While it may feel like property prices are skyrocketing out of reach, the majority of Australian homes are actually cheaper to buy than rent over the next decade.
The latest REA Insight Report reveals it is cheaper to buy than rent for approximately 57% of properties across Australia, based on a housing price growth rate of 3% per year over the next decade.
Why is it cheaper to buy than rent?
Record-low mortgage interest rates in the current property market is the main driver for favourable buying conditions.
Interest rates can currently be fixed below 2% per year and the Reserve Bank of Australia has committed to maintaining low interest rates until at least 2024. This certainty that mortgage costs are not going to increase rapidly provides comfort for buyers that are borrowing large amounts.
Given these low-interest expenses, property price growth will likely offset the additional costs of owning a property, such as stamp duty and maintenance costs.
State Breakdown
Below is the REA’s state-by-state breakdown showing the percentage of suburbs for each state where it is cheaper to buy than rent (For Houses with 3 bedrooms and Units with 2 bedrooms).
Australia: 4,561 (59.1%) for houses, 2,666 (83.8%) for units
NSW: 966 (41.3%) for houses, 695 (69.1%) for units
Victoria: 728 (42.2%) for houses, 384 (67.6%) for units
Queensland: 1,427 (85.4%) for houses, 627 (98.4%) for units
South Australia: 495 (73.6%) for houses, 363 (98.4%) for units
Western Australia: 434 (69.7%) for houses, 314 (98.4%) for units
Tasmania: 363 (73.2%) for houses, 137 (100%) for units
Northern Territory: 81 (97.6%) for houses, 55 (100%) for units
ACT: 76 (65.7%) for houses, 91 (100%) for units
The analysis assumes that buyers already have access to a 20% deposit. However, saving up for a deposit still remains as the biggest challenge for many buyers as prices have risen - particularly for those entering the market for the first time.
How we can help you start buying.
Saving for a house deposit is the biggest hurdle for many buyers - especially for first home buyers as prices continue to rise in the current housing market.
However there is good news. Our team at KBRZ has several potential options to help you get a foot on the property ladder quicker.
A good first step is to speak to our team at KBRZ to assess your options. If you are currently interested in purchasing a property, or if you have any further questions, please feel free to contact us today. With our extensive network and years of experience in the industry, our team at KBRZ can provide tailored investment loan solutions that will allow you to maximise your wealth regardless of your circumstances.
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