It’s cheaper to own an apartment than rent in 1 in 5 suburbs

While it almost always costs more to buy rather than rent a place, new research shows it can be cheaper to own an apartment than rent in one in five suburbs nationally.

Buying a home is a major step, no doubt about it. So big in fact, that it can be easy to assume you’ll pay less to rent a place compared to buying.

But new research from Domain shows this isn’t always the case1. Let’s take a closer look at what’s happening.

Apartments hold the key

First the not-so-good news. When it comes to houses, chances are it’s going to cost less to rent than buy.

Domain found median home loan repayments are cheaper than house rents in just 6% of neighbourhoods nationally – a figure that falls to 0% in Sydney and Melbourne and 0.4% in Brisbane1.

Apartments are more promising.

It turns out, it can be cheaper to own rather than rent an apartment in almost one in five suburbs nationally. Of course, this varies according to where you plan to buy.

In Brisbane, it’s cheaper to own rather than rent an apartment in around 8% of suburbs. That figure rises to one in ten suburbs in Sydney, and almost one in five neighbourhoods in Melbourne.

But great news if you’re buying in Perth – in around eight out of ten suburbs in the WA capital it’s cheaper to buy an apartment compared to renting. 

The proportion of suburbs where it’s cheaper to buy or rent

^{Source: Domain Rent vs Buy Report1 Canberra, Hobart and Darwin were excluded from the analysis due to low volumes.}

The cost saving between buying and renting a unit isn’t always massive.

Domain found, for instance, that in the Sydney suburb of Mascot, it can cost $74 less a week to service a mortgage on a unit than to pay rent1.

In Melbourne, the neighbourhood of Notting Hill can see unit owners pay $137 less per week than rents.

In Adelaide, the weekly price difference between owning and buying a unit is about $21, while in the Perth suburb of Burswood, an apartment owner can pay a whopping $254 less each week to own rather than rent an apartment.

Bear in mind, as a home owner, you can also expect to wear all the costs of ownership such as strata levies, insurance and repairs and maintenance. So, in terms of the bigger picture, renting can be cheaper in the short run, but over time the odds favour home owners, who can expect to see the value of their home rise.

What it means for you

For many Australians owning a house is a personal property goal.

But if you are prepared to make an apartment your stepping stone to getting into a house later on, you could be rewarded with valuable savings compared to renting.

To begin your home buying journey, talk to us to get to know your borrowing power and get the ball rolling with home loan pre-approval. 

¹https://www.domain.com.au/news/where-its-cheaper-to-buy-than-rent-1396765/