Australian renters could be saving thousands of dollars a year by buying property in some key suburbs where rents are higher than average mortgage repayments.
Sydney suburbs including Leumeah, Campbelltown, Jamisontown, Fairfield, Warwick Farm and Mount Druitt are among those where it is cheaper to buy a unit than to rent.
This is because monthly rental prices are more expensive than the average monthly mortgage repayment, meaning renters aren’t getting bang for their buck.
A report released by mortgage brokers Aussie indicated that in 17.4 per cent of Sydney suburbs it is cheaper to have a mortgage than rent a unit, The Daily Telegraph reported.
The suburbs where it is cheaper to buy a property rather than rent for years on end have been revealed (pictured, aerial view of Campbelltown)
Sydney suburbs such as Leumeah, Campbelltown, Jamisontown, Fairfield, Warwick Farm and Mount Druitt are also suburbs where it is cheaper to buy a unit than to rent
This is because monthly rental prices are more expensive than the average monthly mortgage repayment, meaning renters aren’t getting bang for their buck (pictured, apartment in Notting Hill)
This is also true of 52.2 per cent of Australian suburbs when it comes to houses, and 59.1 per cent in terms of units, the report said.
‘It’s been a tough year for the average mum and dad but they are seeing more opportunity out there than ever to buy their own home and that is being driven by interest rates,’ Aussie CEO James Symond said.
‘People are looking at these homes and realising that in many cases the alternative [renting] is a more expensive proposition.
‘The cost of real estate has not really gone down but property has become more accessible.’
The report suggested this is because repaying a mortgage in a capital city such as Sydney, Brisbane, Perth or Melbourne is cheaper than it was a decade ago.
Brisbane suburbs such as Kilcoy, Woodridge, Kingston and Logan Central are cheaper to buy in than rent a home while Browns Plains, Murrumba Downs, Springwood and Waterford West are better for units.
In Melbourne suburbs such as Hastings, Melton and Melton South it is cheaper to buy a home than pay rent every month.
It is cheaper to buy a unit in suburbs such as Flemmington, Notting Hill, Cragieburn and Melbourne’s CBD than rent in those areas.
The stats are based on average variable loan rates with a 10 per cent deposit compared to average rental valuation.
With a discounted variable loan, the average Australian homeowner is saving $809 a month compared to what they were paying in 2010.
In Hobart the best suburb to buy a home rather than rent is Rokeby (pictured, house for sale in Rokeby), which has an astonishing difference of more than $400 every month
SUBURBS WHERE IT IS BETTER TO BUY THAN RENT
- Warwick Farm
- Mount Druitt
- Logan Central
- Browns Plains
- Murrumba Downs
- Waterford West
- Melton South
- Notting Hill
- Melbourne’s CBD
- Blackmans Bay
- Elizabeth North
- Elizabeth Park
- Davoren Park
- Smithfield Plains
- Mount Barker
- Brooklyn Park
A report released by mortgage brokers Aussie indicated in 17.4 per cent of Sydney suburbs it is cheaper to have a mortgage than rent a unit (pictured, house for sale in Kilroy)
Houses in almost every Darwin suburb, such as Gray, Wulagi or Karama, are cheaper to buy than rent.
In Hobart the best suburb to buy a home rather than rent is Rokeby, which has an astonishing difference of more than $400 every month.
Adelaide suburbs where it is cheaper to buy a home than rent include Elizabeth North, Elizabeth Park, Davoren Park and Smithfield Plains.
Suburbs suited for those preferring a unit include Klemzig, Salisbury, Mount Barker, Lightsview and Brooklyn Park.
The report comes as the Reserve Bank of Australia cut interest rates to a new record-low of 0.1 per cent.
Governor Philip Lowe announced the 0.15 percentage point cut just half an hour before the first-ever Melbourne Cup with no crowds – and declared rates would stay at an all-time low for three years following the third rate cut in 2020.
This is also true of 52.2 per cent of Australian suburbs when it comes to houses, and 59.1 per cent in terms of units, the report said (pictured, unit for sale in Leumeah)
‘Given the outlook for both employment and inflation, monetary and fiscal support will be required for some time,’ he said on Tuesday.
‘Given the outlook, the board is not expecting to increase the cash rate for at least three years.’
The latest cash rate cut will see a $500,000 borrower pay $43 a month less on repayments should their average standard variable mortgage rate of 3.99 per cent fall to 3.84 per cent by the end of the week, in line with the Reserve Bank of Australia rate cut.
Dr Lowe said interest rates were likely to stay at record-low levels for three years based on inflation, now at 0.7 per cent, being well below the Reserve Bank’s two to three per cent annual target.
The Reserve Bank also wants unemployment, now at 6.9 per cent, to fall closer to pre-pandemic levels of 5.1 per cent before putting up interest rates again.
‘For this to occur, wages growth will have to be materially higher than it is currently,’ Dr Lowe said.
‘This will require significant gains in employment and a return to a tight labour market.’