Australian suburbs where it’s better to rent than buy

Young Aussies are struggling when it comes to housing but there is a way to live in your dream suburb. Find out how to live there and also buy a place.

People looking to break into the property market could save thousands by renting in a desirable suburb in Sydney and Melbourne and buying elsewhere, according to new research.

It found it would be better to rent an apartment in the Sydney suburbs of Ryde and Carlingford in the northwest, as well as Canterbury and Hurstville in the southwest and Auburn instead of purchasing a home in the area.

Instead people could look to areas in Queensland, NSW and Tasmania to make their money stretch further and to build up equity for a home in the city they live later on, according to the research from Well Home Loans.

In Ryde, a renter would pay on average just $1840 a month for a unit, yet buying the same place would typically cost $725,000 which would mean forking out $2568 per month on a mortgage if a 10 per cent deposit had been put down.

It’s a similar story for Canterbury where monthly rent typically adds up to $1800 compared to a mortgage on a unit worth $680,000 costing $2400 a month.

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It’s cheaper to rent in North Ryde than buy a unit.

Renting was a much better option in a number of suburbs across Melbourne too including Box Hill, Doncaster, North Melbourne, Hawthorn East, South Yarra, Abbostford and Brunswick.

In Doncaster renters would typically pay $1720 a month, yet a mortgage for $598,000 would mean meeting repayments of $2120.

Over in South Yarra, renters typically would pay $1680 in rent compared to $2085 a month for a mortgage on a unit worth $588,000.

Other suburbs that are better for renting than buying include South Melbourne, Caulfield North, Glen Iris, Clatyon and Malvern East, the research found.

First home buyers in Sydney and Melbourne would be better off renting units in these suburbs and buying high-growth investment houses in regional areas or interstate, according to Well Home Loans CEO Scott Spencer.

It’s better to rent in Box Hill than buy. Picture: AAP Image/James Ross

After the recent property boom, it’s become very hard for younger workers to break into the Sydney and Melbourne property markets, particularly if they have a budget of $500,000 to $800,000, he added.

“I feel for first home buyers in Sydney and Melbourne, because it’s really hard to buy a

house close to the CBD,” he said.

“That means having to choose between buying an inner-ring or middle-ring unit – which

might not suit someone who is planning to start a family – or buying a house on the city

fringes – which can be hard if you have to commute to the CBD every day.”

He recommended that first home buyers consider rentvesing, where they lease a unit in their dream suburb and buy a house for investment purposes in a cheaper market with long-term growth potential.

“At some point in the future, you might be able to use the equity from your investment property to buy the house you always wanted in Sydney or Melbourne,” he added.

Well Home Loans CEO Scott Spencer. Picture: Supplied

For the same price as a unit in the inner city Sydney and Melbourne suburbs, first home buyers with a budget between $500,000 and $600,000 could score a house in Goulburn and Cringlia in NSW and Nambour, Kippa Ring in QLD or Darling Downs in WA.

Tasmania also offers a number of options including in Sorell, Mornington, Oakdowns, Brighton and Bagdad.

First home buyers who can fork out between $600,000 and $700,000 for a home should forget Canterbury in Sydney or South Melbourne and instead look to Edgeworth or Koonawarra in NSW, South Arm or Warrane in Tasmania.

There were also a number of spots in QLD including Coombabah, Meridan Plains, Caloundra West, Lower Beechmont and Rothwell, the research found.

Spencer said these suburbs have low vacancy rates meaning they could be easily rented out and house prices have grown on average by 5 per cent in the last 10 years.

For those who can push their budget to between $700,000 and $800,000, QLD topped the list for the best renvesting opportunity for suburbs such as Highland Park, Merrimac, Little Mountain, Forest Glen, Nerang, Pacific Pines, Bli Bli and Sippy Downs.

Queensland offered some great bargains. Picture: AAP Image/Glenn Hunt

Others on the list included Mirrabooka in NSW and Lauderdale in Tasmania.

But Spencer said rentvesting isn’t for everyone, because deciding where to live and buy is as much of an emotional decision as it is a financial one.

“So first home buyers should weigh up both those factors when deciding whether to follow the traditional owner-occupier path or choose the increasingly popular rentvesting option,” he said.