The analysis found that median rents in inner-city Melbourne, suburban Canberra and Darwin are now nearly matching weekly home loan repayments. In one in 10 suburbs and towns across the country, repayments are less than $200 a week higher than rent for the typical property. In some suburbs, they are actually cheaper.
Australia's median rent prices rose 5.5% over the year to September to reach $713 per week, while the median property price across houses and units was flat over the year after six months of steady falls.
In Melbourne, the typical rent for an apartment was $628 a week after rising 4.8% over the last year. Typical repayments for a Melbourne flat were $211 more, at $839 a week, based on a median value of $624,740 in September, down nearly $25,000 from a year earlier. The analysis assumes a new 30-year loan of 95% of the value at a 6.2% interest rate, and does not account for additional costs. Smaller loans with bigger deposits would make repayments even more affordable compared with rents.
Repayments were cheaper than rent for the typical property in Carlton, Melbourne CBD, Notting Hill, Travancore and Southbank. In Sydney, repayments were just $100 a week more than rents in inner-city Ultimo.
Clint Waters, a Melbourne mortgage broker and director at Axton Finance, said home buying interest had dropped but renters were inquiring in strong numbers as they weighed lower house prices against higher rents. "They're certainly doing the maths ... [and] the equation at the moment is starting to narrow," Waters said. He noted a stable or growing number of tenants were looking to buy directly from their landlord. "Landlords are getting slammed left, right and centre, and going 'screw this, I'm going to offload,'" Waters said. "Tenants will ring us up and say, 'I need to work out if I've got the capacity to buy this thing.'"