New research by RP Data has found that the number of suburbs in Australia where it is cheaper to buy than rent has increased to 692, representing a year-on-year increase of 387 per cent.
The bulk of this increase was driven by Sydney, where there are 73 suburbs where it is cheaper to pay off a home loan than a landlord. Other areas that showed significant increases were Brisbane and the Hunter Valley region of New South Wales, which recorded 71 suburbs and 40 suburbs respectively.
The research looked at four different loan structures – these are broken down below, with the number of suburbs where it is cheaper to buy than rent in each category.
1. Servicing a principal and interest loan on a variable mortgage rate: 692 suburbs;
2. Servicing an interest only loan on a variable mortgage rate: 2,778 suburbs;
3. Servicing a principal and interest loan on a three year fixed mortgage rate: 864 suburbs;
4. Servicing an interest only loan on a three year fixed mortgage rate: 3,230 suburbs.
Of the capital cities, Melbourne recorded the smallest number of suburbs, with only two suburbs meeting the criteria of being cheaper to buy than rent. Nationally, regional areas dominated the list with 440 suburbs outside of the capital cities showing a better payments schedule for buying than renting.
"In some suburbs, it [buying] may actually be cheaper than renting, especially where we are seeing evidence of tight rental markets resulting in rental increases and lower home values. For many buyers, now may be a good time to consider either re-entering the market or buying their first home," said RP Data's Research Director, Tim Lawless.
For people willing to pay an extra $50 per week to buy rather than rent, another 1069 suburbs are available – largely in Sydney, Brisbane and Adelaide.
"Across the capital cities, it is typically apartment-style housing where renting can be more expensive than paying a mortgage. The buy-in price tends to be lower compared with weekly rents, providing a narrower gap between mortgage payments and rental payments" said Mr Lawless.
For more information about the residential property market in your areas of interest, please feel free to stop by your local Century 21 Real Estate office for clear and expert advice. Additionally, if you would like to speak to a mortgage professional about suitable loan packages, please contact Century 21 Home Loans.