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Buying a unit is cheaper than renting in more than 20 per cent of suburbs nationwide, with Perth showing the most favourable outlook for prospective apartment buyers.
New data comparing the cost of servicing a mortgage on a unit to renting has revealed that buying a unit is more affordable in 22.8 per cent of suburbs nationwide.
Domain’s comparison used the median unit price for each suburb, based on a mortgage rate of 5.68 per cent, with a 20 per cent deposit.
The calculations excluded additional costs such as transfer duties, council rates, and maintenance.
The study then compared the unit price for each suburb to the current median asking rent for units.
For the combined regions, servicing a mortgage on a unit was found to be cheaper than renting in 31.3 per cent of suburbs.
Across the combined capitals, the research showed that it was cheaper to service a mortgage on a unit than to rent in a lower proportion of suburbs, at 20.7 per cent.
“The combined capitals experience a more noticeable jump in the number of suburbs where buying is cheaper than renting, outpacing regional Australia,” Domain said.
“Most capital cities show a double-digit increase in the share of suburbs where units are more affordable to buy than rent.”
Domain said buying a unit was over 12 times more likely to be cheaper than renting, with just 1.7 per cent of capital city suburbs showing that for houses.
“This difference is not surprising given the significant price gap between property types,” Domain said.
Out of the capital cities, Perth showed the most favourable outlook, with 82.9 per cent of suburbs being cheaper to buy a unit than to rent.
However, for the rest of the capitals, the majority of suburbs were cheaper to rent a unit than to service a mortgage.
In Sydney, the data showed that only 9.5 per cent of suburbs were deemed cheaper to buy a unit than to rent, while Melbourne recorded 19.7 per cent of suburbs.
For Brisbane, 7.9 per cent of suburbs were cheaper to service a mortgage on a unit than to rent.
Finally, in Adelaide, data showed that it was cheaper to buy a unit than to rent in 13.3 per cent of suburbs.
Domain noted that mortgage repayments tend to be lower than rents in more affordable areas of capital cities, including Notting Hill in Melbourne and Burswood in Perth’s south-east.
“In these areas, property prices may not be as high, but rental demand is greater because of the financial hurdles associated with purchasing a home (interest rates, saving for a deposit and stamp duty), making it difficult for those looking to enter the property market,” Domain said.
When it comes to interest rates, data showed that units were especially likely to benefit from further cuts, with pressure expected to ease on mortgage rates later this year.
The average mortgage rate, currently at 5.68 per cent, has been forecast to fall to about 4.98 per cent by the end of 2025.
“This shift highlights how falling interest rates will have the greatest impact on affordability for units, providing an entry point for first home buyers and those seeking more attainable housing.”
However, Domain said that prospective unit buyers should still be aware of several expected obstacles as interest rates fall.
“This improvement may come with new challenges, including increased buyer competition and renewed upward pressure on prices,” Domain concluded.
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