The Aussie suburbs where it’s cheaper to buy than rent

Media release

07 November 2020|3 minute read

 

  • Leading home loan experts Aussie, have released their Buy vs Rent Report, in partnership with CoreLogic, which investigates the suburbs across Australia where mortgage repayments are cheaper than rental payments.
  • When buying a house under a three-year fixed rate scenario, over half (52.2%) of Australian suburbs were cheaper to pay down a mortgage than pay rent on a house, which is up from 39.9% last year.
  • The gap between renting and paying a mortgage on a unit has also narrowed over the past decade, with typical discounted variable mortgage rate repayments reducing from $2,597 per month in 2010 to $2,325 in September 2020; equating to a monthly saving of $272 and $777 per month on a three-year fixed rate scenario.

Record low mortgage rates coupled with slightly weaker property market conditions have contributed to a growing trend of home loan borrowers paying less in their mortgage repayments than they would in rent in the same suburb, according to a report from CoreLogic commissioned by mortgage broker Aussie.

Based on a 30-year loan with a principal and interest variable rate of 3.65 per cent, 1 in 3 (32.9%) Australian suburbs recorded lower monthly mortgage repayments than rental payments for houses and almost 40 per cent (37.7%) for apartments.

Meanwhile, on a 2.35 per cent, three-year fixed rate loan, more than half (52.2%) of Australian suburbs are cheaper to pay down a mortgage than pay rent on a house, with almost 60 per cent (59.1%) of apartments cheaper to pay off, than rent.

Proportion of suburbs where paying a mortgage is cheaper than paying rent, national

Proportion of suburbs where paying a mortgage is cheaper than paying rent, national graph

 

CEO of Aussie, Mr James Symond said, “Our research confirms that in many suburbs across Australia, especially those outside the major capital cities, on a monthly basis, it is cheaper to buy than rent.”

“Why pay your landlord – when you could potentially pay the same amount – or less monthly – on a place you can call your own.

“The cost gap between buying and renting has tightened over the last year as rates and property values have either stabilised or fallen, especially in regional areas across Australia and in the cities of Darwin and Perth,” he added.

Based on a 30-year, principal and interest, average discounted variable loan rate of 3.65 per cent, mortgage repayments fell from $3,139 per month three years ago to $2,770 in September 2020, while average rents have held firm for houses and dropped 2.2 per cent for units over the last year.

The rental market has softened over the last 12 months due to the effects of COVID-19, with stalled immigration, as well as weaker economic and labour market conditions. The apartment market has been most affected, with average rents down 7.8 per cent in Melbourne, down 3.8 per cent in Sydney, and down 11.1 per cent in Hobart.

Mr Symond said, “The combination of lower property values in some regions, record low mortgage rates and government incentives for first home buyers, have made buying conditions generally more attractive for buyers.”

According to Mr Symond, the outlook for interest rates remained positive, with the Reserve Bank recently confirming its expectation that interest rates would not rise for at least three years, providing some certainty that interest rates will remain low for an extended period.

He also pointed out the rates used to calculate the savings in this report are estimated based on the average rates from the RBA. “While this is a really good indication of the suburbs where it could be cheaper to buy than rent, there are a lot of current market rates well below these averages, so the savings and range of suburbs is potentially even greater. This is where a broker can add value, by helping you source the latest competitive rates, incentives, or government grants to enable you to get into the market.”

Capital city suburbs

The report found that across Melbourne, house values declined 4.7 per cent in the six months to September 30, and unit values were down 5.1 per cent, while in Sydney, house values fell 3.7 per cent and unit values 3.5 per cent.

Under the discounted variable rate scenario outlined above, 16.9 per cent of capital city suburbs recorded lower monthly mortgage repayments compared with rental payments for houses, rising to 34.7 per cent of suburbs under a three-year fixed rate scenario.   

Sydney and Melbourne recorded no suburbs where it was cheaper to service a mortgage on houses than rent based on a variable rate, while 82.6 per cent of Darwin suburbs, 50 per cent of Hobart suburbs and more than a third of suburbs across Perth and Adelaide were more affordable to pay down a discounted variable rate mortgage than rent for houses.

Under the fixed rate scenario, 5.3 per cent of Sydney suburbs were more affordable to service a mortgage than rent for houses, and this was the case for only 1 per cent of Melbourne suburbs. Every suburb across Darwin was cheaper to pay a mortgage than rent under a fixed rate scenario, and the proportion was more than 50 per cent across Brisbane, Adelaide, Perth, Hobart, and Darwin.

Regional suburbs

Meanwhile 58 per cent of regional suburbs recorded lower mortgage repayments than rental rates under the discounted variable mortgage rate scenario for houses, rising to almost 64 per cent for units. 

Under the lower interest rate scenario associated with a fixed rate mortgage, the proportion rose to 79.8 per cent for houses and 87.4 per cent for units in regional suburbs.

Across the regional areas of Northern Territory, South Australia, Tasmania and Western Australia, more than 80 per cent of suburbs showed lower typical mortgage repayments than renting for houses under a discounted variable mortgage rate, reducing to 33.8 per cent of regional Victorian suburbs and 44.4 per cent of regional New South Wales suburbs. 

Mr Symond said, “COVID travel restrictions have inspired many people to holiday in their own states and prompted a property boom in some regional areas – a trend expected to continue.

“As Australians continue to work from home, many can be expected to move away from metropolitan areas as they decide they no longer need to live close to their workplace. This current environment is good news for renters looking to become owner occupiers.”

However, according to Mr Symond, “Buyers should do their homework to ensure they are paying the right price for a property with the right home loan. Mortgage brokers can provide expert guidance for those looking to stop renting and take advantage of current market conditions and competitive deals, to take the home ownership plunge,” he concluded.

Top suburbs where it is cheaper to buy than rent – by region

In Greater Sydney

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Lake Haven
  • San Remo
  • Charmhaven
  • Blue Haven
  • Watanobbi
  • West Gosford
  • Gorokan
  • Warwick Farm
  • North Gosford
  • Jamisontown

 

In Regional NSW

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Broken Hill
  • Werris Creek
  • Wellington
  • Muswellbrook
  • Condobolin
  • Sapphire Beach
  • Crestwood
  • Griffith
  • Tweed Heads West
  • Queanbeyan

 

In Greater Melbourne

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Hastings
  • Melton
  • Melton South
  • Kurunjang
  • Melton West
  • Carlton
  • Travancore
  • Flemington
  • Notting Hill
  • Melbourne

 

In Regional Victoria

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Red Cliffs
  • Terang
  • Kerang
  • Portland
  • Ararat
  • Portland
  • Traralgon
  • Mildura
  • Mooroopna
  • Lakes Entrance

 

In Greater Brisbane

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Kilcoy
  • Woodridge
  • Kingston
  • Logan Central
  • Goodna
  • Browns Plains
  • Oxley
  • Waterford West
  • Springwood
  • Richlands

 

In Regional Queensland

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Healy
  • Sunset
  • Townview
  • Parkside
  • Cloncurry
  • White Rock
  • Woree
  • Manunda
  • Manoora
  • Cairns North

 

In Greater Adelaide

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Elizabeth North
  • Elizabeth Downs
  • Smithfield
  • Elizabeth South
  • Davoren Park
  • Mawson Lakes
  • Salisbury
  • Adelaide
  • Klemzig
  • Lightsview

 

In Regional South Australia

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Kingston Se
  • Bordertown
  • Whyalla
  • Port Augusta West
  • Port Pirie West
  • Mount Gambier
  • Victor Harbor

 

In Greater Perth

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Cooloongup
  • Parmelia
  • Calista
  • Orelia
  • Brookdale
  • Spearwood
  • Armadale
  • Midland
  • Bayswater
  • Glendalough

 

In Regional Western Australia

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Nickol
  • Baynton
  • Newman
  • Port Hedland
  • South Hedland
  • Port Hedland
  • South Hedland
  • Cable Beach
  • Bunbury
  • Withers

 

In Greater Hobart

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Rokeby
  • Risdon Vale
  • Bridgewater
  • Warrane
  • Primrose Sands
  • Brighton
  • Glenorchy
  • Claremont
  • Sorell
  • Blackmans Bay

 

In Regional Tasmania

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Bicheno
  • Zeehan
  • Queenstown
  • Ravenswood
  • Mayfield
  • Mowbray
  • Legana
  • South Launceston
  • Newnham
  • Riverside

 

In Greater Darwin

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Moulden
  • Zuccoli
  • Driver
  • Gray
  • Woodroffe
  • Parap
  • Darwin City
  • Nightcliff
  • Stuart Park
  • Coconut Grove

 

In Regional Northern Territory

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Sadadeen
  • Araluen
  • Braitling
  • East Side
  • Gillen
  • Gillen

 

In Greater Australian Capital City

Where it is cheaper to buy a house Where it is cheaper to buy a unit
  • Charnwood
  • Holt
  • Ngunnawal
  • Latham
  • Macgregor
  • Mawson
  • Phillip
  • Campbell
  • Lyons
  • Braddon

 

Get the data

Further suburb breakdowns are available in Aussie’s Buy vs Rent report.


 

About Aussie

Aussie was founded in 1992 and was widely credited for bringing competition to the Australian home lending industry. For nearly 30 years, Aussie Brokers have put progress within reach of more Australians, helping over 1.3 million customers with their home loan. Today, Aussie has the largest retail footprint across Australia.

Media enquires

Tim Allerton, City PR | 0412 715 707

Caroline Raffan, Aussie | 0409 914 614