Home Insights The Capital City Suburbs Where Renting Is Much Cheaper Than Buying

The Capital City Suburbs Where Renting Is Much Cheaper Than Buying

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A year ago, more than half of Australian homes could be bought cheaper than rent, but nearly three-quarters have been cheaper than rent after record rises in home prices over the past year...

And the suburbs, which offer the greatest savings each month, share one common feature.

new PropTrack purchase or rental report Shows that only 31% of the suburbs of a country with a three-bedroom home are currently cheaper to buy than rent. This is a significant decrease from 59% just a year ago.

The unit is much more advantageous to buy.

Just over half (53%) of the suburbs of Australia with two-bedroom units are now estimated to be cheaper to buy than rent, which is also a significant reduction from 84% a year ago.

Download PropTrack Purchase or Rental Report 2022

Rental housing

The number of suburbs that are cheaper to buy than rent has dropped dramatically. Photo: Getty.

More suburbs are cheaper to rent than buying. This is driven by the possibility of high interest rates, which is one of the main factors.

This made the purchase terms less attractive, but it also contributed to the price increase, which was more than double the rent.

However, it is important to note that rent vacancy rates have hit record lows and weekly rents have skyrocketed. Most of the suburbs are cheaper to rent than purchased, but rents are also higher.

We looked at the suburbs of each state with the largest monthly price differences to identify where tenants most benefited from renting instead of buying. This represents the potential monthly average savings from renting.

The price difference is calculated assuming a 10-year holding period for the buyer, with a mortgage rate of 4.62%, an inflation rate of 2.5%, and a 3% increase in rent and home prices.

A complete explanation of the methodology can be found in the report.

In Sydney, choosing to rent a three-bedroom home in Watsons Bay can save you $ 25,000 a month. Meanwhile, Melbourne’s Mainridge renters can save as much as $ 18,000 compared to the estimated purchase cost.

In the suburbs of Perth and Hobart, people in Peppermint Grove and Rosney Park can rent $ 10,000 and $ 6,000 a month, respectively, instead of buying a three-bedroom home.

People can save $ 10,000 a month by deciding to rent a two-bedroom apartment in Roseville Chase, Sydney instead of buying one.

People renting two-bedroom units in Portsea, Melbourne and North Brighton, Adelaide were able to save $ 7,000 and $ 2,000, the largest monthly savings in their respective cities.

More insights from a team of PropTrack experts:

The interesting thing is that these suburbs, where rents have the largest monthly price differences, look expensive.

This means that buying a home in an expensive area may not be better than renting it for 10 years, even considering the return on investment.

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