Buying VS Renting: A Look Into the Australian Property Market

Buying VS Renting: A Look Into the Australian Property Market

The choice between renting and buying a home in Australia is still a topic that potential new homeowners debate. Each choice has its advantages, but today we take a closer look at the numbers from trusted sources to understand what’s really going on in the Australian property market and what it means for those looking to move into their own home.

Australian House Prices: The Current Numbers

Buying a home in Australia has become quite the challenge lately, particularly when it comes to saving up for that initial deposit. According to the ANZ CoreLogic Housing Affordability Report, the national average time required to save up a 20% deposit is around 10 years.

However, in bustling Sydney it stretches to a staggering 12.6 years! On a brighter note, Melbourne seems to have made some headway over the past five years, with the time to save for a deposit reducing from 10.2 years in 2018 to 9.6 years in 2023.

While this improvement signals progress, this remains true: the journey towards homeownership remains a tough climb for most Australians.

⅓ of Homes in Australia are Cheaper to Buy than Rent

Now, turning our attention to the Australian property market insights brought to us by PropTrack. According to the index, more than a third of homes in Australia, approximately 36.3%, actually make more financial sense to buy than to rent. That’s a significant chunk of properties where buying a home might be cheaper than renting.

Let’s break it down further across different regions. In Western Australia, a striking 78.7% of homes advocate for buying over renting. Similarly, states like Queensland (53.3%), Tasmania (48.1%), and South Australia (38.9%) also display a substantial number of homes where buying seems to be the more wallet-friendly choice.

However, the story isn’t the same everywhere – in Victoria (16.6%) and New South Wales (24.3%), there aren’t as many homes where buying clearly outshines renting in terms of affordability.

Paul Ryan, a senior economist at PropTrack, mentioned that despite the interest rates rising at a record speed, favorable conditions for buying homes have stayed steady. “This shows that there are still opportunities for buyers across the housing market,” Mr Ryan said.

So, what’s the practical takeaway from all these numbers? It’s a mixed bag across Australia but buying seems to be the smarter move than renting in right now. Even though interest rates are going up, the crazy rise in rent prices has balanced things out. This means that for many folks, buying a home might actually be more doable and financially smarter.

Looking Ahead: 2024 Predictions for the Australian Property Market

Looking ahead to the Australian property market in 2024, experts anticipate potential shifts in the dynamics that could affect the affordability and accessibility of homeownership. While the current trend shows favorable conditions for buying in many regions, there’s a looming concern tied to the expected increase in interest rates.

These anticipated rate hikes might pose challenges for aspiring homeowners, potentially impacting their ability to afford homes. If interest rates climb as predicted, it could result in a slowdown in the growth of Australian house prices.

The expected changes in interest rates and their subsequent impact on housing affordability are key factors that both prospective homebuyers and mortgage brokers should keep a close eye on.

While the current scenario leans towards buying being financially advantageous, the forecasted changes in interest rates might alter this landscape, warranting a cautious outlook for the year 2024.

What Does This Mean for Mortgage Brokers?

For mortgage brokers, the evolving scenario in the Australian property market presents both challenges and opportunities. The numbers indicating that buying is often more financially viable than renting in various parts of Australia offer an opportunity for brokers to play a major role in guiding potential homebuyers, especially those who would like to buy their first home.

The landscape shifting presents a prime opportunity to showcase expertise, support clients in achieving their homeownership dreams, and build long-lasting relationships by being trusted partners throughout the home-buying journey.