House prices have boomed and interest rates may be on the up but rising rents are making it more affordable to buy than rent in nearly 300 Australian suburbs.

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Median dwelling values were driven up nearly 30 per cent across the nation since the COVID pandemic struck and it put property out of reach of many buyers.

Rents have also jumped significantly however, and it has meant that in more than a quarter of our capital city property markets you’re better off in the hip pocket paying a mortgage rather than paying rent.

CoreLogic analysis shows that a total of 274 suburbs are cheaper for buyers than renters, with most being unit markets (201) but also significant housing markets (73).

Here in Melbourne there are 20 apartment markets where your monthly mortgage repayments would actually be less than your monthly rental bill in the same dwelling, including the popular inner-city suburbs of Carlton and Docklands.

Head of research at CoreLogic, Eliza Owen, spoke to Australian Financial Review.

“It depends on the individual’s situation, but broadly speaking, it’s probably more challenging to rent, with rapidly rising rents in many parts of the country, increased competition for rents with holiday-makers and overseas arrivals,” she said.

“And although interest rates are rising, they are still pretty low, and in some markets prices are starting to fall.

“This could be a bit of a ‘sweet spot’ for first home buyers who have been saving up their deposit. You have a window of relatively low rates, slightly lower purchase prices in some parts of Sydney and Melbourne, and slowing market dynamics in terms of longer time on market.”

Jack Henderson is a buyer’s agent based in Sydney and he told Australian Financial Review the rising rents were providing an incentive for people to pull the trigger on buying a property.

“Housing costs are going up whether you’re renting or looking to buy, but for those who have saved the deposit, soaring rents could potentially push them to take the plunge and buy their home,” he said.

“I think with rents continuing to rise, people may feel more comfortable spending that money on their own property than paying other people’s mortgage.”

CoreLogic data shows rents in Australia have risen 2.7 per cent in the three months to April, which is a faster rate than the 1.9 per cent rise in house prices and Eliza Owen expects this trend to continue.

“Rent rises probably do have a bit further to go,” she told Australian Financial Review.

“Upward pressure on rental values could persist amid higher wages growth, the return of overseas arrivals to Australia, and the lag at which rental supply responds to increases in demand.”

Ray White chief economist Nerida Conisbee also spoke to AFR and aid if aspiring homebuyers can get their deposit together, it could be a great time to buy amid cooling property prices off the back of rising interest rates.

“Right now, we are seeing prices start to moderate as interest rates rise but conversely rents are rising rapidly,” she said.

“If you are someone who wants to flip houses quickly, now isn’t the time. But if you want to buy to hold long term, now is a good time to own or buy.”




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