- Buying conditions best in Queensland, South Australia, and Western Australia.
- Smaller capital cities with low supply and affordable prices attracting investors.
- Units outshine houses with 55% cheaper to buy than rent.
More than a third of homes are cheaper to buy than rent, but not for long, according to PropTrack’s latest report.
Cheaper to buy than rent (states)
Analysing estimated purchase and rent prices nationally and on a state-by-state basis, the report found that buying conditions were excellent in Queensland (QLD), South Australia (SA), and Western Australia (WA).
Cheaper to buy in Australia’s smaller capitals
Particularly, three out of four homes in Western Australia were cheaper to buy than rent.
“A record pace of rent growth – with advertised rents up 14.6% over the past year – has offset higher buying costs in many regions,” said PropTrack senior economist and report author, Paul Ryan.
“Buying conditions remain strongest in QLD, SA and WA, which points to continued upward pressure on prices in these regions.”
Paul Ryan, PropTrack Senior Economist
Whereas housing values have been slowing down in the eastern capitals like Sydney and Melbourne, prices in Perth, Brisbane, and Adelaide have pulled ahead.
Despite being bogged by low stock levels, demand has not subsided in these capitals, with investors being drawn by their relative affordability and strong pace of capital gains.
WA home prices likely to rise further
In WA, investment activity skyrocketed from 9% to 32% between Q1 2022 and Q1 2023, making it one of the top choices for interstate property investors.
Investors have been enamoured by WA’s strong population growth, investor-friendly policies, and comparative affordability. With the state plagued with a record-low rental vacancy rate and resilient population growth, investors have been looking to capitalise on the potential for higher rental returns and solid capital gains.
Perth residential vacancy rates
However, for the average renter in WA, this means that both home and rental prices will continue following their upward trajectory.
More units cheaper to buy than houses
The report noted that buying conditions were better for units, with 55% being cheaper to buy than rent. In comparison, only 29% of houses were cheaper to buy nationally.
Cheaper to buy than rent (houses vs units)
Importantly, the favourable buying conditions in many capitals reflected new unit development. The buying prices of these units have fallen behind unit rents following the recent record highs in rent growth.
National weekly asking rents
“More than a third of homes across Australia are cheaper to buy than rent. Favourable buying conditions remain despite a record pace of interest rate increases, and home prices increasing 36% since the pandemic. This shows that there are still opportunities for buyers across the housing market,” Ryan said.
“Looking to 2024, higher interest rates will challenge housing affordability for many. This may slow price growth and rebalance buying conditions across the market.”