Despite the pandemic, our lockdowns, and the curfews, property prices are surging around Australia.
And more recently vacancy rates have plummeted pushing rents up, especially for houses.
However, a recent report by NAB has revealed the suburbs where buying is still cheaper than renting.
The report has identified outer-metro suburbs and inner-city apartments as the 'best bang for buck' areas to buy, rather than rent.
Not surprisingly, in Sydney and Melbourne, recent strong property price growth has meant home buyers will need to move further out from the CBD or into regional areas to find a house that’s cheaper to buy than rent.
Now just to make things clear...
While some segments of the media are reporting these locations as "pockets of value", in my mind these are terrible locations to invest in.
There's a reason why these locations are cheap and they're lucky to remain cheap enough to perform.
Similarly, tenants who live in these locations will have difficulty paying more rent over time – read the lists below with interest but don't consider buying there.
And even if you're a first homebuyer considering these locations, while entry into these markets may be cheap today, you'll miss out the strong capital growth of will allow you to build an asset base over the long term.
It's likely your first home won't be your forever home and at some stage you want to upgrade, meaning capital growth in your first home is going to be critical to give you future choices.
NAB Executive, Home Ownership, Andy Kerr said:
“We have seen through the pandemic, particularly with first home buyers, that flexible and hybrid working is providing more options than they have historically had.
Our research shows prospective buyers shift in where they want to buy and demand from first home buyers has been the strongest we’ve seen in a generation.
Property prices have not risen as much in outer-metro suburbs and first home buyers are very good at picking up on where property prices have been more subdued.
The correlation between outer metro suburbs and buying new builds is certainly playing through in finding a bargain.
House prices are rising, but there’s still plenty of opportunities for Australians to buy their dream home rather than rent it.
The simple reason for this is the record low rates on offer, with many mortgage rates still coming with a 2 in front of them.”
Here is a breakdown of where the NAB it’s cheaper to buy than rent in your state.
New South Wales
Sydney housing prices have kept moving higher and higher up 19.7% over the last year.
Yet these are some suburbs where it’s cheaper to buy a unit than rent:
- Bankstown and
Regional locations in New South Wales where it’s cheaper to buy a house than rent include:
- Broken Hill
- Port Macquarie
- Coffs Harbour
- Tweed Heads
Despite suffering from over 200 days of lockdowns, Melbourne house prices rose 11.8% over the last 12 months.
However, in Melbourne apartments in inner-city locations such as Carlton, Melbourne CBD, Southbank, Docklands and Abbotsford are cheaper to buy than rent.
Obviously, these locations are suffering because of a lack of overseas students, travelers, and holidaymakers.
The apartment market in Bundoora, in the city’s northeast near LaTrobe University, also presents more affordable buying opportunities.
When it comes to houses, Melton and Melton South, on the outskirts of the city, provide some options where it’s cheaper to buy than rent.
Interestingly Melton has underperformed the general Melbourne property market for decades, so while properties might be cheap there, they won't make a good long-term investment
Other options in regional Victoria include:
While the overall Brisbane property market has performed strongly this year, and house prices have grown 18.6% over the last 12 months, it’s cheaper to buy a house than rent in the outer suburbs of Logan, Bald Hills, Redbank Plains, Redcliffe, and Caboolture.
Due to the fact that apartments have underperformed in Brisbane over the last years, there are opportunities where it’s cheaper to buy than rent as close as a 3km radius of the CBD, including areas such as Brisbane City, Fortitude Valley, Spring Hill, and South Brisbane.
Outside of Brisbane, it’s also cheaper to buy than rent in various suburbs in the Gold Coast and the Sunshine Coast.
The same goes for the regional towns of:
Perth is one of the more affordable capital city markets in Australia, with house price growth of only 11.4% over the last year.
Yet the suburbs of Armadale, Greenfields, Port Kennedy, Clarkson, and Baldivas provide opportunities where it’s cheaper to buy a house than rent.
Units in Perth CBD, East Perth, South Perth, Rivervale, Maylands, and Fremantle are also cheaper to buy than rent.
In regional WA, it’s cheaper to buy than rent in Port Hedland, Newman, Broome, and South Hedland.
Adelaide's housing values grew 16.5% over the last year, yet it’s cheaper to buy a home than rent in outer northern suburbs such as Elizabeth and Salisbury.
Apartments in Adelaide's CBD are more affordable than renting as are units in Glenelg.
Regional S.A. areas where it’s cheaper to buy a house than rent include:
- Port Augusta
- Mount Gambier
- Murray Bridge
- Port Lincoln
- Victor Harbor
In Hobart units in Glenorchy are cheaper to buy than rent, while in the towns of Sorell, Howrah, Moonah, and Kingston there are affordable housing options.
Other locations in Tasmania where it’s cheaper to buy than rent include Queenstown, Ulverstone, Launceston, Devonport, and Wynyard.
In Canberra, it’s more affordable to buy a house than rent in Kambah, Ngunnawal, and Bonner.
For apartments, it’s cheaper to buy than rent in Braddon, Belconnen, Franklin, and Kingston.
The Darwin houses are more affordable to buy than rent in Zuccoli, Gunn, Durack, and Leanyer.
ANd it’s cheaper to buy an apartment in Darwin City, Stuart Park, and Larrakeyah than rent.