Many Australians have come to grips with the reality they’ll never be able to afford their own home. But new analysis reveals the property window might still be ajar for would-be buyers.
Despite median prices in Sydney and Melbourne remaining dizzyingly high, there are hundreds of suburbs across Australia’s capital cities where it’s cheaper to buy your home than it is to rent.
Almost all of those suburbs are in the outer flanks of the respective cities, realestate.com.au data shows, but there are a few surprising exceptions.
Kent Town is just 2km from Adelaide’s CBD, nestled in the desirable eastern suburbs, and has a thriving cafe culture. And based on its median price it has the greatest positive gap in the country between monthly loan repayments and what rent would typically cost.
If 80 per cent is borrowed to fork out for a median priced home in that suburb — $455,000 — the monthly loan repayments would be $1673.
And with monthly rentals priced at $2448, that’s an extra $775 a month to go along with the “Australian dream”.
“It’s been an interesting dynamic in the Adelaide market because we’re starting to see rents and pricing jump,” realestate.com.au chief economist Nerida Conisbee said.
“So it might not remain the case that there is such a long list in Adelaide going forward.”
There are nearly 140 suburbs in the Queensland capital where the data suggests buying would be more worthwhile than renting. The best positioned of those is the new trendy hangout of Newstead.
The suburb is directly on the river, borders Teneriffe and the ever-popular Fortitude Valley, and is just 3km from Brisbane’s CBD.
Newstead’s median price is $647,500, where owners could pocket $111 more a month than renters.
Of the 75 Perth suburbs on the list, Glendalough is 5km from the CBD, a 10-minute drive to the beach and has a positive buy-to-rent ratio of $539.
Hobart is next on the list with 35 suburbs but, due to its size, 16 of those are less than 10km from the CBD, while 25 suburbs in Canberra are calculated to have a positive buy-to-rent ratio.
However, despite the recent fall in Sydney and Melbourne prices, the realestate.com.au analysis suggests it’s overwhelmingly cheaper to rent than buy in those cities.
Airds, near Campbelltown in Sydney’s southwest more than 40km from Sydney’s centre, is the one suburb in the city with a positive ratio, while Diggers Rest and Longwarry are the only two in Melbourne but are 33km and 78km respectively from the CBD.
“The reason is that both those cities have seen the biggest jump in pricing over the past five years,” Ms Conisbee told news.com.au.
“It probably won’t remain the case that there’s only three over the next 12 months because prices are coming back in both those cities.
“And we’re also likely to see rent start to rise in 2019 as well, so that will switch things around in places like Melbourne and Sydney.”
When weighing up the costs between buying and renting, Ms Conisbee said it was important to consider retirement and that an owner’s primary residence has tax benefits.
She also said renters were more susceptible to market changes.
“If you bought a home in Newtown (in Sydney’s inner west) 10 years ago, you would be paying the same on your mortgage as you were 10 years ago,” Ms Conisbee said.
“Whereas if you were renting in Newtown 10 years ago and you were still renting in Newtown, you’d be paying far more in rent because rent has gone up such a lot.
“There are financial reasons but there are also market reasons to get into the housing market.”
SUBURBS WITH A POSITIVE BUY-TO-RENT RATIO LESS THAN 10KM FROM CBD:
Kent Town, Woodville North, Renown Park, Ascot Park, Mitchell Park, Mansfield Park, St Marys, Greenacres and Angle Park.
Risdon Vale, Rokeby, Goodwood, Warrane, Lutana, Glenorchy, Montrose, Rosetta, Moonah, West Moonah, Mount Nelson, Mornington, Derwent Park, Geilston Bay, Kingston, Lindisfarne.
Glendalough, Westminster, Nollamara.
Sydney and Melbourne
Data is based on 80 per cent of the median house price borrowed and interest rate of 3.69 per cent over a 30-year term. Suburbs must have had 10 sales over the 12 months to the end of December 18.