30 city suburbs where it’s better to rent than buy

First home buyers who live in good suburbs in big cities might be better off buying high-growth investment properties in different locations and stay put in their rental.

New research commissioned by Well Money has identified the 30 suburbs where first home buyers might prefer to rent than buy.

Some unit markets in the inner and middle rings of Australia's capital cities have above-average vacancy rates, which limits their rental growth.

• Also read: Top 25 Sydney suburbs where prices are still booming

• Also read: Down $325k: 20 regional suburbs seeing the biggest property price falls

• Also read: Down $300k: 40 city suburbs where prices are plummeting

That’s good news for tenants but bad news for property investors.

At the same time, there's a good chance many more units will be built in those suburbs in the coming years, which would reduce demand and put downward pressure on prices.

The suburbs in the list are split depending on the price that you would be willing to pay for a home.

Well Money CEO Scott Spencer said he feels for first home buyers, because conditions are tough.

“Prices are falling, which is making housing more affordable. However, prices are falling from a high base, so they’re still elevated,” Spencer said.

“Another challenge for first home buyers is that while interest rates remain low by historical standards, they’re rising and are likely to rise further, which is affecting their borrowing capacity.”

Spencer said first home buyers who live in capital cities who have a budget between $500,000 and $800,000 have a tough choice to make.

“They can buy a unit in the inner or middle rings, which would give them a convenient location but maybe not the amount of space they want,” Spencer said.

“Alternatively, they can buy a house in the outer rings, which would give them lots of space but might leave them with a long commute to the city every day.”

Spencer said this is why many young people are choosing to buy an investment property, while choosing to still rent in the city.

Budget of $500k to $600k

With a budget of up to $600,000, you could buy a unit in about 30 per cent of the suburbs in Sydney, 65 per cent in Melbourne and 95 per cent in Brisbane.

All of these suburbs have a median sales price below $600,000 but potential buyers may actually be better off renting.

Here are the top 10 suburbs where it’s better to rent, along with their median rental prices:

1. Miller, NSW - $220 per week

2. Narellan, NSW - $430 per week

3. Wentworthville, NSW - $430 per week

4. Manor Lake, VIC - $330 per week

5. Noble Park North, VIC - $380 per week

6. Ascot Vale, VIC - $380 per week

7. Ormond, VIC - $385 per week

8. Deer Park, VIC - $350 per week

9. Sunshine North, VIC - $395 per week

10. Redland Bay, QLD - $455 per week

These are locations where downward pressure is being placed on weekly rents and property prices, so you may end up saving money by renting instead.

Budget of $600k to $700k

With a budget of up to $700,000, you could buy a unit in around 50 per cent of the suburbs in Sydney, 85 per cent in Melbourne and 100 per cent in Hobart.

But here are some locations where it’s better to rent than buy right now:

1. Sefton, NSW - $400 per week

2. West Footscray, VIC - $325 per week

3. South Kingsville, VIC - $360 per week

4. Thornbury, VIC - $360 per week

5. Parkville, VIC - $395 per week

6. Coburg North, VIC - $430 per week

7. Malvern, VIC - $400 per week

8. Caulfield North, VIC - $420 per week

9. Northcote, VIC - $420 per week

10. Ripponlea, VIC - $400 per week

11. Rose Bay, TAS - $400 per week

Budget of $700k to $800k

With a budget of up to $800,000, you could buy a unit in around 70 per cent of the suburbs in Sydney, 95 per cent in Melbourne, 98 per cent in Perth, 100 per cent in Hobart and 100 per cent in Canberra.

But here are some locations where it’s better to rent than buy right now:

1. Asquith, NSW - $490 per week

2. Forest Hill, VIC - $400 per week

3. Strathmore, VIC - $400 per week

4. Hughesdale, VIC - $420 per week

5. Clayton, VIC - $415 per week

6. Bulleen, VIC - $480 per week

7. Fitzroy, VIC - $500 per week

8. Burswood, WA - $545 per week

9. North Hobart, TAS - $465 per week

10. Giralang, ACT - $520 per week

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