Top Australian suburbs where it’s cheaper to buy than rent

There are more than 3400 suburbs across Australia where you fork out more for rent than a mortgage, with a difference of up to $158 a week.

More than a third of properties across Australia are cheaper to buy than rent with over 3400 suburbs offering a better deal with a mortgage, a new report has found.

CoreLogic found servicing a mortgage is now cheaper than paying rent on 36 per cent of Australian properties, which is higher than the pre-covid proportion of 33 per cent, which is attributed to record low interest rates.

Regional parts of Australia were particularly ripe for a cheaper deal with 60 per cent of properties offering savings when paying off a mortgage, compared to around one-quarter of homes in capital cities.

Regional Queensland offered some of the best opportunities for buyers, with more than nine in 10 homes in Townsville cheaper to buy than rent, more than eight in 10 in Cairns and almost eight in 10 in Toowoomba.

The Northern Territory offered the biggest difference between renting and buying. A mortgage in Darwin set people back a median of $389 a week, compared to a median rent of $548, a gap of $158.

For the rest of the NT, weekly mortgage payments were $344, a drop of $142, with renting sitting at a median of $487.

For Western Australia, it was $114 cheaper to rent with a mortgage costing $301 far below the weekly rent of $416.

In Queensland, paying off a mortgage saved someone $114 with a median mortgage sitting at $369, as opposed to $471 in rent.

But there was just 90 cents between renting and buying in Hobart, with a mortgage sitting at median of $498 a week.

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Across Australia, there are more than 3400 suburbs where its cheaper to buy then rent. Picture: Dave Hunt/AAP Image

Covid’s influence

Eliza Owen, head of research at CoreLogic, said serviceability of mortgages has become cheaper due to a dramatic reduction in interest costs since the onset of Covid-19.

“According to the RBA, average mortgage rates for new owner occupier borrowers has fallen from 3.21 per cent in February 2020 to 2.4 per cent in May of 2021. The analysis also assumes a 20 per cent deposit has been paid on the property, so it is important to note that just because the actual mortgage repayments are cheaper does not mean it is necessarily easier for people to access property,” she said.

“However, the analysis may be useful for renters who have accumulated savings throughout COVID-19, and are in a place to weigh up their rental costs against the possibility of ownership.”

The high portion of properties for which mortgages are relatively cheap, particularly in regional Australia, also has to do with a rise in rental prices, she added.

“The national CoreLogic rent value index has increased 6.4 per cent since Covid-19, and the increase was an extraordinary 11.8 per cent across combined regional Australia,” she said.

In South Australia, paying off a property was $224 a week, a saving of $91 with median rents starting at $315.

The savings dropped after that for other places around Australia, with Tasmanian mortgage holders putting an extra $41 in their pocket, compared to renting, while Adelaide homeowners saved $13.

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Eliza Owen, head of research at CoreLogic, said serviceability of mortgages has become cheaper due to a dramatic reduction in interest costs. Picture: Supplied

Bleak outlook in some cities

However, in places like Sydney and Melbourne renting was generally cheaper compared to paying off a mortgage.

Renters in Sydney saved $232 with a median rent of $582, compared to weekly mortgage repayments of $814, while Melbourne renters spent $444 on rent, holding on to $172 more compared to a mortgage of $617.

In Sydney, the picture was bleak for buying versus renting. Buyers were better off in only 0.7 per cent of all homes in Ryde, 1.1 per cent in the inner west and 1.3 per cent in the northern beaches.

The difference was minimal though for other capitals. People in the ACT paid just $11 more a week for rent at $620, compared to a median mortgage of $631, while the rest of NSW and Brisbane saved a measly $4 from renting.

In Victoria, the difference was even starker with a $2 gap between renting as a median mortgage was $396.