A third of Australian properties now cheaper to buy than rent
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.
Home loan comparisons on Mozo - last updated 20 April 2024
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Unloan Variable
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Initial monthly repayment5.99% p.a. variable5.90% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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Express Home Loan
Owner Occupier, Principal & Interest, LVR <90%
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Initial monthly repayment6.01% p.a. variable6.14% p.a.Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
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Flex Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR <60%
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Initial monthly repayment5.99% p.a.
fixed 3 years6.37% p.a.Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.
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Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.
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fixed 3 years
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- 6.37% p.a.
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- 5.99% p.a.
fixed 3 years
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- 6.37% p.a.
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Discounted Home Value Loan
Owner Occupier, Principal & Interest, LVR 70-80%
interest rate
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Initial monthly repayment6.09% p.a. variable6.09% p.a.Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
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Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
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- 6.09% p.a. variable
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- 6.09% p.a.
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- 6.09% p.a. variable
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- 6.09% p.a.
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Neat Home Loan
Owner Occupier, Principal & Interest, LVR <60%
interest rate
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Initial monthly repayment6.14% p.a. variable6.16% p.a.Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
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Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
- interest rate
- 6.14% p.a. variable
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- 6.16% p.a.
- interest rate
- 6.14% p.a. variable
- comparison rate
- 6.16% p.a.
- Upfront fees
- $250
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
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