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Buying can be cheaper than renting in Sydney

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It’s not something Sydneysiders would have expected over the last decade, but right now it’s cheaper to buy a home than rent, thanks to rock bottom interest rates. And yes, even with the recent explosion in prices, it’s still cheaper to buy than rent in some suburbs.

Last week, Sydney prices reached a record high soaring an average 5.7% since October. Taking this into account, monthly mortgage repayments are still lower than rent in many instances, especially for apartment buyers.

Data has also revealed home buyers received the biggest savings compared to renters in the Sydney areas with a high concentration of recently built units. These locations include Liverpool, Granville and Guildford, where paying down a mortgage on an apartment was an average of about $100-$250 cheaper per month than renting at current rates.

In other apartment hubs like Olympic Park, Mascot, Parramatta and Homebush, buying a home was an average about $20-$90 per month cheaper than renting – when excluding the associated costs of ownership such as council and strata fees.

Homeowners got even better savings outside of Sydney – paying a mortgage is cheaper than renting in about 40 per cent of the country, according to additional data.

Of course, this is assuming a few things, including the buyer having a 20 per cent deposit and buying a property at the median price in the suburb with an average loan rate of 3.5% – which is actually significantly higher than the cheapest loans – around 1.88%

There’s no doubt that property is a great long-term investment. Over the course of your lifetime you’ll probably be better off owning your home. The old truth is even truer nowadays – why pay your landlord when you could potentially pay the same amount, or less ,monthly on a house or apartment you can call your own?

But how long will this last?

Mirvac head of residential Stuart Penklis said Sydney buyers may have a limited window to potentially get apartments for lower prices that would be cheaper to repay each month than paying down rent.

Growth in apartment prices has lagged house price rises in recent months but the experience of previous market booms suggests this discrepancy will not last indefinitely. Growth in established house prices will eventually spill into the unit market.

Many people are being attracted to larger apartments and finding them cheaper to buy than rent. Take an example of a recent purchase in Liverpool. A couple purchased the unit with just a $10k deposit through a scheme provided by the developer and their mortgage repayments are $190 per week less than rent.

McGrath Projects agent Glen Craigie said most buyers coming from out of the area didn’t realise just how much better value they could get in the southwest. Liverpool is pretty underrated – possibly the best market for first-home buyers at the moment.

So, if you’re on the fence about buying, it’s time to just make it happen. If you’re outside of Sydney, it could just be the perfect time to buy an investment property here too.

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