There is even more incentive for people to quit the big smoke— Sydney and Melbourne—with homes across the rest of the country generally cheaper to buy than rent.
Only 4.9 per cent of homes in Sydney and 7.3 per cent of Melbourne homes were cheaper to buy than rent, according to Corelogic’s latest report.
This compared to between 43 and 96 per cent of other Australian addresses where it was cheaper to service a mortgage, including Brisbane.
The Weekly Property Pulse showed buying cost less than renting at 36.2 per cent of properties across the country, up from 33.9 per cent last year.
Proportion of homes cheaper to buy than rent
|Capital||Percentage cheaper to buy||Regional homes||Percentage cheaper to buy|
^Source: Corelogic Property Pulse
Corelogic head of research Eliza Owen said the data revealed striking differences in housing costs across different parts of Australia, with a loss of migration affecting Sydney and Melbourne.
“The combination of lower rent growth and very strong dwelling value growth has meant that even fewer properties across Sydney are cheaper to pay down a mortgage than rent, at just 4.9 per cent,” Owen said.
“This is down from 7.1 per cent when the analysis was done with the same assumptions in February 2020.”
Owen said the results were also a reflection of much lower interest costs on mortgage debt since the onset of Covid-19.
“However, reduced interest costs have not led to cheaper mortgage serviceability relative to rents in every instance,” Owen said.
“This is especially the case in Sydney, where property values have increased markedly against low interest rates, pushing up loan principals and outpacing growth in rents.”
Despite homes becoming cheaper to buy than rent, prices were also going up, however, a boom-to-bust scenario was unlikely, according to Knight Frank research.
The housing value would continue to be underpinned by undersupply, low interest rates and buyers’ fear of missing out.