Where is it cheaper to buy than rent in Australia?

A new report highlights Australian locations where it’s cheaper to buy property than to rent it.

The PropTrack Market Insight report found 36% of Australian homes are cheaper to buy than rent, with Queensland, Tasmania and Western Australia offering the highest proportion of homes where would-be buyers should take the plunge.

Based on a national analysis of estimated purchase and rent prices, the report revealed that buying conditions remain more favourable for units with over half (55%) estimated to be cheaper to buy than rent, while 29% of houses in Australia are cheaper to buy.

PropTrack economist and report author Paul Ryan (pictured above left) said the report suggested stronger price growth conditions would persist in Queensland, Tasmania and Western Australia, a trend seen since the onset of the COVID pandemic, which may reduce the share of homes cheaper to buy.

“Many of the capital cities where buying conditions are most favourable reflect recent unit development, where prices are low compared with rents following recent record rent growth,” Ryan said.

Data on where it’s cheaper to buy than rent property

States where it’s cheaper to buy than rent

The PropTrack report shows that Western Australia has the highest percentage of homes where it’s cheaper to buy than rent with 78.7%.  Queensland is in second place with 53.3%, followed by Tasmania (48.1%), South Australia (38.9%), NSW (24.3%) and Victoria, with just 16.6% of homes cheaper to buy than rent.

^{Source: Prop Market Insight Report, November 2023}

Cities where’s it cheaper to buy than rent

PropTrack analysis shows that Perth comes out on top of all state capitals when it comes to the share of units and houses where it’s cheaper to buy than rent, with a whopping 92.5% of all units and 74.3% of all houses. In Hobart, 63.7% of all houses are cheaper to buy, along with 35.7% of all units, while in Brisbane, 77.3% of houses and 26.4% of units are cheaper to buy than rent.

In Adelaide, the ratio is 60% of all units and 30% of all houses, while in Melbourne it’s only 38.5% of houses and 2.2% of houses. In Sydney, just 1.4% of all houses are cheaper to buy than rent and 42.7% of all houses.

Ryan said favourable buying conditions remained despite the record pace of interest rate increases, and home prices had increased 36% since the pandemic.

“This shows that there are still opportunities for buyers across the housing market,” Ryan said.

“A record pace of rent growth – with advertised rents up 14.6% over the past year – has offset higher buying costs in many regions.”

“Looking to 2024, higher interest rates will challenge housing affordability for many. This may slow price growth and rebalance buying conditions across the market.”

Current interest rates not deterring property buyers

The report highlights some locations in Hobart where a high proportion of properties are cheaper to buy than rent including north-west Hobart where 70% of properties are cheaper to buy than rent and Brighton where 68% of homes are also cheaper to buy than rent.

Emmanuel Marios (pictured above right) CEO and principal of Hobart mortgage brokerage Derwent Finance said in “the vibrant Tasmanian market” buying a home was not only a wise financial decision but also more cost effective than renting for a significant number of his company’s clients.

“Even with the current higher interest rates, the prospect of building equity and enjoying the long-term financial benefits has inspired many individuals and families to make the leap from renting to homeownership,” Marios said.

“In our positive experience, the prevailing real estate conditions, despite the increased interest rates, have sparked a wave of enthusiasm among our clients, motivating them to embrace homeownership.

“They recognize the intrinsic value of owning a property, embracing stability, and acknowledging the substantial savings that come with investing in a home over time.”

Marios said the company’s clients viewed the current real estate landscape as a “golden opportunity” to transition from renting to homeownership.

He said the willingness to buy was propelled by optimism about the long-term financial advantages and the joy of having a place to call their own.

Other Australian locations where a high number of properties are cheaper to buy and rent includes Sydney’s Botany (71%), Melbourne city (83%), Brisbane’s inner city (80%) and Beenleigh (78%), Adelaide’s Playford (84%) and Perth’s Kwinana (95%), Gosnells (95%) and Swan (93%).

^{Source: PropTrack Market Insight, November 28,  2023}

Despite this latest report, data on housing affordability shows it’s at its worst level in at least three decades, with affordability in New South Wales, Victoria, and Tasmania the toughest, according to a PropTrack report released in September and rental supply hit an all-time high in the past 12 months.

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