The places in Australia where it’s currently cheaper to buy than rent a house

More than one third of Australian properties are cheaper to buy than rent, with loan repayments lower than renting in nearly all regional areas of the Northern Territory.

In a new report, CoreLogic found repaying a home loan is now cheaper than paying rent on just over 36 per cent of Australian homes because of record low interest rates.

However, it also noted there were “striking differences” in housing costs across the country, with repaying a mortgage cheaper than paying rent in two-thirds of regional Australia.

Nearly 97 per cent of properties in regional areas of the Northern Territory were cheaper to buy than rent, followed by 86.5 per cent of housing in Darwin. 

Eliza Owen, head of research at CoreLogic, said record low interest rates had made it cheaper to buy than rent in some areas.

“The increase in areas where it is cheaper to service a mortgage than to pay rent across Australia, when compared with pre-COVID analysis, is a reflection of much lower interest rate costs on mortgage debt since the onset of COVID-19,” she said.

CoreLogic estimated mortgage repayments on individual properties and compared them with rental estimates.

It did not take into account the amount needed for a home deposit and fees and charges associated with home ownership such as maintenance and council rates.

Renting still cheaper than buying in big capitals

In regional South Australia and Western Australia it was cheaper to pay a mortgage than pay rent on eight out of 10 properties.

In contrast, just under 5 per cent of loan repayments in Sydney were cheaper than rental payments and less than 8 per cent in Melbourne.

Regional New South Wales was more finely balanced with renting cheaper for just over half of properties. 

Mortgage repayments were cheaper than renting for eight out of 10 homes in Logan in outer-Brisbane and Ipswich in regional Queensland and nearly nine out of 10 homes in far-west NSW, which includes Cobar.

In outback Western Australia, it was cheaper to buy than rent for nearly 96 per cent of homes.

Ms Owen said reduced interest costs have not led to cheaper mortgage serviceability relative to rents in all instances.

“This is especially the case in Sydney, where property values have increased markedly against low interest rates, pushing up loan principals (the amount borrowed) and outpacing growth in rents.”

Ms Owen added that just because an area sees cheaper mortgage costs than rents does not mean people necessarily want to buy there. 

For example, in regional Northern Territory and outback Western Australia, rental costs tend to be higher because accommodation is in higher demand from temporary workers such as fly in, fly out mine workers. 

Record low interest rates, subsidies for home construction and the closure of international borders have driven record high home prices. 

But the spread of working from home because of coronavirus restrictions has seen a surge of people buying in or moving to regional areas, which has also pushed up rents.

Last month CoreLogic said property values jumped by nearly 14 per cent on an annual basis in June. 

And home building was at a record high in the March quarter according to the Bureau of Statistics.

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