It's cheaper to pay off a mortgage than it
is to rent in many Australian locations. While the long-term benefits of home
ownership are obvious, the short-term savings associated with renting do not
always come off. According to figures from CoreLogic, the majority of homes in
Queensland are now cheaper to buy than rent, as are some cities and most
regional parts of Australia. While Sydney, Melbourne, and combined capital
figures point towards cheaper renting, these figures may even out in coming
months as more people move away from state capitals. According to the latest CoreLogic figures, over 55% of Brisbane homes and 73% of regional Queensland homes were cheaper to buy than rent. These numbers were even higher in other parts of the country, with regional Northern Territory leading the way at 96.4% and Darwin not far behind at 86.5%. Regional South Australia also had a high proportion of properties where mortgages were cheaper than rents at 79.4%. While it was still cheaper to rent in regional NSW and regional Victoria at 48.2% and 43.6% respectively, the combined national regional figure was 60.1%.
It is still much cheaper to rent than buy in Australia's biggest cities, however, with the combined national capital figure also low at 26.2%. Sydney is the least affordable place to buy property in Australia compared to renting at just 4.9%, followed by Melbourne at 7.3%. While Australia's two largest cities will be the hardest to shift, low interest rates and population movement towards the regions will have an effect over coming months. In recent quarters, both Sydney and Melbourne experienced a downward shift in internal migration.
According to CoreLogic Research Director Tim Lawless, while smaller state capitals and many regions were cheaper to buy “compared with New South Wales and Victoria, Queensland is looking very affordable. Over the past ten years, Brisbane housing values have increased at a much lower rate than Sydney or Melbourne. Brisbane values are up 33% since June 2011 compared with a 90% rise in Sydney housing values and a 58% lift in Melbourne housing values.”
The changing relationship between buying and renting will further influence market sentiment according to Mr. Lawless, with “the analysis a good reminder for renters to weigh up housing costs and savings, to see if it is time for a change in tenure... If it makes more financial sense to pay for a mortgage than rent, renting households may have been triggered to look for something to buy as interest rates have fallen... The average mortgage rate for owner occupiers taking out a new principal and interest loan in May was just 2.3 per cent; the lowest cost of debt on record.” As more and more Aussies leave the cities and head for the hills, this trend might start to expand into more populated parts of the country. ; ;
;
;
;
;