More than half of units across Australia are cheaper to buy than rent

PropTrack's Market Insight Report found over a 10 year period, it would be cheaper to buy rather than rent 36% of Australian properties.

More than half (55%) of the number of units across Australia are estimated to be cheaper to buy than rent, compared to 29% of houses.

For those looking to rent an apartment in Perth, buying might be worth thinking about, with 92.5% of units cheaper to buy.

The majority of units in Brisbane (77.3%), Hobart (63.7%) and Adelaide (60%) are also more expensive to rent.

Paul Ryan, Senior Economist at PropTrack, says these results suggest there are plenty of opportunities for buyers at the moment.

"Favourable buying conditions [compared to renting] remain despite a record pace of interest rate increases and home prices increasing 36% since the pandemic," he said.

Over the 12 months to the September quarter, unit rents across Australia rose 11.7%, compared to 7.1% for rent for houses, according to CoreLogic.

Over the same period, national unit prices only rose 5.6%.

Time for tenants to get on the ladder?

PropTrack compared the cost of buying versus renting over a 10 year period, based on averages for mortgage rates, house price and rental rate growth, and assumed a 20% deposit for buyers.

Rent across Australia has gone up dramatically over the past 18 months, and with vacancy rates still near record lows and strong migration to the capitals, the situation for tenants isn't set to ease any time soon.

While property prices also rose throughout 2023, defying expectation in the face of interest rate rises, CoreLogic research director Tim Lawless expects growth to moderate, particularly in Sydney and Melbourne, as listings start to increase.

"With an acceleration in the flow of new listings coming onto the market, it’s unlikely buyer demand will be able to keep pace as we move through spring amid high interest rates and low sentiment," he said.

Further rate increases in early 2024 might be a further constraint on buying power, which could help moderate price growth.

There is still a shortfall of available properties in Brisbane and Perth, which might mean values continue to rise, but this is also likely to translate into higher rental rates.

For units in particular, the time to buy could be near, with Housing Australia predicting Australia will have approximately 175,000 fewer properties than it needs by 2027, 59% of this shortfall in the unit market.

CoreLogic economist Kaitlyn Ezzy says this could mean unit prices boom over the next couple of years.

"Australia faces a relatively low number of approved projects, which may create a temporary vacuum in new unit supply," she said.

Where it's cheaper to buy than rent

For each of the six largest capital cities, PropTrack revealed the SA3 regions with the biggest share of homes where renting is more expensive than owning a home over a 10 year period.

Sydney

Melbourne

Brisbane

Adelaide

Perth

Hobart