Invest
Revisiting the rent v buy property conundrum
A growing number of regions are reporting rental prices that are on par with mortgage repayments, reigniting the age-old question of whether Australians are better off renting or buying.
Revisiting the rent v buy property conundrum
A growing number of regions are reporting rental prices that are on par with mortgage repayments, reigniting the age-old question of whether Australians are better off renting or buying.
The new housing affordability report from ANZ and CoreLogic has examined the costs of housing as a proportion of average incomes.
Here’s a breakdown of what it found:
Servicing new mortgages
According to the report, repayments on a new mortgage on a regional dwelling currently require 30.6 per cent of gross household income.
For detached houses, this breaks down to 31.4 per cent, while for units, this sits at 27.5 per cent.
It’s down from the peak across both houses and units of 53.1 per cent gross household income, as recorded in March 2008.
The report went on to indicate that the proportion of income required by regional households to service a new mortgage has been held below one-third since June 2013.
Share of income required for rent
“The proportion of income required to pay the rent is roughly equivalent compared with the proportion of income required to service a mortgage across regional Australia,” the report read.
On average, renters are dedicating 30.3 per cent of their salary to accommodation costs, which is only slightly below the 30.6 per cent recorded for mortgage payers.
ANZ and CoreLogic have noted that rental costs have been trending upwards since late 2016, “reflecting an 8.6 per cent rise in rents between the end of 2016 and June 2019, while household incomes were up a lower 5.3 per cent”.
To rent a house, costs as a percentage of income are sitting at 30.6 per cent, while the proportion being spent on servicing a unit rental agreement is now sitting at 29 per cent.
The findings led to CoreLogic’s head of research, Tim Lawless, highlighting an increase in the number of locations where it is cheaper to buy than rent.
Almost 80 regions Australia-wide have been flagged by ANZ and CoreLogic as locations where this is the case.
Such locations include the ACT’s Molonglo, Greater Brisbane’s Ipswich Hinterland and Ipswich Inner, NSW’s Broken Hill, Snowy Mountains and Dubbo, Greater Perth’s Kwinana and Armadale, Greater Hobart’s Brighton, and Darwin city and suburbs.
Mr Lawless said this can be attributed to “the lowest interest rates since the 1950s, together with lower housing prices relative to the market peak.”
nestegg previously reported that housing affordability has now peaked as housing prices rebound.
About the author
About the author
Property
3 reasons why Australia’s booming housing market won’t last long-term
Despite Australia’s property market growing at a pace not seen for three decades, a leading economist suggests there are warning signs that the property boom could be short-lived. ...Read more
Property
FHB surge as ‘it’s now cheaper to buy than rent’
Record-low interest rates mean that it is now cheaper to buy than rent, with first home buyers taking advantage, doubling their participation in the market, a big four bank CEO has said. ...Read more
Property
New home sales continue to soar in March
A strong level of building activity is expected in 2021 and 2022, given a strong spike in home sales during the year to March. ...Read more
Property
HomeBuilder extension announced
One of the government’s most successful schemes, HomeBuilder, has been extended, bringing the total level of expected government support for the construction sector to $2.5 billion. ...Read more
Property
Policy failures see houses become unattainable for young Australians, minister says
Australia’s booming house prices are the result of the government’s failed policies, with the younger generation now unable to afford what their parents could, a minister has said. ...Read more
Property
House prices to grow by 25% over 3 years
New research is predicting a large gain in property prices of around 25 per cent through to the end of 2023, driven mainly by low interest rates. ...Read more
Property
Strict cap on short-term rentals delayed following criticism
Following widespread criticism from councils and online rental companies, the introduction of NSW’s planned holiday rental code of conduct has been pushed back by three months. ...Read more
Property
Melbourne becomes Australia’s 2nd most affordable rental market
While most capital cities saw house rents soar to new record highs over the first quarter of 2021, Melbourne continued to lag behind – becoming the second most affordable capital city to rent in Aus...Read more
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
Property
3 reasons why Australia’s booming housing market won’t last long-term
Despite Australia’s property market growing at a pace not seen for three decades, a leading economist suggests there are warning signs that the property boom could be short-lived. ...Read more
Property
FHB surge as ‘it’s now cheaper to buy than rent’
Record-low interest rates mean that it is now cheaper to buy than rent, with first home buyers taking advantage, doubling their participation in the market, a big four bank CEO has said. ...Read more
Property
New home sales continue to soar in March
A strong level of building activity is expected in 2021 and 2022, given a strong spike in home sales during the year to March. ...Read more
Property
HomeBuilder extension announced
One of the government’s most successful schemes, HomeBuilder, has been extended, bringing the total level of expected government support for the construction sector to $2.5 billion. ...Read more
Property
Policy failures see houses become unattainable for young Australians, minister says
Australia’s booming house prices are the result of the government’s failed policies, with the younger generation now unable to afford what their parents could, a minister has said. ...Read more
Property
House prices to grow by 25% over 3 years
New research is predicting a large gain in property prices of around 25 per cent through to the end of 2023, driven mainly by low interest rates. ...Read more
Property
Strict cap on short-term rentals delayed following criticism
Following widespread criticism from councils and online rental companies, the introduction of NSW’s planned holiday rental code of conduct has been pushed back by three months. ...Read more
Property
Melbourne becomes Australia’s 2nd most affordable rental market
While most capital cities saw house rents soar to new record highs over the first quarter of 2021, Melbourne continued to lag behind – becoming the second most affordable capital city to rent in Aus...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
