<i>Illustration: Greg Newington</i>

Illustration: Greg Newington

The properties may be in need of some loving care and some way from the centre of town, but there are houses and units in Sydney and Melbourne where it is cheaper to buy than to rent.

Property researcher RP Data has identified 22 suburbs in Sydney and two in Melbourne where the rent is more than the mortgage repayments.

RP Data compared the rent payable with the cost of servicing a standard principal and interest loan using an interest rate of 6.15 per cent, a loan period of 30 years and a deposit for the property of 10 per cent.

Most of the suburbs have median sales prices of less than $300,000 and so are well within the range of first-time buyers.

A medium dwelling price is $530,000 in Sydney and $465,000 in Melbourne.

The head of research and analytics for RP Data, Tim Lawless, says that in most locations it remains more affordable to rent a house than it does to service a mortgage.

But he says it is in the unit market where mortgage payments tend to be the closest to, or more affordable than, rental payments.

''Similarly, at least within the capital cities, it is generally the outer ring suburbs that typically show the most suburbs that are more affordable to buy a home than rent one,'' he says.

RP Data gives the best 10 suburbs in each city for buying over renting. For houses, only one suburb in Sydney, Lethbridge Park, makes the top 10, with the other nine suburbs identified for its units.

Houses in Lethbridge Park in outer western Sydney have a median sale price of $241,300 and a median weekly asking rent of $320. Assuming a deposit of 10 cent, a buyer would pay $217,170 for the house. The RP Data figures show a buyer would be paying $64 a month less than renting the same house. Suburbs in Sydney with units that are cheaper to buy than rent include Warwick Farm in the south-west and Mount Druitt in the outer western suburbs.

In Melbourne, only two suburbs - Carlton and Dallas - were cheaper to buy than rent for units. RP Data says the reason there are fewer suburbs in Melbourne is that rents are higher in Sydney than in Melbourne and rents are rising faster in the northern capital.

Most economists are expecting the Reserve Bank of Australia to cut interest rates further, perhaps starting as early as next month.

A lower cash rate would likely mean lower mortgage interest rates, though not all cuts to interest rates have been passed on in full by financial institutions to their borrowers.

Provided that house prices and rents stay steady, lower mortgage interest rates would lengthen the list of those suburbs in Sydney and Melbourne where it is cheaper to buy than rent.

A financial planner and the managing director of WLM Financial Services, Laura Menschik, says it is important to keep in mind that this comparison does not take into account the costs of buying a house and maintaining it.

There will be stamp duty, building insurance and council rates among the many costs of buying a property.

But there are also drawbacks to renting, such as the lack of certainty about whether the lease will be renewed and moving costs, Menschik says. Having a mortgage forces borrowers to save, she says.

Lawless says it's important that prospective buyers undertake their own investigations.

''Every person's circumstances are unique and the figures presented above are a guide only,'' he says. ''There are always going to be differences across individual properties.''