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Buying vs. renting – what’s cheaper?
Buying vs. renting – what’s cheaper?

Prospective first home buyers in Melbourne and Sydney are feeling the squeeze, as a new study shows that only a handful of suburbs in each city are cheaper to buy a home in than to rent.

Only six of Melbourne’s 668 suburbs were more affordable to buy in than rent, while Sydney fared only slightly better, with 48 of its 967 suburbs cheaper for home buyers.

Of all the state capitals, Brisbane fared best, with 58 of its suburbs cheaper for buyers than renters.

The report, commissioned by property data company RP Data, found that in other parts of the country the outlook was brighter for prospective home owners.

Stable house prices and the recent interest rate fall have boosted the pool of locations where it is cheaper to buy than rent.

The Buy vs. Rent report shows that the number of localities Australia-wide where it’s cheaper to pay a mortgage than pay a landlord has risen from 388 in October to 494 this month.

If buyers were willing to pay an extra $50 per week on mortgage repayments above what they’d be paying in rent, that number jumps to 1726.

Breaking down the figures state-by-state, Queensland again comes out on top, home to 185 of the 494 localities. New South Wales is the next best, home to 122 towns and suburbs where buying is cheaper.

Looking at individual suburbs across the nation, RP Data found that Thurgoona, just north of Albury, was NSW’s best location for buyers when compared to renters.

They calculated those paying off a mortgage would be $531 better off per month than those paying a landlord.

In Victoria, prospective buyers needn’t look to regional towns for a good deal: the state’s best buy vs. rent result was in inner-city Docklands, where its estimated buyers would save $846 per month when compared to renters.

Once again though, Queenslanders have it best: buy a home in Queensland’s best-performing location, the small town of Miles around four hours inland from Brisbane, and you’ll be $1430 better off per month than if you’d rented.

The analysis provides a region-by-region comparison of the costs involved with servicing a mortgage and the costs of renting, based on median house and unit values and median asking rents across each suburb around the country.

It did not factor in other costs associated with buying a property, such as taxes, rates or body corporate levies.