Cheaper to pay mortgage than rent in Tasmania

It is cheaper to pay mortgage repayments then pay rent for over 70 per cent of properties in regional Tasmania and 50 per cent of those in the capital. FIGURES >>

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WITH rising rents and falling interest rates it is now cheaper to pay off a mortgage than rent almost one third of properties in regional Tasmania and more than half in the State’s capital city.

CoreLogic analysis suggests servicing a mortgage is now cheaper than paying rent on 36.2 per cent of Australian properties – higher than the pre-COVID proportion of 33.9 per cent reported in February last year.

The situation is starker in Tasmania with it being cheaper to buy than rent almost 83 per cent of properties in the State’s North-West, 71.4 per cent in broader regional Tasmania and 50.2 per cent in the capital.

But TasCOSS said those struggling to get anywhere they could afford to rent could also not afford a house deposit nor expect to get approval for a loan from a bank.

Instead they are stuck in a “near on impenetrable private rental market.” with historically low vacancy rates.

A For Rent Sign Outside a House.

“Frankly, home ownership for Tasmanians living pay cheque to pay cheque, bill to bill is out of reach,” CEO Adrienne Picone said.

“And while the fact may be that mortgage repayments are cheaper that rent in a number of suburbs across the state, for Tasmanians living on low incomes — who are doing their level best to keep the heating on over winter and put food on the table — it is a moot point.”

The median rent for a house in Hobart is $550 a week while the median cost of a house is $780,000.

But in some areas, particularly Burnie, George Town and Queenstown, mortgage repayments can be less than $250 a week about $150 cheaper than paying rent on the same property.

Last year, the Hobart suburb of Rokeby was named the No. 1 area where house buyers stand to save the most money by making the switch with the difference between paying a typical rent and the repayments on a variable rate home loan being over $400 per month.

Mount Wellington/ Kunanyi, Hobart. Picture: Chris Kidd

Ms Piccone said that in the wake of the pandemic, thousands more Tasmanians have found themselves in acute housing stress.

“What we’re seeing highlights what we already know: there is a chronic undersupply of affordable housing in our state. We need affordable housing that is integrated into every suburb so more Tasmanians can have a roof over their head.

“To even keep pace with current and projected housing need, we would need our government to deliver 14,000 affordable homes over the next 15 years. That is equivalent to about 1000 homes per year,” Ms Picone said.

“We must also do more to support Tasmanians to access and remain in the private rental market with personal debt and financial stress rising rapidly over the past 12-months due to a loss or reduction in family incomes and rising cost of living.”

Average new mortgage rates for owner occupiers have fallen from 3.21 per cent in February 2020, to 2.40 per cent as of May 2021, according to RBA data.