Explosive rent increases over the past year have made it up to $690 cheaper to pay off a home loan each month than be a tenant in parts of regional NSW.
And that’s despite the record pace of interest rate hikes and continued home price rises, which have pushed the costs of owning a home to unprecedented levels.
New analysis from national brokerage group Mortgage Choice revealed there were 18 regional locations spread around the state where the average repayments were cheaper than average rent.
The areas included suburbs in Wellington, Lismore, Kempsey, Muswellbrook, Broken Hill and much of the Richmond-Tweed region in northern NSW, among others.
The study assumed a home purchase at the median price in the area using a 20 per cent deposit and the average loan rate currently being offered by Australia’s big four banks (6.69 per cent).
Homeowners got the biggest savings over renters in the Northern Rivers region. Picture: Jay Cronan
The analysis also assumed the buyer would otherwise have paid median rent in the area if they had remained a tenant.
Mortgage Choice CEO Anthony Waldron said the research indicated many tenants would save money becoming homeowners.
MORE: How dropout turned $38k salary into $43m
“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.”
Tenants are at the mercy of landlords because of the shortage of rental housing relative to demand. Picture: Adam Yip
Mortgage Choice indicated home buyers would get the biggest saving over renters in parts of the New England region in NSW’s northwest, along with the state’s far west and Orana region.
Repaying a loan on a typical home in Boggabri, a town about 110km northwest of Tamworth, was an average of $550 per month cheaper than renting.
MORE: Shock bank balance you now need to be ‘rich’
About 100km further to the northwest, home buyers in the town of Wee Waa got an average saving of about $490 per month.
The biggest savings for buyers were on offer in flood-affected South Lismore in the Northern Rivers region. Repaying a loan on a typical home was about $686 cheaper each month than paying rent.
Tenants have been urged to consider a home purchase if they have enough savings.
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 gap between rents and repayments were so large than many landlords were making considerable profits.
“Our rental returns are among the highest in the country,” she said, noting that most homes in the area cost about $200,000 but rented for nearly $500 per week.
“The homes are very cheap compared to the rents,” Ms Nadge said.
WHERE HOUSE BUYERS GET THE BIGGEST SAVINGS OVER RENTERS
(with avg. monthly saving)
South Lismore (Richmond-Tweed) $688
Boggabri (New England and North West) $542
Wee Waa (New England and North West) $486
Broken Hill (Far West and Orana) $450
Peak Hill (Central West) $363
Lismore (Richmond-Tweed) $319
Cobar (Far West and Orana) $269
Girards Hill (Richmond-Tweed) $235
South Kempsey (Mid-North Coast) $183
Wellington (Far West and Orana) $165
Muswellbrook (Hunter Valley) $100
Source: Mortgage Choice analysis of PropTrack median data
English (US) · 