten said.
Advantage Property Consulting director Frank Valentic has helped clients buy in Albion for years and believes it’s a bit of “a hidden gem” in the Melbourne market.
He noted lesser-known suburbs including it and Travancore, also on the list of units with cheaper loan repayments close to the CBD, might be flying under buyers’ radars.
“Try and buy in small boutique blocks of less than 10 units rather than large complexes with high body corporate fees,” Mr Valentic advised.
“Other important features to look out for are an entertainer’s courtyard with a bit of land, a lockup garage as people want storage and a modern open-plan living floorplan — the layout is always crucial.”
Buying walking distance to public transport was another key to help ensure an investment was a good one, he said, with nearby cafe and shops another plus.
MARKETS CHEAPER TO BUY THAN RENT IN MELBOURNE
– all units
Suburb, median price, weekly rent, monthly mortgage repayments, monthly rent
Albion, $280,000, $280, $1,018.82, $1,213.33
Melton South, $340,000, $310, $1,237.14, $1,343.33
Travancore, $390,000, $351, $1,419.07, $1,521.00
Notting Hill, $407,100, $360, $1,481.29, $1,560.00
Roxburgh Park, $420,000, $370, $1,528.23, $1,603.33
Melton, $355,000, $310, $1,291.72, $1,343.33
Wollert, $416,500, $360, $1,515.50, $1,560.00
Craigieburn, $405,000, $350, $1,473.65, $1,516.67
Wallan, $405,000, $350, $1,473.65, $1,516.67
Caroline Springs, $470,000, $400, $1,710.16, $1,733.33
Darley, $390,000, $330, $1,419.07, $1,430.00
Tarneit, $416,000, $350, $1,513.68, $1,516.67
— Albion only Melbourne market at 90pc LVR
VICTORIA’S TOP 10 MARKETS CHEAPER TO BUY THAN RENT
Suburb, property type, median price, weekly rent, monthly mortgage repayments, monthly rent
Ouyen, H, $148,000, $260, $538.52, $1,126.67
Murtoa, H, $145,000, $245, $527.60, $1,061.67
Warracknabeal, H, $205,000, $260$745.92, $1,126.67
Donald, H, $205,000, $260, $745.92, $1,126.67
Sale, U, $265,000, $330, $964.24, $1,430.00
South Geelong, U, $286,667, $350, $1,043.08, $1,516.67
Merbein, H, $240,000, $290, $873.28, $1,256.67
Nhill, H, $200,000, $240, $727.73, $1,040.00
St Arnaud, H, $230,000, $275, $836.89, $1,191.67
Benalla, U, $255,000, $300, $927.85, $1,300.00
*assumes 20 per cent deposit
*analysis assumes the average variable discounted owner occupier home loan interest rate of 3.6033 per cent, according to the RBA.
*analysis assumes a 30-year loan term.
Source: Finder
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