Mortgage repayments might be escalating as interest rates rise, but a local buyer’s agent has highlighted how it’s still cheaper to buy than rent in some suburbs in Perth.
Perth-based buyer’s agent Peter Gavalas, from Resolve Property Solutions, said the city was currently experiencing a significant rental shortage that was pushing rents to all-time highs. Nevertheless, property prices remain affordable, which means servicing a loan is cheaper than paying rent in a lot of Perth suburbs.
“As one of the most competitive capital cities for potential tenants, Perth experienced the highest annual rental increase over the 2022 calendar year, with house rents growing 15.2% year-on-year, according to Domain’s latest rental report,” he said.
“At the same time, Perth is one of the most affordable cities in the country to buy property, with a February median house price of $561,700 and unit price of $406,200, according to CoreLogic. So it shouldn’t be surprising that the maths work.”
Assuming a 20% deposit and a 30-year loan term at an interest rate of 5.86%, the monthly mortgage repayment for a $561,700 house would be $640 per week. This is $26 less than the median weekly rent of $666 for a house in Perth as of 4 March, according to SQM Research.
Similarly, it would be $50 per week cheaper to buy than rent for a median Perth unit.
Mr Gavalas said that Perth’s relative affordability coupled with its great lifestyle has made the city increasingly attractive to first home buyers from all over the country.
“You can see this clearly in recent Australian Bureau of Statistics lending data, with 36.3% of all new home loans in Western Australia in January being taken out by people entering the property market for the first time, the highest share of all the capital cities,” he said.
In addition to being more cost-effective, Mr Gavalas also pointed out that buying property comes with other benefits too.
“You’re paying down your mortgage, not your landlord’s, and building equity with every mortgage repayment. And if you buy well, your home’s value should appreciate over time – earning you a profit if you decide to sell,” he said.
“Owning a property gives you peace of mind and stability that renting can’t offer, as nobody can terminate your lease or increase your rent just because they feel like it,’ he said.