A new analysis of house price data demonstrates that paying a mortgage on an apartment in Melbourne’s central business district could save up to $79 a week when compared to renting in the same home.
For housing in Balwyn or Toorak, however, investors may be better off renting with mortgage repayments being $1278 and $1788 more expensive than paying rent every week.
When comparing the median weekly rents and mortgage repayments across Melbourne suburbs, including the newest interest rate cuts. The study assumed that people had a 20 percent deposit saved and did not incur the added costs including council rates or owners corporation fees.
The study showed it was cheaper to pay a weekly mortgage than rent in other inner suburbs including Southbank, Windsor, Carlton and Collingwood. This means that investors could save between $19 and $41 each week, depending on the area.
This compared to Sydney where only in Lakemba was it cheaper to pay a mortgage than rent – paying a mortgage for an apartment there would cost $1 less per week than renting. There are units one could buy for thousands of dollars each week on a mortgage but these are the more high-end properties.
Most buyers were discovered to be owner-occupiers looking to live in close proximity to the city, proof of the fact that more and more people are open to compact living.
On the other hand, first-home buyers were looking for properties mostly priced under $600,000 to avoid incurring stamp duty costs. Downsizers, particularly those entering retirement, were also buying smaller apartments in the city. Some investors were couples who had previously rented in the city or inner suburbs like Southbank and were now returning as owner-occupiers.