It sounds impossible, but it really can sometimes be cheaper to buy than to rent. New data from the Real Estate Institute of Victoria (REIV) has revealed that in some suburbs of Melbourne, there are properties where it would be cheaper to take out a home loan and purchase the property than to rent it.
The report showed how it was possible to repay the mortgage on a $210,000 one-bedroom apartment for $221 a week in Carlton, while the median rent for the same type of property was $135 more than that.
NOT JUST AN OUTLIER
Similar results were seen in many other suburbs across Melbourne. Assuming a fixed mortgage is paid weekly, differences ranged from a few dollars per week to over $100 difference in some areas.
In Melton, the median price for a three-bedroom house could be paid off for $258, while the median rent was $260. Two dollars may not seem like much, but considering that at the end of a mortgage you actually own the property, those two dollars a week can make all the difference.
With the whole Melbourne region seeing a 2.2 per cent annual increase in rental yield in 2015, according to CoreLogic RP Data, it’s likely that these rents are going to increase even further!
FIRST HOME-BUYERS TO BENEFIT
“One and two-bedroom apartments allow first home buyers to get a foothold on the property ladder for what they are currently paying in rent.”
This is particularly important for younger home-buyers who are taking their first step into the world of property,according to REIV CEO Enzo Raimondo.
“One and two-bedroom apartments allow first home buyers to get a foothold on the property ladder for what they are currently paying in rent,” he said.
By purchasing a property rather than renting, you are appreciating the capital gains for the property rather than your landlord. With Melbourne homes seeing an 11.19 per cent value increase in 2015, according to CoreLogic RP Data, it’s a smart plan to get on the property market early while interest rates are low and lending figures are high.
This research highlights how important it is to do your research when it comes to taking out a home loan. In order to maintain a healthy bank account and slip a few extra treats into your budgeting plan, be sure to investigate buying a home rather than just renting one out.
For more information on your options in purchasing a property, speak to us today and take your first step onto the property ladder.