Buying an apartment is edging closer to cost-competitive with renting in a small number of Australian markets, fresh data from Cotality suggests.
Cotality’s March Monthly Housing Chart Pack finds mortgage repayments on median-priced units are now similar to, and in some cases below, equivalent rents in a handful of capital city locations.
This shift is playing out against a backdrop of rental vacancies still sitting below about 2% in many markets, signalling robust rental demand and keeping advertised rents under upward pressure.
Cotality head of research Gerard Burg (pictured) said the shift reflects the way rents have outpaced unit values.
“Rents have risen rapidly over the past few years and we’re seeing that growth pick up again, with the national rental index up 5.5% over the past year and vacancy rates around 1.5%,” Burg said.
At the same time, additional apartment supply in some areas has tempered price growth, helping to narrow the cost gap between renting and buying.
Inner Melbourne stands out as one of the few markets where a new mortgage on the median unit is estimated to cost about $322 per month less than the median rent.
Parts of inner-city Darwin and Canberra’s Woden Valley also show only a minimal difference between typical unit rents and mortgage repayments.
Burg cautioned that even when headline repayments appear similar, renting remains the cheaper option in most locations once full ownership costs are considered, and detached housing is still significantly more expensive to buy than rent across all capital city regions.
“Even where mortgage repayments appear similar to rents, buyers still need to factor in additional costs such as deposits, rates, insurance, body corporate fees and maintenance,” he said.
For clients comparing scenarios, brokers will need to weigh those upfront and ongoing costs against the potential wealth benefits of ownership. Cotality notes that Australian home values have surged almost 44% in the past five years, adding around $280,000 to the median dwelling value.
The chart pack also highlights a clear performance gap by price point. Capital city dwelling values across the lower quartile rose 11.5% over the past year, compared with 6.6% across the upper quartile, as affordability constraints push borrowers towards more accessible segments.
“The most affordable segment of the market is attracting the largest pool of buyers, particularly when borrowing capacity is stretched and investors are competing with a pickup in first home buyer demand,” Burg said.
That competition is being amplified by tight stock levels, with total listings still well below year-ago levels and vendor discounting close to record lows.
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