Seven Melbourne suburbs where it’s cheaper to buy than rent
No. 2/1 McDonalds Road is on the market in Epping, where mortgage repayments on a typical unit are cheaper than rent. It has a $395,000-$430,000 price guide.
There are just seven Melbourne suburbs left where it’s cheaper to pay off a mortgage than rent, new research reveals.
Those first-home buyer havens are Travancore, Carlton, Bundoora, Notting Hill, Epping, Sydenham and Truganina — but only for those in the unit market.
PRD Real Estate found once tenants managed to save up a deposit, they would spend less covering a mortgage on a median-priced unit than renting one in these postcodes.
A typical weekly repayment on the property type in hidden gem Travancore costs $293 — 22 per cent cheaper than the $375 median weekly rent.
No. 4/48 Leicester Street, Carlton, is on the market with a $600,000-$660,000 price guide.
The difference is 16.4 per cent (equating to $62) in Carlton, 10.6 per cent ($41) in Bundoora, 7.5 per cent ($26) in Notting Hill, 5.3 per cent ($19) in Epping and 4 per cent ($15) in Sydenham.
Paying a mortgage was only marginally more affordable than renting a typical unit in Truganina, at 0.1 per cent, according to PRD.
PRD chief economist Diaswati Mardiasmo said the list had expanded from just three unit markets in 2020 (Carlton, Travancore and Notting Hill) to prove there was hope left for buyers battling to break into a Melbourne market where affordability was deteriorating.
But while some of the suburbs had joined the list due to a falling median house price — Sydenham, Epping and Bundoora — the inclusion of others was the result of rising rents.
“Rental affordability has been in decline. So if you can buy, that’s what you want to do,” Dr Mardiasmo said.
“People will say, ‘we do have to put up a deposit and pay stamp duty’. But if you think about it from a long-term perspective, that will make up for it.”
She said homeownership had the benefits of earning capital growth on your property, improving your credit rating and equity to help with future property purchases or loans, and not being “reliant on what your landlord wants to do”.
Interest rates were also at record lows, with the Reserve Bank of Australia again keeping the cash rate at 0.1 per cent this week.
“If it is possible to enter the market, … now’s the time to do it,” she said.
Jellis Craig agent Kieran Moloney said affordability had been a major drawcard for Travancore, along with its healthy supply of apartment stock and inner suburban location.
“Travancore is predominantly made up of units. And if you’re the second or third buyer of new apartments there, you can buy well,” he said.
“You could get a two-bedroom apartment in the mid $300,000s, compared to those selling off the plan for closer to $500,000. So the mortgage would be the equivalent of rent, if not cheaper, just not factoring in body corporate fees.”
No. 8/45 Flemington Street, Travancore, has an affordable $450,000-$490,000 asking price.
Mr Moloney said while capital gains weren’t typically as strong on newer apartments compared to those in boutique older blocks, they presented good buying for those looking to buy their first home on limited budgets.
“Not many people know where Travancore is,” he said.
“But you’re on the fringe of the city, a tram goes right through past the (Parkville) hospitals and into the city. You could walk to three different train stations, and a CityLink entrance is right nearby.
“And there’s a good supply of apartments — in comparison, if you went to the next suburb over in Flemington, you could probably count on one hand how many apartments are available.”
PRD found several other postcodes were just shy of being cheaper to own than rent in, with the difference between mortgage and rent payments on a median-priced unit 10 per cent or lower in Mill Park, Broadmeadows and Flemington.
In the house market, the gap is smallest in Dallas (typical mortgage repayments 13.8 per cent higher), Meadow Heights (17.9 per cent) and Roxburgh Park (24.3 per cent).
The analysis is based on the NAB home loan calculator and assumes a median purchase price with a 2.99 per cent principal and interest comparison rate, a 30-year loan term and a 20 per cent deposit, with stamp duty and other fees not included.