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143 suburbs where it’s cheaper to buy than rent

Posted: 17 November 2020 3:13 pm
News
Young woman holding the key to her new house.

With interest rates at record lows, it could be cheaper to pay a mortgage than to pay rent in your suburb – and you may even be able to buy with a deposit as low as 5%.

New research prepared by mortgage broker Aussie in collaboration with CoreLogic reveals that a number of suburbs across Australia are actually now more affordable for mortgage holders than they are for renters.

This is a vastly different picture than this time 10 years ago when mortgage interest rates hovered around 6-7% and less than 1% of suburbs were more affordable for homeowners than renters.

The Buy vs Rent Report 2020 shows that it could cost less to own a house than to rent it in up to 52% of suburbs across the country – or 59% for units.

Percentage of suburbs where it's cheaper to own than rent - 2020

Houses Units
Discounted variable rate of 3.65% 32.9% 37.7%
3-year fixed rate of 2.35% 52.2% 59.1%

Percentage of suburbs where it was cheaper to own than rent - 2010

Houses Units
Discounted variable rate of 3.65% 0.5% 0.7%
3-year fixed rate of 2.35% 0.4% 0.1%

Source: Aussie, CoreLogic; November 2020

Aussie CEO James Symond said that right now, for the eight million Australians who rent, "the current market's low interest rates, coupled with generous first home buyer incentives, could be the key that allows aspiring homeowners to break out of the rent cycle and into their own home".

"The rates used to calculate the savings in the report are estimated based on the average rates from the RBA, which may be higher than the actual rates on offer at the moment. There are a lot of current market rates well below these averages, so the savings and range of suburbs is potentially even greater," Symonds said.

"From bustling national cities to regional towns across the nation, we've identified the suburbs where Australians can be a homeowner and still be in front compared to renting. These findings should inspire many Australians to get off the rental treadmill and into a place they can truly call home."

Buying a home with a 5% deposit

Monique Ferrario This latest research is not surprising to Gold Coast-based first home buyer Monique Ferrario, 39, who has been keen to get on the property ladder for several years.

"I've always wanted to buy my own home but it has always seemed a little out of my reach. I've been seriously saving for the last two-and-a-half years for a deposit," Ferrario said.

With the First Home Loan Deposit Scheme (FHLDS) slashing her deposit requirements to just 5%, and other government grants and incentives helping her overcome the hurdle of saving for stamp duty, Ferrario hopes to make her dream of home ownership a reality within the next six months.

The government incentives coupled with historically low interest rates mean managing a mortgage will be no more onerous than paying rent, she said.

"The LMI waiver will definitely make purchasing a little easier. When I buy a home, the weekly cost will be almost the same as renting, but having said that, my rent is slightly lower than the average in my area because I have been renting this property for almost 12 years," she said.

"If I were renting a similar property in my area for market rent, it could be up to $100 a week more, and a mortgage repayment would definitely be less than the rent."

Ferrario, a small business owner who works in children's education, added that as a long-term renter preparing to buy a home, she is preparing for the fact that interest rates won't stay this low forever.

"I'm definitely mindful of interest rates once they increase and ensuring I have enough savings behind me for any major repairs," she said.

First home buyers flood the market

According to Dr Andrew Wilson, chief economist at Archistar, she may also need to be mindful that she will be in competition with a number of other first home buyers who are also keen to take advantage of the current market to get their foot on the property ladder.

Archistar's latest National First Home Buyers report found that first home buyers are currently flooding Australian housing markets, driven by federal and state government incentive policies.

This trend is reflected in Finder's Consumer Sentiment Tracking, which reveals that 66% of Australians believe that now is a good time to buy a property – up from just 42% six months ago.

"The ABS reports that 13,040 first home buyer loans seasonally adjusted were approved nationally over September, which was an increase of 6.0% over the month and 45.5% higher than approved over the same month last year," Wilson said.

"Over the first nine months of this year, 92,386 loans have been approved for first home buyers – an increase of 23.8% compared to the same period last year."

Picture not described

Source: ABS, Archistar; November 2020

More than 120,000 first home buyer loans have been approved over the past 12 months, which is the highest annual result since June 2010, when government stimulus packages were introduced to offset the GFC, Wilson added.

143 Suburbs where it is cheaper to buy than rent

Houses Units
Greater Sydney Lake Haven

San Remo

Charmhaven

Blue Haven

Watanobbi

West Gosford

Gorokan

Warwick Farm

North Gosford

Jamisontown

Regional New South Wales Broken Hill

Werris Creek

Wellington

Muswellbrook

Condobolin

Sapphire Beach

Crestwood

Griffith

Tweed Heads West

Queanbeyan

Greater Melbourne Hastings

Melton

Melton South

Kurunjang

Melton West

Carlton

Travancore

Flemington

Notting Hill

Melbourne

Regional Victoria Red Cliffs

Terang

Kerang

Portland

Ararat

Portland

Traralgon

Mildura

Mooroopna

Lakes Entrance

Greater Brisbane Kilcoy

Woodridge

Kingston

Logan Central

Goodna

Browns Plains

Oxley

Waterford West

Springwood

Richlands

Regional Queensland Healy

Sunset

Townview

Parkside

Cloncurry

White Rock

Woree

Manunda

Manoora

Cairns North

Greater Adelaide Elizabeth North

Elizabeth Downs

Smithfield

Elizabeth South

Davoren Park

Mawson Lakes

Salisbury

Adelaide

Klemzig

Lightsview

Regional South Australia Kingston Se

Bordertown

Whyalla

Port Augusta West

Port Pirie West

Mount Gambier

Victor Harbor

Greater Perth Cooloongup

Parmelia

Calista

Orelia

Brookdale

Spearwood

Armadale

Midland

Bayswater

Glendalough

Regional Western Australia Nickol

Baynton

Newman

Port Hedland

South Hedland

Port Hedland

South Hedland

Cable Beach

Bunbury

Withers

Greater Hobart Rokeby

Risdon Vale

Bridgewater

Warrane

Primrose Sands

Brighton

Glenorchy

Claremont

Sorell

Blackmans Bay

Regional Tasmania Bicheno

Zeehan

Queenstown

Ravenswood

Mayfield

Mowbray

Legana

South Launceston

Newnham

Riverside

Greater Darwin Moulden

Zuccoli

Driver

Gray

Woodroffe

Parap

Darwin City

Nightcliff

Stuart Park

Coconut Grove

Regional Northern Territory Sadadeen

Araluen

Braitling

East Side

Gillen

Gillen
Greater Australian Capital City Charnwood

Holt

Ngunnawal

Latham

Macgregor

Mawson

Phillip

Campbell

Lyons

Braddon

Source: Aussie, CoreLogic; November 2020

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