Aussie tenants could save money by waving goodbye to their landlords and becoming homeowners, a new study shows.
The exclusive Mortgage Choice analysis showed it has become cheaper to pay off a home loan than to rent in several suburbs across the country – especially in regional areas.
The once-inconceivable reality is sending ripples through the property market, leaving renters and prospective buyers scrambling to rethink their living arrangements.
Experts pointed to a combination of factors that have led to this unexpected reversal.
A surge in rental demand, driven by population growth and a shortage of available properties, has caused rental prices to soar, creating a perfect storm that now favours those who own their homes – even with recent rises in interest rates.
MORE: Rents fall at fastest rate since Covid hit
High tenant demand means landlords hold the power in much of the country.
Mortgage Choice CEO Anthony Waldron said the research indicated tenants had an opportunity to improve their financial situation.
“If you’ve been saving, you may be better off buying your own property and exiting the rental market,” he said.
“With your own property, you’re building on your financial position and paying off your own asset, rather than your landlord’s mortgage.
“That said, it’s important to note that buying property may involve costs outside of the mortgage such as stamp duty, legal fees and strata.”
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The Mortgage Choice analysis of PropTrack median rent and price data measured the monthly cost of buying a property at each suburb’s median price.
It assumed the buyer had a 20 per cent deposit and was charged the typical interest rate currently being offered by the big four banks.
Renting isn’t always cheaper than buying, depending on your location. Picture: Paul Miller
The study contrasted these repayments with the costs of renting a typical home, which was guided by the median rental price in each area.
The extra costs of homeownership such as maintenance, strata fees and council rates were not included.
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The findings indicated the cost of servicing a mortgage has dropped below the median rental prices in many areas, flipping the script on what has been an unrelenting rental market.
SuburbTrends founder Kent Lardner said would-be home buyers delaying their purchases due to uncertainty in the market may have increased pressure on the rental market
“The real drivers of this problem are the huge disconnect between population growth and housing supply,” Mr Lardner said.
The types of suburbs where it was cheaper to repay a home loan than rent varied across states:
NEW SOUTH WALES
See the full list of NSW suburbs
There were 18 locations spread around the state where the average repayments were cheaper than average rent.
The biggest savings for buyers were on offer in South Lismore in the Northern Rivers region. Repaying a loan on a typical home was about $686 cheaper each month than paying rent.
Some of the locations where buying is cheaper than renting were in NSW’s Northern Rivers region.
In Broken Hill, in the far west, the average saving for buyers was about $450 per month.
Broken Hill real estate agent Tara Nadge of LJ Hooker said: “The homes are very cheap compared to the rents.”
VICTORIA
See the full list of Victorian suburbs
Tenants could get some of the biggest savings in the regional Victorian suburb of Rochester, a short drive from Echuca.
Repaying a loan on a typical home in the suburb, priced at $350,000, would be $350 a month cheaper than paying the average rent in the area, which is currently $450 per week.
Buyers hoping to get a mortgage that costs less than rent are also heading to Ouyen.
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The famed silo art in Rochester, where repaying a home loan is cheaper than renting.
PropTrack data shows the town once famous for a vanilla slice contest has a typical house price of just $184,350, while the median rent is $338 a week.
Mortgage Choice has calculated that this means you’re $500 a month better off owning a home than paying rent.
Ray White Mildura’s Brett Driscoll sells homes in Ouyen and said not only was it cheaper to buy than rent, but most people in the area “knock out their mortgage quite a few years early”.
QUEENSLAND
See the full list of QLD suburbs
The data found tenants in every suburb outside the state’s cities were paying more to keep a roof over their heads than average home loan repayments.
It followed a critical shortage of rental properties that pushed costs skyward since the pandemic.
Moranbah houses are cheaper to own than rent.
The research, based on PropTrack median house price and rent data, found first-home buyers across all regional Queensland suburbs would have an average of $261 left in their pockets after paying the monthly mortgage, compared to renters.
The difference was most stark in mining service centres such as Moranbah, Bucasia and Dysart. Monthly rent in Moranbah was $2,817, while home loan repayments were $1,353.
SOUTH AUSTRALIA
South Australian tenants could get the biggest saving by becoming buyers in 15 locations.
The difference was most significant in Peterborough, in the state’s mid north, where it’s $476 per month cheaper to pay off a mortgage than rent.
See how rents and repayments compare in SA
WESTERN AUSTRALIA
Renters in Western Australia had the most choices of destination where it was cheaper to buy than rent. Many were spread across the state’s wheat belt and in prominent regional centres.
But mining towns had the biggest savings – largely due to FIFO workers.
Units in Baynton, part of mining town Karratha, were an average of $2000 a month cheaper to buy than rent, but experts cautioned that this was largely due to a smaller buying market for properties in the area.
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