A new report has found it’s now cheaper to buy than it is to rent in 388 suburbs around the country, that’s up a massive 63 percent since August.
And if buyers are willing and able to spend an extra $50 a week in mortgage repayments over rent, the number of suburbs where purchasing becomes a viable option rises to 1419, according to RP Data’s latest Buy vs. Rent report.
“For many buyers now may be a good time to either re-enter the market or buy their first home,” RP Data’s national research director Tim Lawless said in a statement.
He said the combination of steep price falls and significantly lower interest rates was creating new opportunities for renters keen to buy a property.
But future buyers hoping to purchase a traditional house may be disappointed, with apartments accounting for about 75 percent of the 388 suburbs where it’s cheaper to buy than rent.
“Across the capital cities, it is typically apartment-style housing where renting can be more expensive than paying a mortgage. The buy-in price tends to be lower compared with weekly rents, providing a narrower gap between mortgage payments and rental payments,” the report found.
Bryce Holdaway, host of Foxtel’s Location Location Location Australia, said: “If you have a look at this report it talks about a lot of suburbs that aren’t in proximity to the capital cities and I think that’s the important point here there are a lot of regional towns, areas well outside the capital cities.”
Evidently, the buy versus rent equation was most favourable in regional areas, accounting for almost two-thirds of suburbs where it was cheaper to buy than rent.
Yet there were some notable suburbs close to capital cities.
In Queensland, Fortitude Valley, Oxley and the CBD made the list. While in Sydney, Rushcutters Bay, The Rocks and Macquarie Fields were revealed among the most affordable.
Melbourne, by comparison, had just three suburbs, including Docklands, Carlton and Abbotsford.
“It’s important to note that there are about 14,000 plus suburbs in this country and this particular report talks about 388 suburbs, so we don’t need to get too carried away. But it’s a good position for people to be in if they are on the rent cycle and they do want to get off and they are in these suburbs,” Holdaway told Ten’s The Project.
The findings come just weeks after the release of a similar study by RateCity, which found that renters could pay a mortgage worth $312,415 compared to the cost of the national average house rent.
Michelle Hutchison, spokeswoman for RateCity, said: “This is more than the national average mortgage size of about $294,000.”
However, the news may bring hope to many Australians trapped in the rental cycle and unable to saving for a home deposit, she said.
As the name suggests, these accounts are only open to people saving for their first home. They have two main benefits. First, any interest you earn on the account is taxed at 15 percent. Second, to encourage savers to make regular deposits, the government will add a bonus that’s equal to 17 percent of any deposits you make, up to a maximum contribution by you of $6000 each year.
“Right now only a handful of institutions offer these accounts – and none of the big four banks are among those, which is one reason many potential buyers haven’t heard of these accounts and so don’t use them,” she said.
For more information about the first home saver account scheme visit firsthome.gov.au, or to work out the costs of servicing a home loan, use a mortgage calculator such as the one at RateCity.