Savings to be had when buying versus paying rent

Compared to renting, buyers could save over $100 a week paying a mortgage in one Hobart suburb. OUR BEST SUBURBS FOR SAVINGS >>

Rent costs more than servicing a mortgage in some Hobart suburbs. Picture: SUPPLIED

NEW research has revealed four Hobart suburbs that offer house and unit buyers a mortgage that’s cheaper to pay off compared to renting.

Houses and units in Tranmere, Geilston Bay, Glenorchy and Rokeby topped the buyer affordability charts in PRD Real Estate’s research of buying versus renting costs in quarter one of this year.

Houses in Goodwood and units in Lenah Valley, New Town, Kingston, Bellerive and Moonah also made the cut, however, the amount a property owner could potentially save varied substantially from suburb to suburb.

PRD found there was a $111 saving between a weekly mortgage on a house in Glenorchy compared to renting. In Geilston Bay houses there was an $82 benefit and in Goodwood $63.

The largest saving in the unit sector was $91 in Geilston Bay, followed by $76 in Glenorchy and $60 in Kingston.

Bellerive units were just barely more affordable to buy, with an $8 gap between the weekly mortgage and rental figure.

Research can help save money for the family budget.

When comparing last year’s data to the first quarter of 2021, PRD chief economist Diaswati Mardiasmo said the gap between a weekly mortgage repayment and median weekly rent had tightened for some suburbs.

“In Tranmere we have seen a change from a -6.1 per cent difference to -3.2 per cent, Goodwood -19.4 per cent to -15.8 per cent, and Rokeby -26.7 per cent to -6.5 per cent,” Dr Mardiasmo said.

“Data tells us that median price growth in these areas was high, and outweighs median weekly rent growth.

“In other suburbs such as Glenorchy and Geilston Bay, the gap between weekly mortgage repayment and median weekly rent have widened, due to higher rental prices.”

For those looking at buying a house, Dr Mardiasmo said the market for affordable options was shrinking quite rapidly, especially in areas within 10km of the Hobart CBD.

“And for units there are more options, which means if you are able to look at the possibility of buying it would be a good idea to really compare the costs between buying and renting,” she said.

For those that can buy, the time is now, says Dr Diaswati Mardiasmo.

Dr Mardiasmo said rental market activity could be an indicator for when it was a good time to buy.

She said when property became cheaper to buy, people should look out for the median price dipping down or median rent going up.

“If it’s a tight market with a very low vacancy rate and many people applying for rentals, more likely than not median weekly rent would be going up,” she said.

“From that point people could get an indication of what the weekly repayment costs versus weekly rent are and see if there is an opportunity to buy.

“In an increasingly growing market like Hobart it would be smart to look at suburbs that many do not consider, or widening the search to discover areas with tight/low vacancy rates that might offer a buying opportunity.”

PRD’s analysis was based on the NAB home loan calculator and assumes a median purchase price with a 2.99 per cent principal and interest comparison rate, a 30-year loan term and a 20 per cent deposit, with stamp duty and other fees not included.

It assessed suburbs identified as a “top performer” or an “affordable, liveable” suburb in previous PRD research reports.