For many Australians, rate hikes and inflation have made the dream of property ownership feel ever more distant. But a recent analysis shows that meeting mortgage repayments could actually be cheaper than renting for more than a third of Australian properties.
Look, we get it. Often the biggest obstacle in the way of home ownership is saving up for a deposit.
But once you’ve got that sorted – which we’ll help you tackle below – a recent analysis found servicing a mortgage was more affordable than average rent prices in 518 Australian suburbs.
Additionally, we look at Corelogic’s analysis to determine whether now is a good time to buy.
Suburbs where buying is cheaper than renting
| Suburb | Typical asking price now | % Rent increase in last 12 months | % average annual growth (10 years) |
| Greater Sydney | |||
| Paxton | $563,500 | 56.25% | 13.09% |
| Cliftleigh | $675,000 | 17.17% | 10.67% |
| Wallerawang | $515,000 | 7.79% | 9.77% |
| Greater Melbourne | |||
| Mitchell Park | $486,250 | 6.85% | 13.15% |
| Jackass Flat | $520,000 | 7.14% | 11.60% |
| Morwell | $340,000 | 15.70% | 13.97% |
| Greater Brisbane | |||
| Springfield Lakes | $650,000 | 20% | 8.12% |
| East Ipswich | $439,000 | 21.20% | 10.73% |
| Tivoli | $477,500 | 19.70% | 7.94% |
| Greater Adelaide | |||
| Blakeview | $457,000 | 10.53% | 7.64% |
| Craigmore | $426,450 | 16.67% | 6.71% |
| Gawler East | $485,000 | 9.09% | 5.80% |
| Greater Perth | |||
| Eglinton | $460,000 | 19.05% | 12.18% |
| Treeby | $593,500 | 7.41% | 11.45% |
| Leda | $386,000 | 12.50% | 5.52% |
| ACT | |||
| Belconnen | $630,000 | 5% | 8.76% |
| Isabella Plains | $777,500 | 8.06% | 8.84% |
What is happening in the Australian real estate market?
The Australian housing market is undergoing a significant transformation, with the balance between renting and buying shifting rapidly. According to CoreLogic’s analysis of 3,904 house and unit markets nationally, the number of suburbs where it’s cheaper to buy than rent has dwindled in the past year.
For houses, just 9.1% of suburbs were cheaper to buy than rent, down from 30.2% of suburbs this time last year. For units, just 16% of suburbs are cheaper to buy in than rent, down almost 30 percentage points (45.2%).
This shift is primarily due to a record number of rate hikes, which have outpaced skyrocketing rents. National rents have surged by 10.1% in the past year, adding approximately $225 more per month to the rental expenses of Australian households.
This sharp rise in rents is further exacerbated by a shortage of rental properties, record levels of net overseas migration, and more people returning to major cities for work and studies.
Despite this increase in rents, the cost to service a mortgage has become even more onerous in the past year. A 325 basis point jump in the cash rate by February 2023 has added roughly $774 per month to mortgage repayments.
The average variable mortgage rate for an owner-occupier has risen from 2.49% to an estimated 5.23% between February 2022 and February 2023. This increase in repayments has outstripped the increase in rents by a considerable margin.
Where are the cheap suburbs?
Interestingly, the suburbs where it’s still cheaper to buy than rent in February 2023 are predominantly located in regional areas of Australia, with a notable focus on mining towns and rural markets.
Each of the top ten suburbs where it’s cheaper to buy than rent are situated in regional Western Australia, areas associated with the mining and resources sector where rents tend to be high relative to the price of housing.
These suburbs share a common characteristic – an affordable median value. Whether it’s units or houses, more than nine out of ten of these suburbs have a median value under $500,000.
Moreover, nearly 60% of these suburbs are located outside a capital city. In capital cities where buying is cheaper, over half (52%) of them are in Perth.
While these suburbs might not suit everyone, they offer opportunities for buyers with the desire and ability to enter the market.
Premium Areas Where Renting Reigns
On the other end of the spectrum, suburbs where it’s far cheaper to rent than buy are skewed towards the premium end of the capital city markets and popular lifestyle markets regionally.
Housing values in these areas tend to be extremely high. The top ten regions where the difference between paying a mortgage and renting is the most extreme are largely located in Sydney’s exclusive Eastern Suburbs, and each of these suburbs has a median house value of at least $3.2 million.
Additional Insights from CoreLogic Research Director
CoreLogic Research Director, Tim Lawless, emphasized the stark difference between accessible markets to buy in across capital cities and regional areas in such a short period.
“Despite a double-digit surge in rents nationally, exacerbated by a shortage of rental properties, record levels of net overseas migration, and more people returning to major cities for work and studies, the proportion of suburbs where it’s cheaper to rent than buy has increased exponentially in the past year.”
CoreLogic Research Director, Tim Lawless
Financing tips for buying a house
Keep alerts out for affordable properties
If you’re on the hunt for the cheapest houses in Australia, you’re not alone. Affordable properties can be challenging to find especially since a lot of us are looking for the same thing.
“To locate affordable properties, consider off-the-plan purchases, distressed sales, and up-and-coming suburbs.“
By identifying motivated sellers or properties with growth potential, you can buy properties at a lower cost, making homeownership more achievable.
Keep in mind that the affordable end of the Australian property market has generally outperformed the upper end since the early 1980s, despite Australia’s property market being considered one of the most expensive globally.
By focusing on finding affordable properties, you can take advantage of this trend and build a successful property portfolio, while keeping an eye on property prices.
Get in on government schemes
There’s no denying that saving a big enough deposit to buy can be a bit of a slog.
But what if there was a way to sidestep the standard 20% deposit? And possibly avoid stamp duty too?
There are a number of government schemes you may be eligible for that can fast-track house buying by an average of 4 to 4.5 years.
The federal government offers low deposit, no LMI loans for eligible first home buyers, single parents and regional first home buyers.
Also, all state governments (except South Australia) have first home buyer stamp duty concessions for those eligible.
And you can stack these schemes together for more bang for your buck.
But you’ll have to move quickly on the no LMI schemes – they’re allocated on a first-come, first-served basis every financial year.
Have Your Say
Keen to make the leap from renter to home owner? If so, you’ll be busy researching the market and learning the art of the deal – so why not get a helping hand with your finances with Soho Home Loans?
We can help find the right loan for you and provide you with helpful guidance that could increase your chances of mortgage application success.
And while we’re at it, we can assist you in applying for any money-saving government incentives you may be eligible for.
As you contemplate your housing options, we’d also like to hear from you.
- Are you currently renting, and have you considered buying a home in your area?
- What obstacles are you facing in your journey from renting to homeownership?
- Do you have any success stories or tips to share about buying in a buyer’s market?
Your experiences and insights can be valuable to others in a similar situation so, feel free to get in touch.
Need more financial advice?
Browse our finance category. It’s chock full of hacks and advice from industry professionals. And remember to download the Soho app for quicker browsing and property matching. It’s getting you into your dream home faster!
