Aussie suburbs where it’s cheaper to buy than rent
For budding home buyers the time to buy is almost certainly now, with property ownership well within the reach of many Australians dreaming of a place to call their own.
For budding home buyers the time to buy is almost certainly now, with property ownership well within the reach of many Australians dreaming of a place to call their own.
A new in-depth study of our housing market, has found that in more than half of Australia’s suburbs it is cheaper to own a house than fork out for rent.
According to the Buy v Rent Report from home lender Aussie, in 52.2 per cent of suburbs nationally it is cheaper to pay down a mortgage than rent. This is well up on the same time last year, when it was 39.9 per cent of suburbs.
Ten years ago, the figure was just 0.4 per cent of suburbs nationally.
When it comes to units that figure grows to 59.1 per cent of Australian suburbs – also lining up the once almost impossible dream of saving money while owning your own home.
The figures are based on a three-year fixed rate scenario.
Aussie CEO James Symond said the finding was a strong incentive for those wanting to own their own home, especially first home buyers.
“Our research confirms that in many suburbs across Australia, especially those outside the major capital cities, on a monthly basis, it is cheaper to buy than rent,” he said.
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“Why pay your landlord – when you could potentially pay the same amount – or less monthly – on a place you can call your own.
“The cost gap between buying and renting has tightened over the last year as rates and property values have either stabilised or fallen, especially in regional areas across Australia and in the cities of Darwin and Perth.
“The combination of lower property values in some regions, record low mortgage rates and government incentives for first home buyers, have made buying conditions generally more attractive for buyers.”
Aussie’s Buy v Rent Report discovered that under the three-year fixed rate scenario, typical monthly mortgage repayments on a home have fallen dramatically by $809 between 2010 and 2020. For units, payments have fallen by $777 per month over the same period.
OPPORTUNITY FOR HOME BUYERS
The Agency CEO Matt Lahood said there was the potential for great opportunity in the real estate market.
“More renters are looking to transition to homeownership. This has been driven by the record low interest rates and a slight reduction in prices in certain areas. Throughout COVID-19 buyer demand has remained high due to the record-low interest rates and access to affordable finance,” he said.
“There has also been an attractive incentive driving first home buyers with the government’s First Home Loan Deposit Scheme, this is assisting more renters transition to homeownership.”
There are options a plenty for prospective buyers.
Based on a 30 year loan with a principal and interest variable rate of 3.65 per cent, 32.9 per cent of Aussie suburbs recorded lower monthly mortgage repayments than rental payments for houses and 37.7 per cent for apartments.
Under this variable rate scenario, 16.9 per cent of capital city suburbs recorded lower monthly mortgage repayments compared with rental payments for houses, rising to 34.7 per cent of suburbs under a three-year fixed rate scenario.
When it comes to units, 27.9 per cent of capital city suburbs recorded lower mortgage repayments than rent based on discounted variable mortgage rates. This rose to 48.5 per cent of suburbs under the three year fixed rate scenario.
AFFORDABILITY IN REGIONAL AUSTRALIA
In great news for those looking to join the growing trend of a move to regional Australia, under the lower interest rate scenario associated with a fixed-rate mortgage, the proportion of locales where mortgage payments are less than rent rose to 79.8 per cent for houses and 87.4 per cent for units.
And the numbers crunched in the report don’t include Tuesday’s further cut to interest rates, that brought them to a new record low.
All rental costs in Aussie’s Buy v Rent report are based on the median rental valuation and mortgage repayments on a 10 per cent deposit. Mortgage rates are based on indicator lending rates reported by the RBA.
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