- Over a third of Australian properties are cheaper to rent than buy: CoreLogic
- Almost all the top 10 Perth suburbs have a median price below Perth metro
- REIWA President reiterated that Perth remains the most affordable capital city market
With Perth undergoing a significant rental shortage and house prices lower relative to other capital cities, it makes sense that there could be places where it is cheaper to buy than rent.
Recently, we revealed that servicing mortgage repayments is cheaper than renting across 36.3% of properties.
Analysis conducted by reiwa.com has found that 112 suburbs fall under this criteria in Perth, with the Real Estate Institute of Western Australia (REIWA) President Damian Collins reiterating that WA is one of the most affordable places in Australia to acquire property.
“It is more affordable to pay the costs associated with servicing a home loan than pay the weekly rent in 112 Perth suburbs, which should give tenants encouragement that home ownership is within reach,” said Mr Collins.
Mr Collins noted that of the top ten suburbs where it is cheaper to buy, nine have a median price below the Perth median of $520,000 – in fact, eight are below $300,000.
“The bulk of the suburbs on this list fall within the traditional first home buyer price range,” added Mr Collins.
“Even though Perth house prices have grown over the last 12 months, there is still excellent opportunity for prospective buyers to exit the rental market and step onto the property ladder.
Damian Collins, REIWA
“And as the reiwa.com analysis shows, servicing a loan is cheaper than paying rent in a lot of Perth suburbs.”
Similar to when CoreLogic conducted their recent analysis, reiwa.com assumes an 80% loan-to-value ratio on the suburbs’ median house price based on a 30-year loan repayment at 2% interest.
Additionally, it adds in 1% of the median sale price to account for ongoing ownership costs such as maintenance and council rates.
The top suburb is Brentwood, the only one among the top ten that has a median house sales price well above the Perth median.
Located near the Swan and Canning Rivers and bordering the affluent areas of Mount Pleasant and Rossmoyne, it may not be surprising that the rent is high at $950 a week in the relatively small suburb, which was originally established after World War II for state housing.
Top 10 Perth suburbs to buy instead of renting
|Suburb||Median house sale price||Estimated weekly mortgage cost (inc. 1% ownership costs)||Median weekly house rent price|
Many of the other ten are located in the southern suburbs, in the Kwinana area such as Medina, Parmelia and Leda.
“Record low interest rates combined with some of the most affordable housing in the country, has led to a surge of Perth suburbs becoming more affordable to buy in than rent.”
“Once buyers have saved a deposit, the decision to buy a property is more financially advantageous than renting in these suburbs.”