Deciding whether to rent or buy isn’t always easy.
Property ownership has long been proclaimed the great Australian dream. Even cynical non-dreamers believed it was a smart investment option. But is that still the case? Housing affordability continues to be a major issue for prospective buyers, especially in inner city suburbs.
Although buyer demand generally remains strong thanks to the nation’s real estate obsession, rental demand can vary. This can have a significant impact on whether it’s more affordable to pay down a mortgage or rent.
Traditionally, it’s more expensive to pay down a home loan than it is to rent. However, the pandemic turned the rental market on its head in some areas. Vacancy rates increased significantly in major capital cities like Sydney and Melbourne, due to a mass exodus of international students and citydwellers flocking to regional and coastal towns.
This increased demand in certain regional locations led to inflated rental prices, while those in the inner city have been falling. Mortgage interest rates also hit record lows, which meant that the cost of servicing a home loan became cheaper (although this also had the effect of inflating property prices in certain areas).
Finder analysis of a CoreLogic report from January 2021 explored the issue in more detail, and uncovered the top Australian suburbs where it’s cheaper to own a home than it is to rent.
The report looked at the median monthly mortgage payments against rent in each suburb.
Interestingly, CoreLogic data release this week showed that rental prices may be turning a corner, with asking prices increasing slightly in all capital cities – so this list may change over the coming months.
All of the top 10 locations are coastal, with the price difference potentially influenced by regional migration. Below are the top locations in Australia where it’s cheaper to be a homeowner than a renter.
1. Point Lookout, Queensland
This small coastal suburb on Stradbroke Island has the biggest price difference between mortgage and rental payments. Located about two hours north of the Brisbane CBD, the area is best known for its sweeping beaches and whale watching vantage points.
Here, the median monthly mortgage repayment will cost you $3,092, while a month’s rent will set you back $8,233. This means that homeowners are paying $5,146 less per month than renters on average – an eye watering $61,752 difference per year.
2. Point Lonsdale, Victoria
Home to beaches, walking tracks and a lighthouse, the seasonal town of Port Lonsdale is especially popular with surfers and fishermen. The town sits on a rocky outcrop at the south-eastern end of the Bellarine Peninsula, near Port Phillip.
Mortgage payments for the median property here will set you back $3,120 per month, whereas renters will pay $8,017 per month. This adds up an extra $4,897 per month, or $58,764 per year.
3. Indented Head, Victoria
Indented Head is very much a seasonal town, with the population swelling throughout the summer months. Less than a two-hour drive from Melbourne, locals love it for it’s quiet, remote charm and numerous beaches and boatsheds.
Homeowners here will pay around $1,912 per month for their median mortgage repayments. Renters on the other hand will need to part with a cool $6,175 each month – approximately $4,263 more per month.
4. Manyaya, New South Wales
Manyayna is best known for its surfing and fishing spots, walking trails and sandy beaches. It’s situated on the South Coast in the Shoalhaven region. Manyaya is especially popular over the summer, especially for those wanting a simple and traditional beach holiday.
Mortgage payments on a median property cost around $1,876 per month on average, and this increases to $6,067 for rental payments. The difference is a whopping $4,191 each month.
5. Bicheno, Tasmania
This seaside holiday town is about a two-and-a-half hour drive from Hobart. It’s close to wildlife, and just a short walk away from Wineglass Bay in the nearby Freycinet National Park. Bicheno is also home to some great fishing spots and plenty of local seafood for the foodies.
Mortgage payments on a median property here will cost you $1,693 per month, whereas renters will need to pay $5,460 per month – a difference of $3,767.
Other towns that ranked in the top 10 list
6. Carrickalinga, South Australia
Median monthly mortgage repayment: $1,632
Median monthly rent: $4,333
Difference: $2,701
7. Bawley Point, New South Wales
Median monthly mortgage repayment: $2,882
Median monthly rent: $4,767
Difference: $1,885
8. Tuross Head, New South Wales
Median monthly mortgage repayment: $1,857
Median monthly rent: $3,683
Difference: $1,826
9. Normanville, South Australia
Median monthly mortgage repayment: $1,363
Median monthly rent: $3,033
Difference: $1,670
10. Malua Bay, New South Wales
Median monthly mortgage repayment: $2,251
Median monthly rent: $3,900
Difference: $1,649
