Australia’s most prestigious postcodes are proving far better value for renters than buyers, with Domain data showing the gap between mortgage repayments and rent stretches into the thousands each month.
Domain senior economist Joel Bowman (pictured) said the premium market highlights just how much cheaper it can be to rent compared to buying.
“At the very premium end, you get the largest gap where it is a lot cheaper to rent compared to buying,” Bowman said.
In Sydney’s Bellevue Hill, the difference is a staggering $7913 a month, while Vaucluse renters save $5008. Other eastern suburbs with wide gaps include Mosman (+$4118), Northbridge (+$3777) and Rose Bay (+$3523).
Melbourne’s Toorak leads Victoria with a $3240 monthly saving for renters, ahead of Canterbury (+$2155), Balwyn (+$2072), Malvern (+$2053) and Middle Park (+$1955).
The findings come as national housing affordability improved for the second consecutive quarter, according to the Real Estate Institute of Australia (REIA). The proportion of median family income needed to meet average loan repayments fell to 47.7% in the June quarter, with first-home buyers driving much of the momentum.
In suburbs like Bellevue Hill, Toorak, Vaucluse, Mosman, Northbridge, and Rose Bay, census data shows renters make up a larger share of households than those paying off a home loan.
For many, re5 years, first as a tenant before buying an apartment. He said the area’s lifestyle was the key drawcard.
“Going down to Balmoral beach on a Sunday afternoon, coming from the UK, felt like I’d been away to Barcelona for a weekend, but it was a five-minute walk,” Stark told Domain.
Ultimately, Stark chose to stay permanently: “Mosman was my home. I just needed to find a way to live here permanently, and buying was the right way of doing that.”
While renters benefit from short-term affordability, buyers and investors target future value. Bowman noted that capital gains and tax benefits drive purchasers to pay premium prices.
“The expectations of capital gains, especially if they’re an owner with tax exemptions, can attract a premium,” he said. “However, the rental pool is not interested in that – it doesn’t benefit them to the same extent.”
Buyers’ agent Steve Palise said the long-term stability of these blue-chip postcodes remains attractive.
“They are all statistically long-established areas,” Palise said. “You can get repeated data for the last 30 to 50 years and so they are very low risk in regards to capital growth over the long term.”
While investors continue to rely on long-term growth in blue-chip suburbs, the broader market is showing signs of relief. REIA president Leanne Pilkington said affordability gains are “encouraging,” particularly for first-home buyers re-entering the market.
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