The number of suburbs that are cheaper to buy in than rent has increased by nearly 300 per cent since this time last year, according to new research.
The RP Data Buy vs Rent report found there were 692 suburbs across Australia where it was cheaper to pay a mortgage than a rental lease.
This figure is based on the borrowing scenario whereby principal and interest are paid back on a variable mortgage rate.
The results are a 286.6 per cent increase from the same period last year, when there were only 179 suburbs listed as being cheaper to buy than rent.
According to RP Data national research director Tim Lawless, renters and prospective homebuyers were likely to be more diligent in determining whether it was better for them to pay a mortgage or pay a landlord.
“In some suburbs it may actually be cheaper than renting, especially where we are seeing evidence of tight rental markets resulting in rental increases and lower home values,” he said.
“For many buyers, now may be a good time to consider either re-entering the market or buying their first home.
“Across the capital cities, it is typically apartment-style housing where renting can be more expensive than paying a mortgage. The buy-in price tends to be lower compared with weekly rents, providing a narrower gap between mortgage payments and rental payments.”
South Australia was one of Australia’s most affordable states, with 45 suburbs - 26 in Adelaide and 19 across the regional areas.
Supporting this finding was new figures from Adelaide-based agency Turner Real Estate, which revealed 38 suburbs within the metropolitan areas where it was cheaper to pay a mortgage than rent.
Turner Real Estate managing director Robin Turner said the data should prompt people to consider homeownership, as it was encouraging news.
“We are starting to see the market warm up in the sales area and rents tend to rise in line with CPI, so buying now could be a smart move for those ready to make the transition,” he said.
According to RP Data, Queensland was the state that had the greatest number of suburbs and towns that were cheaper to take out a mortgage than a rental lease, at 242.
New South Wales had 193 suburbs, with 73 in Sydney and the remaining 120 in regional areas. Victoria had 45 suburbs with only two of them in Melbourne and 43 in the regional areas. Western Australia had 78 suburbs with 29 in Perth and the remainder in the resource-driven areas. Northern Territory recorded 29 suburbs with 16 in Darwin and 13 in regional areas. Tasmania had 54 suburbs with 27 in Greater Hobart and the remainder in regional areas. ACT held the least number of suburbs with only six, which were all located in Canberra.