BUYING NOW CHEAPER THAN RENTING IN CITY OF MELBOURNE: ANZ REPORT
- Posted By Prince Lakshman
It is now cheaper to buy rather than rent in Melbourne’s popular inner suburbs, an ANZ report has revealed.
An analysis by ANZ and property data firm CoreLogic shows that homeowners in Melbourne would spend less of their income on mortgage repayments than they would renting in the city.
The municipality includes Carlton, Kensington, North Melbourne, East Melbourne, the CBD, Southbank, Parkville and West Melbourne.
Paying off a mortgage on a median priced house or unit in the area ($540,000) uses up 39 per cent of the median weekly household income ($1342), the research has found.
The proportion to cover the median asking weekly rent of $566 is 41.8 per cent.
ANZ senior economist Felicity Emmett said the “extraordinary situation” was not found in any other Victorian council area.
“It’s a tight rental market with a very low vacancy rate, and that flows through to the asking prices there,” Ms Emmett said.
“Meanwhile, Melbourne house prices have been falling for quite some time and it’s really helped to make it more affordable to buy a new home.”
More buyers are now also able to break into the housing market with the Reserve Bank’s latest interest rate cut to a historic low.
Rental demands in the city remained strong and weekly asking prices had not declined during the property down turn.
If you’re renting an apartment that costs $600,000 to buy, you’re probably going to be paying a minimum of $600 a week for it.
However, it still would depend on the value of the property and the amount you are borrowing.
CoreLogic data shows 2358 units and 368 houses sold in the City of Melbourne in the year to February.
Renter Sasha Soibelman, who lives in the inner city with housemates Steven Greenstein and Emily Trewin, said he hoped the market would become even more affordable.
“We all love Melbourne and would ideally want to buy in the same area we’ve chosen to live in while renting,” Mr Soibelman said.
“If house prices keep going down and rent becomes more affordable, it could change the perception many young buyers have that breaking in is unachievable.”
The report also showed affordability had improved across Melbourne during the market downturn, with the average number of years required to save for a deposit falling from a peak of 10.9 in June 2017 to 10.1 in December
Despite this, Melbourne remained the second least affordable Australian capital, behind Sydney.