The past year has been record breaking for the Victorian residential property market, with more homes than ever before going to auction. In the midst of this, new REIV data has shown that it could in fact be cheaper to buy than rent in some Victorian suburbs.
Transaction volumes have increased by 5% this year in Victoria, with around 116,000 sales in the residential property market. Auction levels have been high, breaking the record for the most auctions held in a single day with 1,648 auctions held in the last weekend of November - 22 more than record-holding October 2014. November also saw the record broken for most auctions held in a month with 5,669.
These high transaction volumes combined with low interest rates, and confidence on both sides of the market all contributed to consistent capital growth this year, with Melbourne’s median house price rising by 4.5% in the September quarter to a record $729,500.
But despite the growing median prices in the market, in some suburbs, it's proved to be cheaper to buy a one or two bedroom apartment than it is to rent.
“One and two-bedroom apartments allow first home buyers to get a foothold on the property ladder for what they are currently paying in rent,” REIV CEO Enzo Raimondo said.
The median price of a one bedroom apartment in Melbourne is $335,000. With a 10% deposit and a three-year, fixed interest rate of 4.5%, weekly mortgage repayments fall between $352-$49 less than the average weekly rent of $401.
Suburbs where it’s cheaper to buy than rent a one bedroom apartment include Melbourne, Carlton, Southbank and Noble Park. For two bedroom apartments, home buyers can look at suburbs like Sunshine, Craigieburn and Packenham, the latter also offering the best rate on 3 bedroom apartments. Those who prefer a house over an apartment can find a 3 bedroom more affordable to buy than rent in Melton and Melton South.