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Where it's cheaper to buy than to rent

The number of suburbes where it's cheaper to buy is on the rise - but they're not likely to be in Sydney or Melbourne.

The number of suburbes where it's cheaper to buy is on the rise - but they're not likely to be in Sydney or Melbourne. Photo: Louie Douvis

Only a handful of suburbs in Melbourne and fewer than 50 in Sydney are cheaper for aspiring owners to buy a home in than to rent.

In Melbourne, only six suburbs were more affordable to buy than rent and in Sydney, only 48 fit the bill.

But in other parts of the country the recent fall in interest rates and stable house prices has boosted the number of suburbs and country towns where it is cheaper to buy than rent.

In October there were 388 localities, this month there were 494, according to RP Data's latest Buy vs. Rent report.

And if prospective home owners were willing to chip in another $50 per week, that number rose to 1726 localities, the report said.

A sharp rise in house prices over the past decade coupled with slower rental growth has resulted in far fewer suburbs in Australia’s largest capital cities being cheaper to buy in than rent, researcher Tim Lawless said.

‘‘If you start factoring in your buying costs, stamp duty, convencing, pest and building inspections it starts to make the equation look much less appealing,’’ he said.

The analysis compared a suburb’s median weekly rent over the past year with the cost of monthly repayments on a variable 30-year mortgage where the loan-to-value ratio was 90 per cent and interest rate 5.65 per cent.

It did not factor in other costs associated with buying a property or take into consideration capital gains over time.

Brisbane had 58 suburbs where it was cheaper to buy than rent.

‘‘Nationally, regional areas dominate the list with 310 suburbs outside of the capital cities showing better payments schedule for buying compared with renting,’’ the report said.

In the capital cities, the type of housing - apartments - made suburbs more affordable.

‘‘That’s a trend across most of the cities. Typically units as opposed to detached houses are more aligned to paying off a mortgage being cheaper than renting,’’ Mr Lawless said.

The full list can be accessed here. (RP Data will ask you for your email address.)

77 comments

  • You say that six suburbs are more affordable to buy than rent, and then force us to visit an external web site and give them our email address for unwanted advertising in order to be able to access the actual details.

    That is not an article. That is a thinly veiled advertisement. Disgraceful. You should mark it as an ad so that we don't waste our time reading it.

    Commenter
    Craig
    Location
    Melbourne
    Date and time
    December 20, 2012, 2:39PM
    • I would suggest at least 90% of real estate "news" is actually PR plant from REIV.

      Commenter
      Rohan J. Carringbush
      Location
      Melbourne
      Date and time
      December 20, 2012, 2:56PM
    • @Rohan

      In keeping with real estate custom, you're under quoting!
      Is any real estate news any more than PR?

      Commenter
      no_subject
      Date and time
      December 20, 2012, 4:05PM
    • Create a different email account for those pesky websites that ask for registration.

      Commenter
      Jules
      Location
      Sydney
      Date and time
      December 20, 2012, 4:05PM
    • Here's some totally crazy news:

      Credit Suisse has downgraded Australia's banking sector for various unsavoury reasons.

      “We are particularly concerned about payment shocks on interest-only loans (which make up roughly a third of the mortgage book), as well as the effects of rising unemployment.”

      They said.

      Yep. Its a shock isn't it. 1/3 of all Aussie mortgages are interest-only.

      Ka-BOOOOOOOOOM!!!!!!

      Lovely.

      :)

      Commenter
      FONZ
      Date and time
      December 20, 2012, 4:08PM
    • FONZ, my loan is interest only. However, I put more than double the interest only amount each month.

      Whats your point about interest only loans?

      You're assuming everyone who has an interest only loan is only paying off the interest. Thats not correct. Every dollar on top of that loan is coming off capital.

      BOOM

      Commenter
      Paul
      Location
      Sydney
      Date and time
      December 20, 2012, 4:45PM
    • "Where it's cheaper to buy than to rent"

      Um...everywhere BUT Australia?

      Commenter
      Jimmy
      Location
      Not_Oz
      Date and time
      December 20, 2012, 4:58PM
    • Fonz, ever considered that some of those loans are investment property owners who are also paying off their own home therefore the IP loan would be interest only while they paid down the principal on the home they live in. Furthermore, some of those loans are offset accounts, like mine. There are many good strategies involving interest only loans, not all of us went with the suggestions of some commission hungry mortgage broker.

      Commenter
      Bob
      Location
      Sydney
      Date and time
      December 20, 2012, 5:13PM
  • So from the report I believe that it was around 93% of suburbs in Australia that it is cheaper to rent than buy, try and tell me now that house prices are not way way way too high.

    Time to burst this housing bubble that is sapping the life out of the Australian economy like a deadly cancer.

    Commenter
    The Hidden Truth
    Location
    Sydney
    Date and time
    December 20, 2012, 2:45PM
    • I'm still surprised how many people think it's going to go up next year. 70% of my friends are worried about loosing their jobs so can't see how many people are going to buy. Plus if 1st time buyers aren't buying then the whole system eventually stagnates and breaks down. How is it that a two bedroom weather board house with zero build quality is $700-$800k in Richmond when for the same money I can buy bigger and better built property in central London or New York.

      Commenter
      Jono
      Date and time
      December 20, 2012, 4:15PM

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