Melbourne suburbs where it is cheaper to buy than rent
The housing market downturn has caused an unusual situation in Melbourne where it’s actually cheaper to buy in some suburbs than it is to rent. SEE IF YOUR SUBURB IS ON THE LIST
Buying has become cheaper than renting in some of Melbourne’s popular inner city haunts and outer family pockets.
Unit owners in Melbourne, North Melbourne, Travancore and Abbotsford would spend up to $880 less a month on mortgage repayments than they would renting there, according to Finder.com.au research.
But outer suburb Cranbourne South recorded the greatest gap, with houses costing $1123 more to rent each month than to buy, based on CoreLogic price data and mortgage repayments with a 3 per cent interest rate over 30 years.
RELATED: How to give yourself the best chance of getting a home loan
Melbourne’s top money-making property markets of the decade
Victorian rental reforms: new pets law slammed by REIV
Advantage Property Consulting director Frank Valentic said rent had continued to get “a lot more expensive” during the market downturn, leading to the unusual situation.
“I’ve had about four or five first-home buyers tell me in the past couple of months that it’s costing them the same to buy as it is to rent, which is why they’re getting into the market,” Mr Valentic said.
“With the ability to get onto the first-home buyer deposit scheme, obviously the opportunity is there to buy now.”
Greater Melbourne’s median weekly unit rents have shot up from $400 to $440 in the past 12 months, according to realestate.com.au.
Nelson Alexander Flemington director Paul Harrison said Travancore unit prices were still recovering from the downturn.
“Inner-city rents are quite high, with demand from university students, those in the nursing industry and people who want to be close to the CBD – rents are not going to be as high if you go four or five more suburbs out,” Mr Harrison said.
“The planets have really aligned a bit at the moment – this sector of the market is quite affordable.”
Student Reuben Hawkes, who purchased a one-bedroom Flinders St apartment to lease out, said his friends were shocked at how cheap homes were in the inner-city.
“People are surprised how much $300,000 can get you in the city — and a place in a good location as well.”
Mr Hawkes said his first real estate venture allowed him to work less while he studied at RMIT.
READ MORE: Lianna Pan: From migrant to $16m property portfolio
Sydney investor pays premium for slice of iconic Melbourne laneway
A new build that makes relaxing outdoors easy
“You’ve got to get into (the market) somehow and instead of buying a big property out in the suburbs, start small and work your way up,” he said.
“It’s good to be into real estate in a way that you’re not in the deep end already — if something does go badly there’s always the option of selling or putting tenants in.”
Finder.com.au personal finance expert Kate Browne said homeowners in the listed suburbs could use booming rental markets to their advantage.
“If you own a home in one of these areas and you’re open to moving somewhere a little cheaper, you could be making yourself some extra money,” Ms Browne said.
CBD units had the largest difference after Cranbourne South, with the average monthly mortgage repayment of $1501 well below the median monthly rent of $2383.
Outer suburbs Notting Hill and Roxburgh Park also proved cheaper to buy than rent in.
with Jayitri Smiles
Originally published as Melbourne suburbs where it is cheaper to buy than rent