The current trend is… renters becoming homebuyers
More and more renters are becoming buyers in recent years – and with the median unit Sydney rent sitting at $530 per week, is it any wonder?
Rapidly rising rental prices are driving an increased number of former-renters to become first-time buyers, with many unable to justify the huge hikes for the homes or apartments they’ve been leasing in recent times.
In some cases, first-time buyers previously renting one-bedroom flats in the city centre or surrounds are finding that their mortgage repayments are only slightly higher than the weekly rent charged for the same size property – but this way, they end up with their own home. This is a realisation I want more and more renters to come to, so that you end up in your own property, and not that of a landlord.
The data reveals a rising trend
The uptick in renters-turned-buyers has increased significantly since December 2022. According to PropTrack data covering the whole of Australia, 20.9% of homes are currently cheaper to buy than to rent, with the biggest portion in the Northern Territory with 94.4% of dwellings.
In New South Wales, an estimated 6.7% of homes (including houses and units) are cheaper to buy than to rent, in Victoria it is 6.5%. South Australia is higher at 17.9%, Tasmania at 22.4% and the ACT similar at 22.7%. In Queensland, 40.1% of homes are more affordable to buy than to rent, and in Western Australia it’s a huge 57%.
Economists at PropTrack agree that the apartment market is actually a lot cheaper to buy in right now than to rent, which may be why so many young Aussie renters are turning their backs on another unpredictable lease and towards ownership. Brilliant!
Rent in short supply
It isn’t just increasing rental costs that are pushing tenants to buy though. Current PropTrack Rental Report data shows that there is in-fact a short supply of rental properties throughout most of Australia, and indeed the major cities such as Sydney and Melbourne.
The vacancy rate is also super-low right now, sitting at just 1.3% nationally as of December 2022. This may be why you’ve seen unusually busy open house inspections for rentals in your area of late.
In Sydney, the vacancy rate is 1.8%, Melbourne 1.7% and Brisbane 1.1%. With more singles hitting the rental scene in recent years, as well as the added pressure of the return of international students and a surge in skilled migrants, we can expect rent in Australia to continue to climb, and rental housing to be difficult for renters to land.
A possible solution
In a bid to navigate an increasingly difficult rental market, I’m seeing an increase in best buds and even colleagues buying properties together.
For renters who have seen their rents increase anywhere from 10-30% in the past year, this is a clever tactic to avoid paying off someone else’s mortgage – especially if you plan on living with the friend or workmate long-term anyway!
But any good mortgage broker will tell you that the decision to buy with mates is not one to be taken lightly, and a long conversation needs to be had prior to signing on the dotted line to ensure all parties are happy with the decision. For more on this, take a look at our Mates and Mortgage blog.
If you’re currently renting and looking to take the leap into home ownership, give us a call at Kitty & Miles! Whatever your situation, our Australian buyers agency is dedicated to finding the right property for you. Give us a call on (02) 8916 6172 or email our team at email@example.com and one of our Sydney buyers will be happy to help!