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Lower interest rates, easing prices and improved affordability are all positive signs for Australians considering purchasing property – and those who help them do it.
New research from Mortgage Choice investigates the rent versus buy equation and shows the value for money is most often higher with the latter.
Company spokesperson Belinda Williamson says that, with changes to government incentives for first homebuyers and weaker than expected consumer confidence around personal finances, it’is not surprising that many renters have recently closed the door on the idea of home-ownership.
“Making your first property purchase requires careful consideration of a range of aspects and detailed planning before you even commence the hunt, let alone think about applying for a home loan. Tenants who know their financial limitations and options are more likely to confidently leave the rental roundabout.
She says the research shows that, for houses in all capital cities aside from Melbourne, the weekly repayments on an average home loan could be less than the median weekly asking rent.
“For example, in the December quarter for a house in Darwin, Australia’s most expensive capital city, the median weekly rent was $650 per week. Darwin’s first homebuyers on the other hand paid only $401 per week on a 30-year average loan of $293,200, at a basic variable interest rate of 5.9%.”
Williamson says home-ownership costs like land tax, strata fees, council rates, water consumption, insurances and maintenance need to be factored into the equation too, but says the small difference between rent and loan repayments within some areas is encouraging for many potential buyers.
“It is important to keep in mind that at present, there is higher than average property listings and lower than average competition between buyers. But it is a cycle and as positive consumer sentiment grows, so too will property demand, making it a good time now to do your sums. First homebuyers should explore their property and finance options carefully before making a quick decision to buy.”
