A third of Australian properties now cheaper to buy than rent

Interior of a home.
Photo by Kara Eads.

Analysis by property research firm CoreLogic has found it is now cheaper to service a mortgage than pay rent on 36.2 per cent of Australian properties, up from 33.9 per cent pre-pandemic.

Record low interest rates have made the prospect of owning a home seem less remote for many Australians, particularly renting households who have been enticed by cheaper borrowing costs to finally enter the market.

It is now more cost-effective to buy in 26.2 per cent of capital city properties and 60.1 per cent of properties in regional areas.

Regional Northern Territory topped the list of areas where mortgage serviceability is cheaper than rent (96.4 per cent of properties).

Darwin came in second (86.5 per cent of properties), followed by Regional South Australia (79.4 per cent), Regional Western Australia (79.4 per cent), and Regional Queensland (73.1 per cent).

However, CoreLogic head of residential research Eliza Owen explained that more affordable serviceability relative to rent does not necessarily mean that home buyers are flocking to regional areas. 

“Rental costs tend to be higher in these regions, because accommodation that suits a more transitory lifestyle would likely be in higher demand – for example, in proximity to FIFO mine sites,” she said.

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A different dynamic has played out in the country’s major property markets. In Sydney, for example, property values have climbed 15.2 per cent since February 2020, while rents have only increased 2.1 per cent.

This can largely be chalked up to a halt in international arrivals, who typically favour Sydney and Melbourne over smaller markets.

“The combination of lower rent growth and very strong dwelling value growth has meant that even fewer properties across Sydney are cheaper to pay down a mortgage than rent, at just 4.9 per cent,” said Owen.

“This is down from 7.1 per cent when the analysis was done with the same assumptions in February 2020.”

Melbourne returned a similar picture, with mortgage repayments eclipsing rent payments in all but 7.3 per cent of properties.

For more information on property and lending trends, head over to our home loan statistics page. And if you’re in the market for a home loan, visit our home loan comparison page, or browse the selection below.

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