Powered by MOMENTUM MEDIA
realestatebusiness logo

Breaking news and updates daily. Subscribe to our Newsletter!

Home of the REB Top 100 Agents
Breaking news and updates daily. Subscribe to our newsletter

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

The suburbs where tenants have it better than owner-occupiers

By Staff Reporter
28 June 2022 | 1 minute read
sydney suburbs aerial reb

While rents are going up, the monthly cost of a lease is still cheaper than a mortgage in many Australian suburbs.

In some, the large disparity between the average mortgage payment and the average rent is tens of thousands of dollars, according to recent data from PropTrack.

Megan Lieu, an economic analyst at REA Group, explained that the company’s recent Rent or Buy report revealed that the equation of which form of housing makes the most financial sense is rapidly shifting across Australia.

Advertisement
Advertisement

More specifically, it’s becoming increasingly more affordable to rent than buy, according to the latest data.

Not because rents aren’t going up – they are. But rather because in comparing buying versus renting, it’s buyers who are facing the highest mounting challenges to affordability.

“Thirty-one per cent of suburbs in the country with three-bedroom houses are currently cheaper to buy than rent. This is a massive drop from 59 per cent just one year ago,” Ms Lieu explained.

And just over half (53 per cent) of Australian suburbs with two-bedroom units are now estimated to be cheaper to buy than rent, but this is also a large decline from the share a year ago of 84 per cent.

The rising disparity is driven by one main factor, according to Ms Lieu – “the likelihood of higher interest rates”. Though she noted that inflating property prices had also been a contributor.

PropTrack’s economists looked at both the two-bedroom unit market and the housing market for three-bedroom homes in each capital city, finding that the largest gaps between renting and buying tended to fall within suburbs highly prized for their lifestyle and proximity to aspects such as water frontage, the inner city, or desirable commercial districts.

The price differential was calculated based on the assumptions of a 10-year tenure period for buyers, with a mortgage rate of 4.62 per cent, inflation rate of 2.5 per cent, and a rent and housing price increase of 3 per cent.

Sydney suburbs came out on top of both lists, with renters of a three-bedroom house in beachside Watsons Bay saving on average $25,000 by renting in the suburb rather than buying. In Roseville Chase, also boasting water access, renters in two-bedroom units were roughly $10,000 better off renting than buying.

Darwin was the only city to come out firmly in favour of buying in either of the two markets, with the largest price differential being about $200 per month in favour of buyers in Fannie Bay.

Three-bedroom homes: Where it’s cheapest to rent versus buying

Location Monthly price differential between renting and buying Average estimated value of 3-bedroom home
Watsons Bay, NSW $25,117 $6,170,000
Main Ridge, Vic $17,670 $4,070,000
Peppermint Grove, WA $9,720 $2,910,000
Franklin, ACT $7,951 $860,000
Rosny Park, Tas $6,087 $1,870,000
Teneriffe, Qld $5,286 $2,290,000
Leabrook, SA $5,194 $1680,000
Brinkin, NT $2,290 $1,090,000

 

Two-bedroom units: Where it’s cheapest to rent versus buying

Location Monthly price differential between buying and renting Average estimated value of 2-bedroom unit
Roseville Chase, NSW $10,166 $2,610,000
Portsea, Vic $7,081 $1,910,000
North Brighton, SA $2,035 $920,000
Denman Prospect, ACT $1,797 $560,000
Dalkeith, WA $1,406 $1,260,000
Taroona, Tas $1,142 $750,000
Shorncliffe, Qld $1,003 $860,000
Fannie Bay, NT -$234 $430,000
The suburbs where tenants have it better than owner-occupiers
sydney suburbs aerial reb
lawyersweekly logo

Tags:

Rankings
rankings
JUST RELEASED
May 09, 2022

REB Top 50 Women in Real Estate 2022

REB is thrilled to present the Top 50 Women in Real Estate 2022 ranking, which sets t ... LEARN MORE

rankings
JUST RELEASED
May 04, 2022

REB Top 100 Agents 2022

Now in its second decade, the REB Top 100 Agents 2022 rankings are the most revered s ... LEARN MORE

rankings
JUST RELEASED
May 02, 2022

REB Top 50 Agents NSW 2022

Even a pandemic has not put the brakes on the unstoppable property market in NSW, whi ... LEARN MORE

rankings
JUST RELEASED
April 27, 2022

REB Top 50 Agents VIC 2022

The COVID-19 crisis has not deterred the property market in Victoria, which has been ... LEARN MORE

rankings
JUST RELEASED
April 25, 2022

REB Top 50 Agents QLD 2022

As the property market continues to roar in Brisbane and Queensland, the REB Top 50 A ... LEARN MORE

Coming up

rankings rankings

 

Subscribe to our RPM
mailing list

 

Do you have an industry update?

top suburbs

12 month growth
Box Hill
127.02%
Mollymook
82.85%
Brightwaters
79.93%
Cleve
78.13%
Bawley Point
76.2%
Murrays Beach
75.57%
Terranora
70%
Crescent Head
69.38%
Park Ridge South
68.32%
Mollymook Beach
67.09%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.