One in four homes in Australia will be cheaper to buy than rent over the next 10 years, reveals a new report from property intelligence company PropTrack.

According to PropTrack Buy or Rent Report - June 2022 authored by PropTrack economist Paul Ryan, there are 3300 suburbs across Australia where it is cheaper to buy than rent. Queensland, Western Australia, and the Northern Territory offer more favourable buying conditions with over 50% of dwellings estimated to be cheaper to buy rather than rent. Northern Territory tops the table at 98%, followed by Western Australia (62%) and Queensland (51%).

At the other end of the spectrum, less than 10% of dwellings were cheaper to buy in NSW and Victoria. Victoria fared the worst with just 7% of all dwellings available at favourable prices.

Australia-wide, 27% of all dwellings are cheaper to buy than rent; however, this number has drastically dropped from over 50% at the same time last year.

In terms of the monthly price differential between buying and renting, one could save up to $1,620 per month by buying a house (Fly Creek NT). Suburbs that offered significant savings to buy also include Jimna QLD ($1,119), Gagebrook TAS ($707), St Kilda SA ($656) and Spencer NSW ($644).

However, between increasing mortgage rates and strong growth in home prices, renting has become a more affordable option across most of the country now compared to a year ago, says the report.

“The balance between the costs of buying and renting provided by this analysis suggests price growth will continue to be slow over the next year, and rent growth will be strong. These trends would rebalance the costs of buying and renting towards buying.”

“Favourable conditions for renters will continue to place upward pressure on rents. Over the next year, rent price growth will continue to be strong. With the relative attractiveness of renting in cities like Sydney, Melbourne, and Canberra, this will put continued upward pressure on rents in these locations, particularly as rental demand continues to increase.”

Report highlights across key cities

Sydney: Price rises across Sydney have made renting houses cheaper than buying almost everywhere across the city. Renting appears particularly attractive to the north and east of the CBD in prestige suburbs. However, there remain many pockets of the city to the south-west and west where the cost of buying is not estimated to be significantly higher than renting.

Melbourne: Modest changes in advertised rents relative to house prices have made much of Melbourne cheaper to rent than buy over the next 10 years. This is particularly the case to the east and south of the CBD. But there remain peripheral regions of the city to the north, east and west where the expected difference in costs is small and will contain attractive houses for buyers.

Brisbane: Those looking to live in houses in the inner-city can save by renting, particularly in suburbs along the Brisbane River. Buying conditions are very favourable in more peripheral parts of Brisbane to the south and south-west of the CBD. House price growth of 26% over the past year has reduced the relative attractiveness of buying houses across Brisbane, particularly in the north and the west of the city.

Adelaide: Families looking to live in a house in the inner city, as well as to the east, south, and west, will find it cheaper to rent. Those looking to buy can find relatively cheap houses to the north of the city. Strong price growth across Adelaide over the past year – up 24% – has eroded much of the favourable buying conditions across the city seen at this time last year.

Perth: Prices remain favourable to buy for houses in almost all parts of Perth, except to the west of the CBD, where it is estimated to be cheaper to rent. Perth has seen relatively modest price growth of 8.5% over the past year, which has maintained affordability in many parts of the city.

Hobart: Strong price growth across Hobart has made conditions less conducive for buyers than a year ago. In 2021, much of the city was estimated to be cheaper to own houses. In 2022, buy-favourable regions are estimated to have shrunk to pockets located only in the north-west and west of the CBD.

Canberra: Strong price growth has pushed prices up in almost all suburbs across the nation’s capital to a point where it is cheaper to rent if looking for a house. However, there are many suburbs to the north and east of Capital Hill where both options are expected to have similar costs and there are likely to be attractive prospects for buyers.

Source: PropTrack Buy or Rent Report - June 2022

Image credit: PropTrack