According to research by Finder.com.au, in some of Melbourne’s popular inner-city and outer areas, buying is cheaper than renting. For example, buyers in Melbourne, North Melbourne, Travancore and Abbotsford are paying up to $880 a month on mortgage repayment rather than renting a house that costs at least $1000 a month.
Data of Melbourne property market
In some outer suburbs, the greatest gap between mortgage and rent is $1123 each month more to pay mortgage repayments at Cranbourne South. This data is based on the CoreLogic price data calculated with a 3 per cent interest rate over 30 years.
With interest rates falling, paying down a mortgage on a property is a cheaper way than renting in 19 Melbourne suburbs according to the latest figures.
Apartments in the heart of the city offer the greatest opportunity, with CBD owners saving about $104 a week on unit repayments compared to renting.
Travancore, a small suburb, is a close second at a $99 discount behind, followed by Carlton offers an $83 gap and Southbank $61.
The analysis compared typical asking prices and mortgage payments for median homes in the same suburb. It assumes that the buyer has a 20% deposit and pays a typical mortgage interest rate of 3.2%.
As for housing, renters with savings can own their homes in certain suburbs on the western edge of the city, and they can save money on weekly meals out.
No western suburbs made the list, but Maddingley and Melton on Melbourne’s western fringe were close behind at $22 and $37 a week more on rent respectively.
Make a better decision on purchasing property
Mr.Harrison, Nelson Alexander Flemington’s director who explained that Travancore unit prices were still recovering from the downturn. And he has illustrated that “inner-city rents are quite high, with demand from university students, those in the nursing industry and people who want to be close to the CBD – rents are not going to be as high if you go four or five more suburbs out.”
If you have owned a home in one of the areas mentioned above, you can pay a little cheaper. According to news.com.au report, there is a list that shows more detail of where it’s cheaper to buy than rent, especially recommended for new owners. CBD units had the largest difference after Cranbourne South, with the average monthly mortgage repayment of $1501 well below the median monthly rent of $2383.
Some things to be considered when buying a home
Although there are many areas where buying a house costs less than renting, there are some things buyers need to know and be aware of before choosing to buy:
- Buyers need to take on more than just mortgages. There are taxes, insurance, maintenance and repairs. There may also be a membership fee from the homeowner’s association to consider.
- Homeowners have less flexibility to move. After buying a house, there is not much flexibility in choosing a new job in another town.
- Market and house price volatility. The value of a property can rise or fall depending on when it is bought, whether in good times or bad. Properties may not appreciate as quickly as homeowners expect, making it unprofitable for homeowners to plan to sell.