Recent analysis has uncovered suburbs in major Australian cities where mortgage payments are lower than the median weekly rental costs. In Sydney, the average weekly rent stands at $787, while Perth and Brisbane have rents of $713 and $678, respectively. By analysing the scenarios based on a 20 per cent deposit and a 30-year mortgage, Cotality (formerly Corelogic) for Ubank found that some areas are more budget-friendly for homebuyers than for renters.
Despite the ongoing housing affordability crisis, this study provides insights into where prospective buyers can find better deals. For those looking in Sydney, affordable units can be found in Eastlakes, Telopea, Greystanes, and Pennant Hills, while houses on the city’s periphery, such as in Mount Victoria and San Remo, present viable options.
According to Eliza Owen, head of research at Cotality, the rental market has seen consistent price increases while mortgage rates are beginning to decline. This shift in dynamics means that monthly mortgage repayments could soon be on par with or even cheaper than renting in certain areas.
In Melbourne, property prices have not escalated as dramatically as the national average, which has increased by about 40 per cent since the onset of COVID-19. In contrast, Melbourne’s property values have only risen by approximately 11 per cent. This situation may make mortgages more manageable for many residents of the city despite rising rental prices.
As a result, some individuals are opting to rent in their desired locations while purchasing investment properties in other regions, a trend noted by UBank’s head of direct lending, Annie Harrison. Although it’s not a suitable choice for everyone, it is appealing for those looking to maintain their lifestyle while making strides into property ownership.
Looking ahead, with further interest rate cuts expected this year, there is optimism that mortgage affordability will improve, even amid potential rises in property prices. This analysis provides crucial insights for buyers navigating the current housing market.