A report from NAB has shown that it is still cheaper to buy than to rent in many parts of Australia, with value still to be found in the market for first home buyers and tree changers.
The Big Four bank has pointed at peripheral areas of big cities and the unit market in cities as areas where value can still be found, especially given the low interest rate environment.
City units have not necessarily been seen as a great value proposition of late, as they have been the traditional domain of investors, but the high vacancy rates in Sydney and Melbourne, allied with rising prices for houses, has seen them become more valuable for owner-occupiers.
Central Melbourne suburbs such as Carlton, Docklands and the CBD itself were all mentioned in the report as areas where buying trumped renting, as were central Brisbane districts such as Fortitude Valley, South Brisbane and the CBD.
In Sydney it makes sense to look further out, with units in Campbelltown, Liverpool, Blacktown and Penrith were all cited as good value propositions. Given the current lockdowns, they may be currently experiencing a lesser reputation, but once lockdowns lift, that value is likely to return swiftly.
“Record low interest rates and first home buyer incentives like the First Home Loan Deposit Scheme have driven strong demand,” said Andy Kerr, NAB executive, Home Ownership.
“We have seen through the pandemic, particularly with first home buyers, that flexible and hybrid working is providing more options than they have historically had.”
“Our research shows prospective buyers shift in where they want to buy and demand from first home buyers has been the strongest we’ve seen in a generation.”
“Property prices have not risen as much in outer-metro suburbs and first home buyers are very good at picking up on where property prices have been more subdued. The correlation between outer-metro suburbs and buying new builds is certainly playing through in finding a bargain.”
“House prices are rising but there’s still plenty of opportunities for Australians to buy their dream home rather than rent it. The simple reason for this is the record low rates on offer, with many mortgage rates still coming with a 2 in front of them.”