Here’s where it is cheaper to buy than rent
- Haynes Wileman
- Sep 10, 2020
- 2 min read
Ultra-low interest rates have created a unique environment where buying a house in many areas is cheaper than paying rent on one
In many areas, rent money is dead money, and renters with secure jobs are better off buying a house than continue paying someone else’s mortgage.
When it comes to houses, that is a preferred dwelling option in most areas of the country, in many cases, it is actually cheaper to buy than rent, and rent money is literally dead money.
Whereas, if you buy a house you can start building equity straight away, particularly when you take a long-term strategic view and are in a good position to negotiate well and buy a ‘Grade A’ property that will serve your family to many years to come,” he said.
Our research shows that the interest-only repayments for both owner-occupiers and investors is lower than the annual rental cost in most of the 88 areas at the statistical area level 4 (i.e. SA4s).
Therefore, funding costs are lower than rental payments across all states and territories.
And, with the exception of Sydney and Melbourne, in all other states and territories, even the principal and interest repayments are lower than the annual rent, assuming that you have 20 percent deposit.
No interest rate rises are expected in the foreseeable fortune and the intense competition between the banks is only going to further intensify, meaning buyers are in a very strong position to continue enjoying ultra-low interest rates.”
The biggest savings were in the capital cities where rental returns were the highest.
A sustained period of ultra-low interest rates seems almost certain in the foreseeable future and is likely to have a positive impact on the market during 2021.
In fact, RBA research has found that for every 1 percentage point reduction to the cash rate, property values may increase 8 per cent over the following two years.
Comments