Renters looking to play the property game now have an opportunity to do so, according to the latest research from RP Data, which revealed that there is up to 238 suburbs nationwide where it is currently cheaper to own a home through a principal and interest mortgage than it is to rent.
The report revealed that Tasmania recorded the greatest proportion of total suburbs where it is cheaper to buy than rent (12.3 percent), with Victoria and the Australian Capital Territory scoring the lowest (both 1 percent).
In addition, 76 of the 238 suburbs detailed were within capital cities, including Warwick Farm in Sydney’s west, Carlton in Melbourne and Mount Hawthorn in Perth.
“As rents continue to increase, renters looking to enter the property market will find affordable opportunities to buy right across the country,” said Michelle Hutchison, spokeswoman for RateCity.com.au.
Other suburbs named in the report were Jindabyne in the NSW Snowy Mountains region, Blackwater in Queensland and Alice Springs in the Northern Territory.
While the affordability of housing in these suburbs should be enough to encourage any renter into the property market, there are many other reasons why one should consider taking out a mortgage, said Hutchison.
“Borrowing money on a mortgage forces you to pay the loan off and even if your property performs poorly as an investment, because at the end of the day you’ll still own an asset,” she said.
“On the flipside, every dollar a renter pays goes into someone else’s pocket.”
Sean Green, general manager of real estate firm, Raine & Horne, said most renters do aspire to own their own home but with housing prices rising by an average of 12 percent per annum for almost a quarter of a century, the reality is that many renters struggle to meet the requirements for home ownership.
“Saving for a deposit and taking on a high mortgage is a heavier financial burden now than it was 25 years ago but that doesn’t mean home ownership can’t be a reality,” said Green.
“Renters looking to make their first foray into the property market can take comfort knowing that there are a number of suburbs in Australia where it is currently cheaper to buy a home than to rent.”
In addition, Green warned that aspiring home owners need to factor in the additional costs such as maintenance, stamp duty, and lenders mortgage insurance when buying a property – something a renter does not.
“Despite these costs, the benefits of owning your own home means you can make improvements on the property if you so desire. A tenant does not have that freedom and must get prior approval from their landlord before any alterations on the property can occur.”
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