Leasing not always best bet
QUEENSLANDERS could save hundreds of dollars a month by buying a home instead of leasing one in more than half of the state as the cost of renting continues to skyrocket.
Analysis from comparison site Finder reveals that paying off a mortgage – even with only a 10 per cent deposit – is cheaper than signing a lease in more than 530 locations, including some of the state’s most desirable places to own a home.
That number jumps to more than 700 locations if buyers were to pay a 20 per cent deposit, excluding the cost of lenders’ mortgage insurance (LMI).
In the Townsville region, it is cheaper to buy than rent a house in 45 suburbs with a 20 per cent deposit, with that number falling slightly to 41
suburbs when paying a 10 per cent deposit.
It is cheaper to buy than rent a unit in every suburb, the data shows.
Top of the list is Cranbrook, where the average monthly rent for a unit is more than double the monthly mortgage repayment.
It is a similar story in Hyde Park, where it is $600 cheaper to buy than rent.
For houses, paying off a home loan with a 20 per cent deposit in Home Hill is $595 a month cheaper than renting.
In Vincent, paying off a home loan rather than paying rent could save you over $500 a month.
But it is still cheaper to rent than buy in five suburbs – Rosslea, Belgian Gardens, Castle Hill, Townsville City and North Ward.
Finder home loans editor Richard Whitten said that the big challenge for most buyers was being able to save enough for a deposit.
“Rather than giving up on your daily coffee, the most effective way to save is to start a budget, pay off any debts, and regularly deposit 20 to 30 per cent of your income into a high-interest savings account,” Mr Whitten said.
Looking for an apartment or townhouse rather than a house could be a smart idea
for budget-conscious buyers, he said.
“Also, think about how many bedrooms and bathrooms you really need,” he said. “If you work from home, perhaps you could set up your desk in the living area instead of having a separate room?”
Many of the suburbs where the rent-to-mortgage gulf is most stark can be found in the mining regions.
It is 190 per cent cheaper to buy than rent in Koongal (Central Queensland), while renters would also be better off buying in Pioneer (181 per cent), Dysart (173 per cent) and Collinsville (167 per cent),
where house values tanked after the resources downturn but rental yields have soared.
The data shows that buyers with a 20 per cent deposit could save $795 a month by owning rather than renting a unit in Koongal.
In Dysart and Collinsville in the Mackay/isaac/whitsunday region, renting a house is $800 a month more expensive than owning one.
In Brisbane, renting a unit is at least 30 per cent more expensive than buying one with a 20 per cent deposit in a number of inner-city suburbs including Dutton Park, Spring Hill and Seven Hills.
The latest figures from SQM Research show the average Brisbane house rent had increased more than 21 per cent in the past 12 months to $594 a week.
The research found houses are cheaper to buy than rent in 244 Queensland suburbs when paying a 10 or 20 per cent deposit, compared with 290 locations for units.
The analysis assumes the average variable discounted owner-occupier home loan interest rate of 3.6 per cent, and a 30-year loan term.
LJ Hooker Property Hub property manager Jessica Melling said saving a deposit while still paying rent was a significant barrier for many tenants who would otherwise be able to service home loan repayments.
“I know many people who are renting and they would love to buy, but the struggle for them is saving the deposit to get a loan while having to keep paying rent at the same time,” Ms Melling said.
“While these areas may be more affordable, if they are buying with a deposit of 10 per cent or less then you also have to factor in lender’s mortgage insurance, plus stamp duty if the home costs more than $500,000.”