Monthly mortgage cheaper than renting in 274 suburbs

Rapidly rising rents could push some aspiring homeowners to pull the trigger on buying a home, despite higher mortgage rates and inflated house prices, experts say.

Many home buyers had been priced out of the housing market as the widespread boom triggered a 27.8 per cent rise in median dwelling values nationwide since the pandemic. But renting has also become unaffordable, and in many cases even more so than buying.

In more than one in four markets across the capital cities, paying a mortgage on an average home is cheaper compared with paying rent, analysis by CoreLogic shows. A total of 274 suburbs are more favourable for buyers than renters, including 201 unit markets and 73 house markets.

The calculation took into account the current median values and median weekly rental valuation, assuming the latest average mortgage rate from the RBA for new owner-occupier variable loans of 2.49 per cent with a 20 per cent deposit over 30 years. No other fees or transaction costs were considered.

“It depends on the individual’s situation, but broadly speaking, it’s probably more challenging to rent, with rapidly rising rents in many parts of the country, increased competition for rents with holiday-makers and overseas arrivals,” said Eliza Owen, CoreLogic’s head of research.

“And although interest rates are rising, they are still pretty low, and in some markets prices are starting to fall.

Source: www.afr.com