Yahoo Finance ‘Scary’ number of Aussie suburbs where it’s cheaper to buy property than rent
Just 57 suburbs in all of Australia are cheaper to buy a house than rent, exclusive new analysis has found.
There are still a small handful of suburbs where it is cheaper to buy than rent property in Australia. But with property prices and rental costs continuing to trend upwards, a property expert said it’s becoming “like finding a needle in a haystack”.
Exclusive new analysis by Compare the Market found it was more expensive to buy than rent a house in a staggering 98 per cent of all Aussie suburbs. Just 57 of the 2,732 suburbs analysed were cheaper to own than rent, with all but one of them located in regional towns.
Property expert Andrew Winter told Yahoo Finance said the gap between buying and renting a property was not new but it was worrying to see how widespread it was.
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“It’s really quite scary that really almost everywhere in Australia, except for some small regional areas, it generally is unfortunately cheaper to rent, even with the higher rents,” Winter said.
For units, only 43 suburbs were cheaper to own with a mortgage than to rent, the analysis of CoreLogic data found.
Where in the cities is it cheaper to buy than rent?
Melbourne, Perth and Darwin were the only capital cities that had a handful of suburbs where it was cheaper to buy than rent. There were no suburbs in Sydney, Brisbane or Adelaide where it was cheaper.
In Melbourne, units were cheaper to buy in Carlton, Melbourne CBD and Notting Hill. In Carlton, for example, the median monthly mortgage was $2,186, compared to $2,416 to rent, meaning tenants could save about $231 a month.
In Perth, units were cheaper in Ascot, Glendalough, Orelia and Thornlie. In Glendalough, the average monthly mortgage was $2,315, compared to $2,460 for rent, a saving of about $145 a month.
For Darwin, Bakewell, Coconut Grove, Darwin City, Gray, Johnston, Millner, Parap and Rosebery were cheaper to buy units than rent, while Moulden was cheaper to buy a house.
Average monthly mortgages on a unit in Darwin City were $2,569, compared to $2,675 for rent. That could save tenants about $106 a month.
Rosebery offered the biggest savings for tenants, with monthly mortgage payments $353 cheaper than average rental payments.
Suburb | Median monthly rent | Median monthly mortgage repayment | Price difference |
Carlton | $2,416 | $2,186 | $231 |
Melbourne CBD | $2,918 | $2,846 | $72 |
Notting Hill | $2,364 | $2,259 | $105 |
Ascot | $2,781 | $2,745 | $36 |
Glendalough | $2,460 | $2,315 | $145 |
Orelia | $1,951 | $1,740 | $211 |
Thornlie | $2,340 | $2,271 | $69 |
Bakewell | $1,968 | $1,626 | $342 |
Coconut Grove | $2,052 | $1,990 | $62 |
Darwin City | $2,675 | $2,569 | $106 |
Gray | $1,886 | $1,642 | $244 |
Johnston | $2,206 | $1,999 | $207 |
Millner | $2,050 | $1,936 | $114 |
Parap | $2,340 | $2,062 | $278 |
Rosebery | $2,201 | $1,848 | $353 |
Moulden | $2,286 | $2,276 | $10 |
Where else is it cheaper to buy than rent?
Looking out of the major cities, in New South Wales it was cheaper to buy than rent a house in Werris Creek, South Lismore, Wellington, Boggabri, Condobolin, West Wyalong, Narrandera and Culcairn.
In Queensland, houses are cheaper to buy than rent in places including Moranbah, Collinsville, Dysart, Blackwater, Clermont, Moura, Mount Morgan, Ingham, East Innisfail, Ayr, Rockhampton City, Emerald, and Roma. All of these areas have a median house price under $400,000.
In South Australia, homeownership was cheaper than renting on average in Whyalla Norrie, Whyalla Stuart, Port Pirie South, Whyalla and Whyalla Playford.
Meanwhile, in Western Australia, houses in Newman, Bulgarra, Kambalda West, South Boulder, Boulder, Kununurra, Piccadilly, South Kalgoorlie, Kalgoorlie, Merredin, West Lamington, Katanning, Rangeway, Collie and Utakarra were cheaper. These also had a median house price under $400,000.
‘Bridesmaid’ suburbs worth considering
With finding a more affordable home in the capitals becoming a difficult task, Winter said looking at “bridesmaid suburbs” could be a good starting place.
These suburbs are usually a few kilometres away from your desired location but often offer the same lifestyle for less.
“Generally most areas have a sister that is a little bit cheaper and that neighbouring relative is somewhere that might not have the kudos or the cool factor of the place that you want to be, but it gets you in your own front door and that’s really the important thing,” Winter told Yahoo Finance.
“What you’ve obviously got to be wary of is if the reason it’s cheap is because it’s flood prone or there are real negatives attached to the area because sometimes that can stop capital growth.”
For example, Compare the Market found looking at the "bridesmaid" suburb for Heidelberg West in Melbourne rather than Ivanhoe could save you nearly $1 million, with an average property price of $856,213 compared to $1,819,604.
Winter recommended that first-home buyer hopefuls look at all incentives available, including the ability to buy with a smaller deposit of 5 or 10 per cent.
“A lot of the states in Australia for first-home buyers do have a lot of incentives to help people. The days of the 20 per cent deposit are not there now,” he said.
“There are ways they can get onto the housing ladder with a smaller deposit, especially if they've got good jobs, they’re showing good career prospects and they’ve managed to save money and they’ve been good when they’ve been renting and paying rent, and have a good credit rating.”
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