Cheaper to buy than rent
Cheaper to buy than rent in 388 suburbs country-wide
RP Data’s Buy vs Rent report showed the number of suburbs across the country where making principal and interest payments on a 5.9% variable mortgage was cheaper than forking out rent had jumped from 238 in August to 388 in October, a rise of 63%.
Regional areas dominated the list, accounting for 246 suburbs.
In Queensland, the number of suburbs where it was cheaper to pay off a loan than pay a landlord rose from 84 in August to 147 in October, with 105 of those in regional parts of the state.
Outside Far North Queensland, the Mackay region had the most suburbs in this category with 22.
New South Wales was second among the states with 88 suburbs on the list, 47 of which were in regional areas.
Nationally the number of suburbs where it was cheaper to buy than rent jumped to 1975 based on variable interest-only loans.
Using a three-year fixed interest rate of 5.39% as a guide, the list of suburbs grew to 674 (principal plus interest) or 2991 (interest only).
Remarkably an additional 1419 suburbs could be added to the list where people were willing to pay $50 per week more to service a mortgage compared with paying rent.
RP Data national research director Tim Lawless said significantly lower interest rates and falling house prices were creating an environment in which an increasing number of people would look to enter the property market.
The Reserve Bank of Australia has cut the official cash rate by 1.25% from its peak of 4.5% last year, while city housing prices have fallen 6%.
“In some suburbs it may actually be cheaper than renting especially where we are seeing evidence of tight rental markets resulting in rental increases and lower home values,” Mr Lawless said.
“For many buyers now may be a good time to either re-enter the market or buy their first home.” A Melbourne Cup cash rate cut will only make it a more attractive option.
CHEAPER TO BUY THAN RENT
Number of suburbs in each state:
New South Wales…88
*Source: RP Data Buy vs Rent report
Source: Adam Carroll 5th Nov 2012 4:18 PM