“When we look at what we’re seeing in the City of Melbourne right now it really reflects the decline in the median value over time as a lot of supply has come online and as a result that has pushed down the mortgage repayments while rents have continued to edge a little bit higher,” he said.
“Parramatta has been home to a lot of unit development over the last couple of years, so again it’s a broader story of supply coming on in a big chunk versus the level of demand.”
Conventional wisdom suggests that rent money is dead money, but Burg did not think this was the case, noting that renters may not be in a position to buy.
“Ultimately, you’re purchasing shelter, and typically it’s the lowest cost,” he said.
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“The challenge in getting on the ladder in the first place [is] the deposit is the biggest hurdle.”
Home buyers who hoped for a house rather than a unit would face a steeper increase in costs compared with renting in the same area.
The smallest gap in Melbourne is in the Melton-Bacchus Marsh region, where mortgage repayments are $520 more than rent per fortnight, the analysis showed. It was followed by Sunbury at $522 extra and both the Casey South and Wyndham regions at a gap of $536 each.
No Sydney regions made the national top 20 rankings.
The research comes after Westpac on Wednesday found that consumers’ views on whether it is a good time to buy a dwelling fell in March to the lowest point this cycle, and well below average levels.
A previous Productivity Commission study found housing would be more affordable if more homes were built.
PRD chief economist Diaswati Mardiasmo thought some of the areas where it was relatively affordable to buy a home had a larger stock of homes.
“There has been more stock available in the Melbourne CBD unit market. It is the same almost with the Sydney one, although the difference is much bigger in the Melbourne CBD,” she said.
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“There is definitely more units available and that has made the Melbourne CBD one of the more competitive markets. Melbourne units are definitely the place to go for first home buyers to try their luck.
“Liverpool [and western Sydney] it is the same but not to the same extent. They have had a surge of units. It is just availability of stock right now.”
Mardiasmo added that in practice, first home buyers needed to raise a deposit, not just meet the mortgage repayments. They also needed to pay council rates, body corporate fees and maintenance, she said.
“Your mortgage repayments can change,” she said, adding the list of suburbs where it’s cheaper to buy than rent may be different in the next 12 months.
“You have got that security in the place you live, you have got that equity … that would be more why you would buy rather than it’s $300 cheaper for the rent.”
