First-home buyers hoping to say goodbye to the rental market are in for some good news, with property market conditions over the September quarter increasing the number of suburbs where it’s now cheaper to pay off a mortgage than pay the weekly rent.
With Brisbane being the most attractive capita city in the country.
Compared to June there are now 175 additional suburbs across the country where it is now cheaper to buy versus rent, new Domain data shows. Figures in June revealed 150 suburbs nationwide. In September, the number of suburbs increased to 325, with Brisbane home to 123 of them.
Domain research analyst Eliza Owen says this uplift is reflective of overall changes in the property and rental markets over the past quarter.
Number of suburbs where a mortgage repayment on median house or unit property prices is lower than the median asking rent
“The past few months have seen a halving of the cash rate, cheaper mortgage rates, and in some cities falling prices. That combination means that in a lot of areas, both the principal component and the interest costs of a mortgage are reduced,” she said.
“Meanwhile, some areas are seeing tighter rental markets. So that combination of rising rents and lower housing purchase costs means that there are more suburbs where it’s cheaper to pay off a mortgage, than pay for the typical asking rent.”
The savings are calculated using the weekly mortgage repayments of the median house and unit price and comparing this to the median weekly asking rent for properties in the same suburb. Weekly mortgage repayments are based on a 20 per cent deposit and do not include additional expenses related to purchasing a home, like stamp duty.
Ms Owen noted that suburbs which demonstrated savings for buyers were generally lower socio-economic areas and had lower median house prices.
“They tend to be areas where property is cheaper, and what that does is place more pressure on the rental market. There’s more competition on the rental market and that exacerbates the dynamic of rising rents and lower mortgage costs,” Ms Owen said.
Greater Brisbane recorded the most suburbs – 69 suburbs where buying a house is cheaper than renting, and 54 suburbs where the same applies for units.
“Increase in the suburbs nationally is really being driven by Brisbane, Perth, Adelaide. These are the cities where property prices are falling, even though interest rates are coming down, because of where they are in the cycle,” Ms Owen said.
“Brisbane is a city that’s been in a downswing for the past three quarters. So because of where Brisbane is, a lot of the mortgage costs are getting cheaper for suburbs. For some of these suburbs, people paying off a mortgage could be $100 better off than those renting in the same area.”
For houses, North Booval in Ipswich and Crestmead in Logan had weekly savings of up to $72 and $56 respectively. The same can be said for units in Logan, with Longanlea unit buyers saving $95 per week and Woodridge buyers $94.
However, it was Brendale in Moreton Bay that had the best buy-versus-rent savings, topping the list with $110. Beenleigh, in Logan, topped the list for units, with weekly savings of $98.