Sydney leads capital city house price growth
After a tumultuous year, most capital cities are now rebounding as vendor confidence continues to improve. ...
New research has revealed that there are indeed dwellings in Australia that are cheaper to buy than rent (57 per cent to be exact), but where are these dwelling located?
According to REA’s inaugural Insights Buy or Rent Report, it is cheaper to buy than rent more than half of properties in Australia, thanks to the Reserve Bank and its low-rate perseverance.
And while results naturally differ by property type, REA’s research – which hinges on current prices and a 10-year analysis of all the costs associated with buying and renting – concludes that just over half of houses are cheaper to buy over the next 10 years, while this rings true for as many as 75 per cent of units.
So, where are these lucky suburbs?
Naturally, REA found that buying conditions are “particularly favourable” outside of NSW and Victoria.
Additionally, more than 80 per cent of houses, and almost all units outside of the most populous states, are estimated to be cheaper to buy than rent.
But they won’t remain “affordable” for long, realestate.com.au economist Paul Ryan believes.
“Affordability is driving demand, and as a result, it is likely we will continue to see regional price growth,” Mr Ryan said.
“Interest rates can currently be fixed below 2 per cent per year, and the Reserve Bank of Australia has committed to maintaining low interest rates until at least 2024.
“This certainty that mortgage costs are not going to increase rapidly provides comfort to buyers borrowing larger amounts,” Mr Ryan noted.
Where, where, where?
Tacoma is a suburb of the Central Coast region of NSW and, according to REA, it would be $578 per month cheaper to buy rather than rent a three-bedroom house, based on the 10-year analysis.
Prefer a unit? Kangy Angy is where you need to cast your gaze. On the Central Cost and in a semi-rural area, Kangy Angy’s monthly price difference sits at $1,206.
According to Mr Ryan, for first-time buyers in Sydney, apartments in middle and outer suburban regions are generally cheaper to buy than rent.
“Families looking for more space will find it only marginally more expensive to buy a house outside of inner-city Sydney regions,” he said.
But REA’s analysis showed that some of the biggest savings from buying instead of renting a house can be found in Western Australia’s Pilbara region, where rents in mining towns have “skyrocketed” amid a boom in iron ore exports.
Among them is Tom Price (over 1,000 km from ), offering the biggest monthly saving nationally at $3,341 if buying instead of renting a three-bedroom house.
Renting still cheaper?
But despite these findings, REA still arrives at the conclusion that renting remains the cheapest option for many people, particularly in Sydney and Melbourne.
In fact, research shows that 71.6 per cent of houses in NSW and Victoria and 41.6 per cent of units are estimated to be cheaper to rent than buy over the next decade.
“While rents do not typically adjust as quickly as prices, the COVID-19 pandemic and the cessation of international travel saw significant reductions in asking rents in inner-city Sydney and Melbourne,” Mr Ryan said.
“As such, renting in these inner-city areas is currently considered cheap, relative to their very high asking prices.”
For example, huge savings can be made by renting in Sydney’s eastern suburbs, led by Vaucluse where a $24.6 million sale set a new Australian record in 2020 for a house sold at auction.
It’s a similar story in Toorak, in Melbourne’s inner east, which offers the biggest monthly saving for the Greater Melbourne area, being $8,672 cheaper to rent than buy a three-bedroom house.
Mr Ryan concluded that families looking to live in inner-city Brisbane, Adelaide and Perth will find it cheaper to rent houses rather than buying, despite the “generally favourable buying conditions”.