Renting still more affordable than buying in 90% of Australian suburbs

Regional Western Australia has the highest share of suburbs where it is cheaper to buy than rent in.

This was according to CoreLogic, which showed that as of February 2023, the share of suburbs where it is cheaper to buy than rent went down to just 9.1% for houses and 16% for units.

Compared to last year, these latest figures were drastically lower — during the same time in 2022, the share of suburbs where buyers are at an advantage than renters were 30.3% for houses and 45.2% for units.

CoreLogic research director Tim Lawless said despite the double-digit gains in rents across Australia on the back of rental property shortage, record-level net overseas migration, and the return to major cities, the proportion of suburbs where it is cheaper to rent than buy has increased exponentially over the past year.

“There is no doubt the cost to service a mortgage compared to rent is keeping people in rental accommodation, adding to the extreme pressure on rental demand at a time when supply levels have not responded,” he said.

“While many tenants might see home ownership as a way of breaking out of the rent cycle, it’s just not possible for many because the cost to service a mortgage has become even more onerous in the past year with the increase in repayments outstripping the increase in rents by some margin.”

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers. To continue reading the rest of the article, read here.

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Lender	Home Loan	Interest Rate	Comparison Rate*	Monthly Repayment	Repayment type	Rate Type	Offset	Redraw	Ongoing Fees	Upfront Fees	LVR	Lump Sum Repayment	Additional Repayments	Split Loan Option	Tags	Features	Link	Compare
loans.com.au	loans.com.au Variable Basic Cashback Home Loan (Principal and Interest) (LVR < 70%)	6.04% p.a.	6.06% p.a.	$2,408	Principal & Interest	Variable			$0	$530	70%				Featured Online ExclusiveUp to $4k cashback	Immediate cashback upon settlement $2000 for loans up to $700,000 $4000 for loans over $700,000	More details	Compare
Unloan	Unloan Variable Rate Home Loan LVR < 80%	5.99% p.a.	5.90% p.a.	$2,396	Principal & Interest	Variable			$0	$0	80%					A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.	More details	Compare
ubank	ubank Neat Variable Home Loan (Principal and Interest) (LVR < 60%)	6.14% p.a.	6.16% p.a.	$2,434	Principal & Interest	Variable			$0	$250	60%					Find out your loan eligibility in 2 minutes or less Complete your application in less than 20 minutes Low fees and fast approval times	More details	Compare
Up	Up Home Variable (Principal & Interest) (LVR ≤ 90)	5.95% p.a.	5.95% p.a.	$2,385	Principal & Interest	Variable			$0	$0	90%						More details	Compare
Tiimely Home	Tiimely Home Live-in Variable Loan Home Loan (Principal and Interest) (LVR < 90%)	5.94% p.a.	5.95% p.a.	$2,383	Principal & Interest	Variable			$0	$0	90%						More Details	Compare

Rent versus mortgage repayments

Over the past year, national rents increased 10.1%, equivalent to $225 per month.

During the same period, dwelling values have declined 7.9%, which took nearly $262,000 off the median value of a home nationally.

However, considering the 325bps increase in the cash rate by February, repayments increased $774 per month. Over the year, the average variable mortgage rate for owner-occupiers increased from 2.49% to 5.23%.

The suburbs where it is still cheaper to buy than rent in February are mostly located in regional areas of Australia, particularly in Western Australia.

The top 10 suburbs where it is more affordable to buy are all in Western Australia, including Baynton, Nickol, South Hedland, Newman, Millars Well, Pegs Creek, Bulgarra, Boulder, and South Boulder. These are all for houses.

The difference between rents and mortgage repayments in these 10 areas are at least $1,100 to up to $1,890.

“Suburbs where it’s cheaper to buy than rent all have the same thing in common: an affordable median value. Whether it’s units or houses, more than nine out of 10 of these suburbs have a median value under $500,000,” Mr Lawless said.

“For capital city suburbs that are cheaper to buy, more than half (52%) are located in Perth. While these suburbs might not appeal to everyone our analysis shows there are opportunities if buyers have the ability and desire to get into the market.”

On the other hand, the top 10 suburbs where it is cheaper to rent are all in Sydney, including Vaucluse, Bellevue Hill, Rose Bay, Dover Heights, Bronte, Greenwich, Northbridge, Strathfield, East Lindfield, Woollahra.

In these suburbs, the difference between mortgage repayments and rents is at least $11,400 and as high as $26,400.