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Rental affordability seems to have worsened in some parts of Australia and there are markets in each state where home seekers are better off buying than renting.

The latest ANZ-CoreLogic Housing Affordability report showed that the proportion of income needed to pay rent in regional Australia rose to 34%, well ahead of the 28% recorded across combined capital cities.

In terms of servicing a mortgage, regional homeowners need to set aside 38.3% of their income, lower than the 40.9% reading in capital cities.

CoreLogic head of Australia research Eliza Owen said the cost of renting is now almost on par with the cost of buying.

“In some ‘lifestyle’ markets, the median household income earners would hypothetically have to spend more than half their income for the median weekly rent value,” she said.

In fact, there are several regions and markets in each state or territory where Australian home seekers might find buying a home more practical than renting.

The table below shows top three markets in each state where it is cheaper to buy than rent based on the median dwelling price and rents over the first quarter of 2022:

State

Market

Share of income needed to pay (%)

Rent

Mortgage

NSW

Bourke - Cobar - Coonamble

10.1

27.3

Broken Hill and Far West

12.5

26.7

Lower Murray

17.0

26.6

Vic

Loddon – Elmore

24.8

35.4

Grampians

24.2

28.6

Murray River – Swan Hill

23.0

27.0

Qld

Far North

21.0

35.0

Outback – North

12.2

24.2

Outback – South

9.8

24.7

SA

Murray and Mallee

21.1

27.5

Outback-North and East

12.8

27.2

Mid North

13.2

25.3

WA

East Pilbara

16.0

31.7

West Pilbara

20.4

34.9

Wheat Belt - South

11.2

22.8

Tas

Central Highlands

27.4

31.8

West Coast

22.6

26.1

Brighton

33.7

34.6

NT

Barkly

17.9

37.6

Daly – Tiwi – West Arnhem

29.1

37.4

Katherine

22.5

38.0

 

Affordability challenges intensify

Ms Owen said both rent and house prices are at levels that are already a challenge for many home seekers, particularly for first-time home buyers.

“The national median dwelling value is now an estimated 8.5 times the median annual household income level nationally — this is a record high and an increase from 6.8 times since the onset of COVID-19 two years ago,” she said.

“Moreover, the increase in the dwelling value to income ratio was largest across regional Australia, where property prices have risen substantially more than incomes.”

As of the end of March, median housing values increased to $818,307 across capital cities and to $577,987 for regional areas.

With these gains, the dwelling value-to-income ratio went up to 8.4 for capital-city homeowners and 7.9 for regional owner-occupiers.

The time it takes to come up with the 20% typical deposit requirement also increased, with buyers now needing 11.4 years, representing an additional 2.2 years since March 2020.

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