Serving a mortgage can cost less than renting in many regional cities. Here’s a look at some of the cheapest areas for homes:
It is cheaper to buy a house than to rent one in much of New South Wales, despite a recent explosion in house prices.
New analysis has found record interest rates have softened the impact of rising prices in many areas, while increased demand from tenants has driven rental prices higher over the past year.
This means that servicing a mortgage on a typical property in many leading regional cities will cost less than the median rental price in the region, according to the ANZ-CoreLogic Housing Affordability report.
Areas where paying for a house was cheaper than renting included Albury, Wagga Wagga, Dubbo, Tamworth, and Queanbeyan, on the outskirts of ACT.
Homeowners have seen particularly significant savings compared to renters in the Lower Murray area. Paying rent for a house in the area would require 24.1 percent of typical income, but paying for a house would eat up 16.9 percent of income.
There was a similar gap between rents and the costs of ownership in the Moree-Narabri area in northwest New South Wales.
ANZ Senior Economist Felicity Emmett said the lack of affordable rental properties in major cities was attracting more tenants to regional areas and rents had gone up.
“Due to migration out of town, the regional NSW has become one of the most expensive areas to rent across the board,” Ms. Emmett said.
“For some, this move will be permanent because they find life in the bush more attractive than in the city. For others, it is a temporary move they took during the pandemic. “
Richmond Valley was the most expensive area for renters, requiring 39.1 percent of their income. It is closely followed by the Snowy Mountains, with 36.7% of the income required to pay rent.
The ANZ report also found that the upfront costs of homeownership remained one of the biggest hurdles for new buyers.
On average, it now takes a typical household a record 10.2 years to save 20%, compared to eight years in 2020.
“While the share of revenue required for rent servicing has remained relatively manageable nationally, there are pockets of regional markets in Australia and lifestyle where the difficulty of saving for a deposit is further hampered by a sharp increase. rents, ”the report said. declared.
“Unlike (upfront costs), mortgage service life has not reached record highs during the current recovery… due to the very low mortgage rate environment,” the report says.
In regional areas, rental values rose sharply by 11.5% against a 4.2% increase in cumulative rents in capital cities over the same period.
“The only respite for tenants in the current environment is that, as with the rate of growth in purchase values, the rate of increase in rents loses some of its momentum,” the report concludes.
“Rental pressures are estimated to be highest in the Richmond Valley – coastal region, where housing trends amid COVID-19 have seen an increase in demand for lifestyle properties. “
Nationally, mortgage service life and rents have been kept relatively contained due to low interest rates.
Ms Emmett said a return to office work could lead to a change in regional areas. “This question mark about the work-from-home culture could slow the rate of house price growth,” she said.
“While there is a modest correction due to new policy changes from APRA, we may not see an increase in the supply and affordability of homes until 2023.”
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Originally published as Rent vs Buy: Data reveals regions where buying is cheaper than rent