Extreme rental rises over recent years have created pockets of Sydney where owning a home is now cheaper than renting one.
Exclusive new research showed there were eight Sydney suburbs where the repayments on a home purchased at current prices were up to $162 a month cheaper than average rents.
This rare occurrence of tenants paying more than mortgage holders was emerging in apartment development hotspots in Sydney’s west, plus higher density inner suburbs.
These areas tended to have a higher concentration of properties available for purchase, which helped moderate prices, coupled with a shortage of rental housing.
This had meant that rent increases had eclipsed property price rises over many years, creating an unusual opportunity for tenants to become first-home buyers and actually save money.
Renters are now worse off in terms of expenses than homeowners in some areas. Picture: Jeremy Piper
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The suburbs included Harris Park and Rosehill, near Parramatta, and Regents Park, in the Bankstown area, according to the Compare the Market analysis of CoreLogic data.
Other suburbs where owning a home was cheaper than renting included Liverpool and neighbouring suburb Warwick Farm, along with Villawood and, in the inner city, Ultimo.
Homeowners got the biggest savings in Mascot, with a typical unit bought at the current median price requiring $4,027 a month if paying with a 20 per cent deposit. Rents were typically $4,189 a month.
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High-rise development has slowed sales price growth in some areas, while rents have continued to go up.
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This assumed the homeowner paid an average interest rate of 5.99 per cent on a 30-year mortgage. The analysis excluded additional homeownership costs such as council rates and insurance.
With interest rates expected to continue dropping later this year, experts revealed there could be more city areas where renters were better off ditching their landlords and becoming homeowners.
“Interest costs are expected to decline in 2025, with the RBA weighing up potential cash rate cuts as inflation trends lower,” said CoreLogic head of research Eliza Owen.
“This might tip more markets in favour of buying over renting, and understanding the market trends and being prepared to act when the time is right can make all the difference.”
Many of the suburbs were near the Parramatta CBD.
Ms Owen said mortgages remained more expensive than rents in most areas.
“It’s been a tough few years for renters … despite this, rising purchase values and a high interest rate environment still mean mortgages are generally more expensive.
“This research highlights the rare pockets where individuals might have an easier time serving a mortgage and reaping the benefits of owning, provided they have the 20 per cent deposit.”
Andrew Winter, Compare the Market property expert and host of TV show Selling Houses Australia, said there was an opportunity for unit buyers to capitalise.
“If owning a home is part of your long-term plan, and you have a deposit saved, you might find it’s worth paying a bit more to have a little slice of Australia to call your own.”
Selling Houses Australia host Andrew Winter said those with a deposit ready had an advantage.
Renters Yatha Jain and Izabella Antoniou said the fact that rents were higher than new repayments was disheartening.
“A big barrier to owning a home is that initial deposit,” Ms Jain said. “It’s great in theory that a mortgage payment is lower but in reality there’s a lot of people who can’t even consider that because they can’t pay that initial payment.”
Ms Antoniou said landlords may be the real winners of the situation.
“Payments being lower for a mortgage is the perfect example of how a rental is set up to benefit the investor and not the people who are trying to live in the home,” Ms Antoniou said.
HOW MUCH YOU SAVE MONTHLY PAYING OFF A LOAN INSTEAD OF RENTING (units)
Harris Park $73
Mascot $162
Regents Park $11
Rosehill $109
Ultimo $74
Villawood $81
Warwick Farm $112
Liverpool $4
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