It is cheaper to make mortgage repayments than to pay rent for houses in two Ballarat suburbs, a new report indicates.
RP Data’s December Buy vs Rent report suggests houses in Alfredton and Redan are cheaper for buyers than renters.
The report looks at suburbs where paying a mortgage is, on average, more affordable than paying rent, based on principal and interest payments on a variable mortgage rate.
The rate used in the report was 5.65 per cent.
Nationwide, there were 494 localities cheaper to buy than rent and in Melbourne – out of 374 suburbs – only six contained houses cheaper to buy than rent.
The report stated Alfredton’s monthly rental cost is $1018 and it’s median house value is $193,379.
Based on mortgage repayments paying both principal and interest, buyers have it $14 better than renters each week.
In Redan, it’s a similar story.
The suburb’s monthly rental cost is $910 and it’s median house value is $174,598. Per week, buyers are $3 better off than renters in Redan according to the report.
Researcher Tim Lawless said a sharp rise in house prices over the past decade, coupled with slower rental growth, has resulted in far fewer suburbs being cheaper to buy in than to rent in.
“If you start factoring in your buying costs, stamp duty, conveyancing, pest and building inspections, it starts to make the equation look much less appealing,” he said.
The analysis contained within the report does not provide consideration of capital appreciation, transaction costs or other costs associated with home ownership or renting.
It does not take into account council rates, electricity, water and sewerage, land tax or stamp duty.
Nationally, regional areas dominate the list, with 310 suburbs outside the capital cities showing a better payments schedule for buying compared with renting, the report said.