Should you buy or rent a home in Australia?

By Mark Rosanes

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

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