cheaper-buy-than-rent

Proptrack data estimates that around one-in-five Australian properties are cheaper to buy than rent as of January 2023. This is down from 27% in mid-2022, a trend that won't surprise anyone after eight consecutive cash rate hikes from the RBA.

However, despite the fastest interest rate tightening cycle since 1994, there is still a sizeable chunk of properties where it's cheaper to buy than rent. This is despite home buyers needing to consider a lot more than just the mortgage payment - they'll need to consider body corporate fees if in a strata-titled dwelling, council rates, upkeep and maintenance, insurance, and more.

Percentage of homes cheaper to buy than rent
National average 20.9%
New South Wales 6.7%
Victoria 6.5%
Queensland 40.1%
South Australia 17.9%
Western Australia 57%
Tasmania 22.4%
Northern Territory 94.4%
ACT 22.7%

The cheapest suburbs to buy in relative to renting by region

PropTrack's buy or rent report in June 2022 revealed the top ten suburbs in each major metropolitan region where it was cheapest to buy relative to rent, for both houses and units.

Greater Sydney houses

Suburb Monthly Price differential
Spencer NSW 2775 $644
Gunderman NSW 2775 $450
Great Mackerel Beach NSW 2108 $79
Bateau Bay NSW 2261 $62
Bar Point NSW 2083 -$90
Watanobbi NSW 2259 -$318
Nattai NSW 2570 -$321
Kanwal NSW 2259 -$422
Doyalson NSW 2262 -$425
Hamlyn Terrace NSW 2259 -$439

Greater Sydney Units

Suburb Monthly Price differential
Kangy Angy NSW 2258 $1,565
Stanhope Gardens NSW 2768 $1,078
Vineyard NSW 2765 $893
Warragamba NSW 2752 $809
Banksmeadow NSW 2019 $790
Doyalson North NSW 2262 $592
Lake Munmorah NSW 2259 $552
Chain Valley Bay NSW 2259 $516
Narraweena NSW 2099 $382
Bateau Bay NSW 2261 $357

Greater Melbourne units

Suburb Monthly Price differential
Bangholme VIC 3175 $91
Differential Longwarry VIC 3816 -$469
Maddingley VIC 3340 -$475
Melton South VIC 3338 -$493
Melton VIC 3337/3338 -$499
Diggers Rest VIC 3427 -$514
Coolaroo VIC 3048 -$537
Kurunjang VIC 3337 -$543
Junction Village VIC 3977 -$547
Melton West VIC 3337 -$565

Greater Melbourne Units

Suburb Monthly Price differential
Gowanbrae VIC 3043 $3,223
Travancore VIC 3032 $276
Williams Landing VIC 3027 $260
Burnside Heights VIC 3023 $254
Crib Point VIC 3919 $212
Darley VIC 3340 $147
Albion VIC 3020 $107
Roxburgh Park VIC 3064 $92
Brookfield VIC 3338 $71
Melton VIC 3337 $35

Greater Brisbane houses

Suburb Monthly Price differential
Jimna QLD 4515 $1,119
Toogoolawah QLD 4313 $741
Laidley QLD 4341 $712
College View QLD 4343 $671
Esk QLD 4312 $637
Lockrose QLD 4342 $629
Riverview QLD 4303 $584
Lamb Island QLD 4184 $568
Lockyer Waters QLD 4311 $564
Calvert QLD 4340 $537

Greater Brisbane Units

Suburb Monthly Price differential
Mount Ommaney QLD 4074 $1,003
Augustine Heights QLD 4300 $905
Fernvale QLD 4306 $864
Springfield Lakes QLD 4300 $863
Boronia Heights QLD 4124 $849
Loganlea QLD 4131 $821
Boonah QLD 4310 $818
Hillcrest QLD 4118 $808
Crestmead QLD 4132 $780
Marsden QLD 4132 $774

Greater Adelaide Houses

Suburb Monthly Price differential
St Kilda SA 5110 $656
Smithfield Plains SA 5114 $574
Munno Para Downs SA 5115 $551
Elizabeth Downs SA 5113 $549
Davoren Park SA 5113 $526
Elizabeth South SA 5112 $518
Munno Para SA 5115 $516
Elizabeth North SA 5113 $498
Gawler West SA 5118 $493
Smithfield SA 5114 $473

Greater Adelaide Units

Suburb Monthly Price differential
Elizabeth Vale SA 5112 $806
Evanston SA 5116 $773
Hillier SA 5116 $748
Para Hills SA 5096 $739
Salisbury South SA 5106 $728
Smithfield SA 5114 $709
Smithfield Plains SA 5114 $709
Walkerville SA 5081 $705
Angle Park SA 5010 $697
Osborne SA 5017 $694

Greater Perth Houses

Suburb Monthly Price differential
Hillman WA 6168 $716
Medina WA 6167 $699
Parmelia WA 6167 $680
Hilbert WA 6112 $675
Leda WA 6170 $669
Cooloongup WA 6168 $650
Bertram WA 6167 $647
Kwinana Town Centre WA 6167 $641
Orelia WA 6167 $624
Armadale WA 6112 $615

Greater Perth Units

Suburb Monthly Price differential
Wanneroo WA 6065 $1,406
Gnangara WA 6065 $1,338
Wattleup WA 6166 $1,275
Brabham WA 6055 $1,218
Leda WA 6170 $881
Calista WA 6167 $874
Brookdale WA 6112 $837
Success WA 6164 $827
Samson WA 6163 $823
Mirrabooka WA 6061 $804

Greater Hobart Houses

Suburb Monthly Price differential
Gagebrook TAS 7030 $707
Herdsmans Cove TAS 7030 $612
Goodwood TAS 7010 $459
Bridgewater TAS 7030 $393
Clarendon Vale TAS 7019 $362
Primrose Sands TAS 7173 $327
Risdon Vale TAS 7016 $325
Chigwell TAS 7011 $310
New Norfolk TAS 7140 $297
Warrane TAS 7018 $279

Greater Hobart Units

Suburb Monthly Price differential
Glebe TAS 7000 $579
Bridgewater TAS 7030 $523
Pontville TAS 7030 $484
Herdsmans Cove TAS 7030 $484
Warrane TAS 7018 $282
Claremont TAS 7011 $241
Geilston Bay TAS 7015 $179
New Norfolk TAS 7140 $170
Glenorchy TAS 7010 $146
Richmond TAS 7025 $120

Greater Canberra Houses

Suburb Monthly Price differential
Belconnen ACT 2617 $223
Throsby ACT 2914 $78
Coombs ACT 2611 $60
Charnwood ACT 2615 $35
Oaks Estate ACT 2620 $0
Jacka ACT 2914 -$28
Isabella Plains ACT 2905 -$48
Lawson ACT 2783 -$104
Oxley ACT 2903 -$132
Gilmore ACT 2905 -$138

Greater Canberra Units

Suburb Monthly Price differential
Lyons ACT 2606 $1,055
Curtin ACT 2605 $1,027
Hughes ACT 2605 $1,026
Oaks Estate ACT 2620 $969
Scullin ACT 2614 $943
Duffy ACT 2611 $858
Hawker ACT 2614 $840
Gungahlin ACT 2912 $830
Wright ACT 2611 $811
Bruce ACT 2617 $811

How can it be cheaper to buy then rent?

There are several factors that can cause buying in a suburb to be cheaper than renting in it.

Demand for temporary housing

One of the biggest reasons why a particular area is cheaper to buy then rent is that there is a strong demand for temporary residence. For example, there might be a large mining project that brings a surge of activity to a rural area. The same can be said for a city like Canberra, which experiences a flood of young professionals during parliament sitting periods. The rental demand will increase as workers move to the area.

However, this demand will likely not translate into increased demand to buy, because the majority of people moving in won't stay after the project is completed or the event is over. Rental rates will increase more acutely with demand, but it is likely that property prices will not, making it relatively cheaper to buy.

Interest rates

Low interest rates can also affect the relative cost of buying. When interest rates are low, mortgage repayments are also lower, reducing the cost of buying. It should also be noted however that low interest rates also tend to result in an increased demand for housing, which can increase property prices and potentially offset the benefits of a reduced interest rate.

Tax incentives

There are also many tax benefits available for homebuyers that might decrease the relative cost. Investment property owners can claim most of the expenses associated with renovating and maintaining the property as a tax deduction, while homeowners who rent out a room or work from home are often able to make associated tax deductions.

Property tax rates

In areas with a lower property tax, the cost of owning a property is decreased. This can include not only stamp duty or property tax levied by the state government, but also council rates. An inefficient or under-funded council can increase rates, making home ownership more expensive.

Holiday or beach towns

Rental homes in popular beach or holiday destinations might be hard to come by, and when they are, they charge like a wounded bull. This is largely because of the supply-demand effect. Many homes might simply be unavailable because they are either for short-term stays like Airbnb, or sit vacant for holidaymakers from the cities. Not to mention it's in an idyllic area, and you have a situation where renters pay more than homeowners do or would.