Housing crisis bites but buying still better than renting for a third of homes

The housing crisis is hitting home around the nation but it is still cheaper to buy than rent more than a third of homes across Australia.

The housing crisis is hitting home around the nation as interest rate hikes collide with a surge in migration, but it is still cheaper to buy than rent more than a third of homes across Australia.

PropTrack found that 36 per cent of homes across the country are cheaper to buy than rent, with Queensland, Tasmania and Western Australia offering the highest proportion of homes that cost less to buy.

Notably, in WA, more than three out of four homes are cheaper to buy than rent, which the researcher said meant that stronger price growth conditions would persist.

Queensland and Tasmania were similar, in line with trends seen since the onset of the Covid-19 pandemic.

Buying conditions remain more favourable for units – with over half (55 per cent) estimated to be cheaper to buy than rent.

Just 29 per cent of houses across the country are cheaper to buy.

But only 1.4 per cent of houses in Sydney and 2.2 per cent of houses in Melbourne are cheaper to buy than rent, with nearly 43 per cent of apartments in Sydney in this situation.

It was also cheaper to buy rather than rent 38.5 per cent of Melbourne apartments.

PropTrack economist Paul Ryan said favourable buying conditions continued despite the record pace of interest rate increases, and home prices increasing 36 per cent since the ­pandemic.

“This shows that there are still opportunities for buyers across the housing market,” he said.

“A record pace of rent growth – with advertised rents up 14.6 per cent over the past year – has offset higher buying costs in many regions,” Mr Ryan said.

“Buying conditions remain strongest in Queensland, South Australia and Western Australia, which points to continued upward pressure on prices in these regions.”

PropTrack said that many of the capital cities where buying conditions were most favourable reflect recent unit development.

It said prices were low compared with rents because of record rent growth in these cities.

But Mr Ryan cautioned about the overall challenges for buyers.

“Looking to 2024, higher interest rates will challenge housing affordability for many,” Mr Ryan said.

“This may slow price growth and rebalance buying conditions across the market.”

Housing affordability decreased in 2023, driven by a simultaneous increase in housing values, rent values and interest rates, a new report by ANZ and CoreLogic has found.

The report showed that in the year to September, the time to save a 20 per cent deposit had climbed to 10 years nationally, and to 12.6 years in Sydney.

Sydney also requires a record 58.1 per cent of income to service a new loan.

Unlike Sydney, some aspects of affordability have improved in Melbourne for buyers in the past five years to September.

The time to save a deposit in Melbourne is now 9.6 years, down from 10.2 years back in September 2018.

Originally published as Housing crisis bites but buying still better than renting for a third of homes