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Buying a home cheaper than renting: RP Data

06 November 2012 Simon Parker

New research from RP Data has revealed there are more than 350 towns and suburbs where the monthly mortgage repayments are cheaper than the monthly rent.

According to the data, there has been a 63 per cent uplift in the number of suburbs where paying a mortgage is more affordable than paying a landlord (based on principal and interest payments on a variable interest rate mortgage).

This result highlights the dramatic impact adjustments to mortgage rates can have on housing affordability.

Queensland has the majority of suburbs and towns where it’s cheaper to buy than rent, at 147; Greater Brisbane accounts for 42 suburbs while the remaining 105 can be found in the regional areas of the state. New South Wales has 88 suburbs, 41 in Sydney and the remaining 47 in the regional areas.


Victoria increased its tally from 10 suburbs in August to now record 17 areas where, with a variable interest rate mortgage structure, a property is cheaper to buy than rent. A strong run on capital gains and flat rental market conditions across Melbourne have meant that with just three suburbs, Melbourne has the lowest number of suburbs across the state capitals where buying is cheaper than renting. The other 14 suburbs are in regional Victoria.

Currently one of Australia’s most affordable states, South Australia has 48 areas where buying is currently cheaper than renting; 31 suburbs are in Adelaide, while the remaining 17 are located across the state.

In Tasmania there are 30 areas: 14 are within Hobart while the remainder are in the regional areas. The ACT, however, recorded just 3 suburbs, all located in Canberra. Western Australia has 44 places where it’s cheaper to buy than rent, six of which are in Perth with the remainder mostly located in the state’s resource-driven areas.

The Northern Territory now has 11 suburbs, two in Darwin, with the remaining nine in regional areas.

According to RP Data's national research director Tim Lawless, the Australian housing market experienced one of its toughest years ever during 2011 and the early months of 2012.

“With capital city dwelling values almost six per cent lower than when they peaked, and discounted variable mortgage rates 125 basis points lower from their 2011 peak, coupled with fixed mortgage rates more than 210 basis points lower, we may see consumers returning to the property market as they realise that residential property may not cost them that much more to own than rent,” Mr Lawless said.

“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. For many buyers, now may be a good time to either re-enter the market or buy their first home.”

"In addition, if a potential buyer was willing to pay $50 extra to pay off a mortgage in a suburb rather than rent a house or unit, the total number of areas nationally rises from 388 to 1,419, based on making interest and principal payments on a variable interest rate loan.”

Buying a home cheaper than renting: RP Data
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