One of the biggest financial decisions many Australian adults must make is choosing between buying and renting a home. Each option has its share of pros and cons, and the decision all boils downs to what suits you best personally and financially.
Proponents of homeownership say that having your own home gives you a sense of certainty because you know that you will not be evicted as long as you keep meeting your mortgage repayments. It also gives you have the freedom to make changes and renovations that can add value to your home.
Some renters, meanwhile, argue that buying a home may not be attainable for everyone because of the heavy financing involved. Renting, however, gives you more flexibility as it allows you to move freely from one place to another once your lease is up. You also do not have to worry about the upkeep of the property as this is often attended to by the landlord.
Is it cheaper to buy than rent a home in Australia?
So goes the age-old question: Is it better to buy or rent a home? A recent analysis by Realestate.com.au may provide some answers.
The group conducted a 10-year analysis of all the expenses associated with buying and renting based on current house prices and a moderate price growth of 3% annually and found that more than half, or 56.8%, of all homes in the country would cost less to purchase than to rent.
The study also forecasted that over the next decade, it would be less expensive to buy more than half, or 51.2%, of houses and about three-fourths, or 72.7%, of units nationwide compared to renting.
Paul Ryan, economist at Realestate.com.au, attributed the favourable buying conditions to the current historic-low interest rates.
“Interest rates can currently be fixed below 2% per year and the Reserve Bank of Australia has committed to maintaining low interest rates until at least 2024,” he wrote in the report. “This certainty that mortgage costs are not going to increase rapidly provides comfort to buyers borrowing larger amounts.”
However, the findings were also based on the assumption that buyers already have a 20% deposit, which Ryan admitted was the biggest barrier to homeownership, particularly for first home buyers.
“Many would-be buyers can already afford loan repayments, but struggle to save a deposit while renting,” he added. “Continued price growth may cause additional concern for many in this position.”
The report provided a breakdown of the top suburbs where buying a home is cheaper than renting and where renting is more affordable. The study compared the prices of a three-bedroom house and a two-bedroom unit across Australia’s capital cities.
Top suburbs where it is cheaper to buy than rent a home
Sydney
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Tacoma |
$492,782 |
$435 |
$578 |
|
|
Rocky Point |
$565,283 |
$450 |
$388 |
|
|
Warragamba |
$532,205 |
$425 |
$366 |
|
|
Hamlyn Terrace |
$589,461 |
$455 |
$338 |
|
|
Warnervale |
$644,367 |
$395 |
$327 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Kangy Angy |
$198,823 |
$340 |
$1,206 |
|
|
Stanhope Gardens |
$336,432 |
$425 |
$1,148 |
|
|
Vineyard |
$252,080 |
$355 |
$1,063 |
|
|
Warragamba |
$277,249 |
$353 |
$973 |
|
|
Banksmeadow |
$603,909 |
$580 |
$960 |
|
Source: REA Insights Buy or Rent Report, April 2021
Melbourne
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Waterford Park |
$379,914 |
$330 |
$472 |
|
|
Rockbank |
$476,683 |
$370 |
$311 |
|
|
Mickleham |
$491,077 |
$380 |
$289 |
|
|
Millgrove |
$457,213 |
$350 |
$278 |
|
|
Wollert |
$511,142 |
$390 |
$266 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Frankston North |
$419,269 |
$415 |
$794 |
|
|
Bangholme |
$375,489 |
$368 |
$682 |
|
|
Williams Landing |
$388,875 |
$370 |
$658 |
|
|
Woori Yallock |
$363,027 |
$350 |
$622 |
|
|
Burnside Heights |
$394,018 |
$363 |
$563 |
|
Source: REA Insights Buy or Rent Report, April 2021
Brisbane
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Kilcoy |
$299,474 |
$360 |
$1,014 |
|
|
Lockrose |
$267,298 |
$335 |
$977 |
|
|
Waterford |
$359,110 |
$375 |
$890 |
|
|
Toogoolawah |
$256,158 |
$310 |
$872 |
|
|
Logan Reserve |
$372,367 |
$385 |
$870 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Brisbane City |
$508,928 |
$525 |
$1,162 |
|
|
Woolloongabba |
$428,708 |
$470 |
$1,156 |
|
|
Kangaroo Point |
$489,224 |
$505 |
$1,125 |
|
|
Eight Mile Plains |
$372,538 |
$430 |
$1,122 |
|
|
Dutton Park |
$433,155 |
$470 |
$1,119 |
|
Source: REA Insights Buy or Rent Report, April 2021
Adelaide
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Elizabeth South |
$168,814 |
$245 |
$772 |
|
|
Gawler West |
$235,200 |
$290 |
$753 |
|
|
Munno Para |
$263,004 |
$310 |
$748 |
|
|
Elizabeth Park |
$223,111 |
$280 |
$736 |
|
|
Wingfield |
$302,639 |
$335 |
$730 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Glanville |
$242,210 |
$340 |
$994 |
|
|
Walkerville |
$368,493 |
$420 |
$967 |
|
|
Sturt |
$226,139 |
$318 |
$946 |
|
|
Happy Valley |
$209,559 |
$298 |
$512 |
|
|
Adelaide |
$419,024 |
$445 |
$908 |
|
Source: REA Insights Buy or Rent Report, April 2021
Perth
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Hilbert |
$287,256 |
$330 |
$811 |
|
|
Meadow Springs |
$360,369 |
$370 |
$730 |
|
|
Lakelands |
$324,126 |
$340 |
$714 |
|
|
Carramar |
$449,931 |
$420 |
$693 |
|
|
Stratton |
$293,819 |
$315 |
$689 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Wanneroo |
$175,417 |
$355 |
$1,363 |
|
|
Merriwa |
$219,695 |
$340 |
$1,135 |
|
|
Coodanup |
$123,255 |
$275 |
$1,110 |
|
|
Wattleup |
$260,214 |
$365 |
$1,084 |
|
|
Swanbourne |
$736,240 |
$690 |
$1,060 |
|
Source: REA Insights Buy or Rent Report, April 2021
Hobart
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Clarendon Vale |
$285,250 |
$365 |
$993 |
|
|
Gagebrook |
$265,480 |
$340 |
$930 |
|
|
Risdon Vale |
$347,229 |
$385 |
$874 |
|
|
Herdsmans Cove |
$283,349 |
$340 |
$853 |
|
|
Chigwell |
$376,246 |
$400 |
$842 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Glebe |
$367,388 |
$495 |
$1,413 |
|
|
Herdsmans Cove |
$225,979 |
$325 |
$1,000 |
|
|
Mornington |
$356,149 |
$405 |
$947 |
|
|
Bridgewater |
$236,351 |
$315 |
$906 |
|
|
Rokeby |
$357,914 |
$395 |
$891 |
|
Source: REA Insights Buy or Rent Report, April 2021
Darwin
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Zuccoli |
$426,905 |
$550 |
$1,449 |
|
|
Muirhead |
$498,843 |
$580 |
$1,315 |
|
|
The Narrows |
$412,274 |
$515 |
$1,295 |
|
|
Woolner |
$589,819 |
$603 |
$1,069 |
|
|
Lyons |
$628,005 |
$605 |
$924 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Darwin City |
$363,492 |
$485 |
$1,336 |
|
|
Anula |
$196,684 |
$340 |
$1,204 |
|
|
Rosebery |
$260,038 |
$380 |
$1,154 |
|
|
Wagaman |
$166,040 |
$310 |
$1,151 |
|
|
Malak |
$194,535 |
$330 |
$1,148 |
|
Source: REA Insights Buy or Rent Report, April 2021
Canberra
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Coombs |
$591,756 |
$565 |
$1,001 |
|
|
Denman Prospect |
$588,355 |
$555 |
$984 |
|
|
Moncrieff |
$598,754 |
$535 |
$833 |
|
|
Casey |
$607,581 |
$525 |
$738 |
|
|
Throsby |
$692,715 |
$580 |
$696 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
City |
$601,111 |
$685 |
$1,634 |
|
|
Reid |
$441,282 |
$540 |
$1,437 |
|
|
Turner |
$531,500 |
$585 |
$1,346 |
|
|
Dickson |
$501,017 |
$560 |
$1,323 |
|
|
Crace |
$368,164 |
$460 |
$1,291 |
|
Source: REA Insights Buy or Rent Report, April 2021
Top suburbs where it is cheaper to rent than buy a home
Sydney
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Vaucluse |
$4,400,585 |
$1,150 |
$11,413 |
|
|
Kemps Creek |
$3,405,054 |
$480 |
$10,925 |
|
|
Dover Heights |
$4,453,670 |
$1,325 |
$10,645 |
|
|
Bellevue Hill |
$4,401,111 |
$1,520 |
$9,341 |
|
|
Bringelly |
$3,065,732 |
$525 |
$9,239 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Bangaroo |
$2,767,308 |
$1,325 |
$3,547 |
|
|
Point Piper |
$2,119,816 |
$920 |
$3,186 |
|
|
Dawes Point |
$2,813,336 |
$1,475 |
$2,909 |
|
|
Beacon Hill |
$1,609,494 |
$620 |
$2,803 |
|
|
Collaroy Plateau |
$1,486,789 |
$583 |
$2,528 |
|
Source: REA Insights Buy or Rent Report, April 2021
Melbourne
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Toorak |
$3,559,877 |
$1,015 |
$8,672 |
|
|
East Melbourne |
$3,284,973 |
$885 |
$8,308 |
|
|
Main Ridge |
$2,590,650 |
$505 |
$7,646 |
|
|
Red Hill South |
$2,597,072 |
$518 |
$7,576 |
|
|
Deepdene |
$2,666,170 |
$663 |
$7,047 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Sorrento |
$1,113,873 |
$445 |
$1,998 |
|
|
Deepdene |
$973,480 |
$415 |
$1,425 |
|
|
Balnarring |
$781,296 |
$340 |
$1,100 |
|
|
Kooyong |
$968,351 |
$503 |
$896 |
|
|
Canterbury |
$861,232 |
$435 |
$882 |
|
Source: REA Insights Buy or Rent Report, April 2021
Brisbane
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Teneriffe |
$1,884,351 |
$820 |
$2,725 |
|
|
Chandler |
$1,227,109 |
$445 |
$2,134 |
|
|
New Farm |
$1,669,596 |
$775 |
$2,080 |
|
|
Camp Mountain |
$1,170,053 |
$490 |
$1,679 |
|
|
St Lucia |
$1,228,189 |
$528 |
$1,672 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Shorncliffe |
$797,231 |
$295 |
$1,255 |
|
|
Tennyson |
$1,116,478 |
$650 |
$538 |
|
Source: REA Insights Buy or Rent Report, April 2021
Adelaide
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Rose Park |
$1,550,148 |
$595 |
$2,856 |
|
|
Unley Park |
$1,601,876 |
$645 |
$2,778 |
|
|
Medindie |
$1,454,602 |
$610 |
$2,368 |
|
|
Tusmore |
$1,328,719 |
$535 |
$2,262 |
|
|
Toorak Gardens |
$1,398,011 |
$590 |
$2,237 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
North Brighton |
$783,014 |
$370 |
$1,002 |
|
|
Urrbrae |
$567,704 |
$360 |
$168 |
|
|
Stepney |
$562,907 |
$375 |
$84 |
|
|
Hackney |
$564,691 |
$388 |
$15 |
|
Source: REA Insights Buy or Rent Report, April 2021
Perth
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Peppermint Grove |
$2,999,666 |
$955 |
$6,491 |
|
|
Dalkeith |
$2,281,191 |
$715 |
$4,997 |
|
|
City Beach |
$1,911,482 |
$660 |
$3,825 |
|
|
Cottesloe |
$2,086,336 |
$888 |
$3,231 |
|
|
Nedlands |
$1,482,903 |
$620 |
$2,330 |
|
|
2-bedroom unit |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Dalkeith |
$1,435,680 |
$820 |
$1,010 |
|
|
Murdoch |
$580,265 |
$355 |
$223 |
|
|
Cottesloe |
$757,415 |
$485 |
$168 |
|
Source: REA Insights Buy or Rent Report, April 2021
Hobart
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Battery Point |
$1,624,438 |
$615 |
$2,834 |
|
|
Bonnet Hill |
$990,462 |
$505 |
$984 |
|
|
Sandy Bay |
$1,046,055 |
$580 |
$760 |
|
|
Acton Park |
$827,232 |
$445 |
$655 |
|
|
Tinderbox |
$922,906 |
$545 |
$486 |
|
Source: REA Insights Buy or Rent Report, April 2021
Darwin
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Brinkin |
$913,665 |
$510 |
$760 |
|
|
Larrakeyah |
$984,062 |
$655 |
$226 |
|
Source: REA Insights Buy or Rent Report, April 2021
Canberra
|
3-bedroom house |
||||
|
Suburb |
AVM median price |
AVM median rental |
Monthly price differential |
|
|
Griffith |
$1,738,415 |
$630 |
$3,252 |
|
|
Yarralumla |
$1,547,434 |
$655 |
$2,367 |
|
|
Deakin |
$1,457,545 |
$655 |
$2,014 |
|
|
Reid |
$1,447,385 |
$680 |
$1,832 |
|
|
Kingston |
$1,495,571 |
$725 |
$1,780 |
|
Source: REA Insights Buy or Rent Report, April 2021
Collections: Mortgage News
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