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The Vanishing Affordability of Homeownership: A Closer Look at the Buy vs Rent Dilemma

By Ershad Ullah May 28, 2023 | Tags:

The dwindling affordability of homeownership has caused a significant decrease in the number of suburbs where it’s cheaper to buy than rent. CoreLogic‘s analysis reveals that just 9.1% of suburbs are cheaper to buy houses in, down from 30.2% last year, while only 16% of suburbs are more affordable for units, a sharp decrease from 45.2%. This trend is evident across all capital cities and regional areas, resulting from rate hikes that have outpaced the soaring rents. Here’s a comprehensive discussion about the pros and cons of property buy vs property rent.

Only 16% of suburbs are more affordable

Despite the 10.1% increase in national rents, the cost to service a mortgage has become even more burdensome in the past year, with repayments increasing more than rents. This keeps people in rental accommodation and puts immense pressure on rental demand. Although homeownership might seem like an escape from the rent cycle, many are unable to afford the increased mortgage repayments.

The few remaining suburbs where it’s cheaper to buy than rent in February 2023 are predominantly found in regional Australia, with a focus on mining towns and rural markets. These areas offer great value in comparison to expensive cities like Sydney, Canberra, and Melbourne. However, these markets can be highly volatile due to their reliance on local economic activity. On the other hand, premium capital city markets and popular lifestyle markets regionally are far cheaper to rent than buy, with median house values reaching at least $3.2 million.

Property Buy Vs Property Rent: Factors to Consider

You need to consider a lots of factors before deciding
  • What do you want to do in the long run?
  • How much money do you need to save up to buy a house?
  • Are you qualified for discounts for being a first-time home buyer?
  • Where will you live in 5 or 10 years?
  • How long do you have to take care of a property?
  • Can you afford to buy a house in a nice neighborhood that is close to your friends or your job?
  • How important is it for you to have a place you can call ‘home’ more permanently?
  • How much money you have and how much you are willing to pay.
  • What kind of home you would like best, and what features do you need.
  • What do your long-term savings goals look like?
  • Your home’s location and how easy it is to get around.
  • The deals you can choose from for your rental or mortgage.
  • How the land looks, and what changes can be made, if any.
  • Whether or not you can live there with your pet.
  • Whether or not there is a place to park.
  • If there are any costs on top of that.
  • If you can, talk to the owner or the person in charge of the property.

Advantages of Renting: Flexibility and Financial Freedom

Renting a home offers a range of advantages that make it an appealing choice for many individuals. One key advantage is the flexibility it provides. Renters have the freedom to move more easily, whether it’s for a job opportunity, personal reasons, or the desire for a change of scenery. Renting allows for greater mobility without the commitments and complexities associated with selling a property.

Financial freedom is another significant benefit of renting. When you rent, you’re not tied down by a long-term mortgage commitment and the associated costs, such as property taxes, maintenance, and repairs. Renters can allocate their financial resources towards other investments, experiences, or savings goals. This flexibility allows for a more adaptable lifestyle and the opportunity to explore various living arrangements without being burdened by substantial financial obligations.

Property Buy vs Property Rent
When you rent, you’re not tied down by a long-term mortgage commitment

Renting also offers a sense of convenience and ease. Landlords are typically responsible for property maintenance and repairs, relieving renters of the associated time, effort, and expenses. Additionally, renting provides access to a range of amenities and services that may not be feasible for homeowners. From swimming pools and fitness centres to on-site maintenance staff and security services, rental communities often offer an array of facilities to enhance the living experience.

Renters can save time, effort, and expenses involving property maintenance

Moreover, renting can be an advantageous option in areas with a high cost of homeownership. In regions where property prices are steep or housing markets are competitive, renting allows individuals to live in desirable neighbourhoods or proximity to their workplaces without the burden of purchasing a home.

While homeownership has its merits, renting provides a flexible and financially advantageous alternative that suits the needs and preferences of many individuals. By carefully considering the advantages and aligning them with personal circumstances, renting can offer a satisfying and rewarding living arrangement.

 Advantages of Buying a Property –

One of the primary benefits is the potential for long-term financial stability and wealth accumulation. Unlike renting, where monthly payments contribute solely to a landlord’s income, homeowners build equity over time. Equity represents the portion of the home’s value that the owner actually owns, and it can increase as property values appreciate or as mortgage payments reduce the principal amount owed. This equity can be tapped into for various purposes, such as home improvements, education expenses, or even as a source of retirement income.

One of the primary benefits is long-term financial stability

Furthermore, homeownership provides a sense of permanence and stability. By owning a home, individuals have the freedom to personalize and customize their living space to suit their tastes and preferences. This ability to create a personalized environment fosters a sense of pride and belonging. Additionally, homeowners have the freedom to make decisions about their property without the limitations and restrictions imposed by rental agreements, providing a greater degree of control and autonomy over their living situation.

Government Incentives –

If you want to buy a house, especially if it will be your first one, the government offers a number of benefits to help you get the property you wish. These funds give people who want to buy their own homes a safety net and a reason to do so. Most of the time, they relieve the stress of having to make a big payment, but others may give you opportunities to save. For more information, talk to your accountant or financial advisor.

The government offers a number of benefits if you are buying your first home

Some examples of grants that Government gives to people who are buying their first home are:

  • First Home Owners Grant
  • First Home Guarantee

Get Your Capital to Grow

When it comes to growing your capital, owning a home can be a smart investment strategy. Capital growth, which refers to the increase in value of a property over time, can provide significant financial benefits. The extent to which a property’s value rises depends on factors like market conditions and location. However, there are steps you can take to further enhance the growth potential of your investment property.

When it comes to growing your capital, owning a home can be a smart investment strategy

One way to maximize capital growth is by making innovative changes to your property over time. Renovations and upgrades can not only enhance the appeal and functionality of your home but also increase its market value. Whether it’s modernizing the kitchen, adding an extra bedroom, or creating an inviting outdoor space, strategic improvements can attract buyers and command a higher selling price.

Timing is another crucial aspect when it comes to capital growth. Selling your home at the right moment can significantly impact your returns. In a hot market where demand is high, you have the opportunity to capitalize on the increased interest in properties and sell your home for a premium. However, it’s essential to stay informed about market trends and monitor your local area to identify the optimal time to sell.

It’s worth noting that tax perks related to capital growth can vary depending on the State or Territory you reside in. It’s advisable to consult with a tax professional to understand the specific regulations and potential advantages you may be eligible for.

Get an Extra Income

The most popular type of property investment is rental property. A rental property is one that you buy with the intention of renting it out. You can easily make extra money from your rental properties without putting in too much work. This could be an excellent long-term investment, even though it might take more work because of managing tenants, upkeep and maintenance, and other landlord duties.

A Safe Way to Invest

People think that real estate is a less risky option than stocks, bonds, or shares.

Buying a house can be a safe way of investing

Most of the time, the real estate market is accessible for new investors to understand and predict. Plus, buildings usually go up in value over time because of inflation. You can use equity to pay for your investment, and it can give you a steady cash flow or a good return.

Enjoy Tax Deductions

As a property owner, you can get the most out of your money by taking tax deductions like:

  • Negative gearing: It is when the rental income is less than the mortgage payments and other costs. You can reduce your tax bill by offsetting the income. 
  • Depreciation: Investors can get a deduction for fittings and fixtures, and you may also be able to get a break for the building itself.

You can also get a tax deduction for some of the costs of managing and keeping your investment property and for the property’s loss of value. With these tax deductions, you can save money on fees and maintenance costs while making more money. 

Credit Score Improvement

When you make a payment on your home loan, you not only pay down your debt, but you also raise your credit score. Your credit score won’t change at all if you rent a home, which can make it hard to get back on track if you have bad credit.


Even though rents have gone up by more than 10% across the country due to a lack of rental properties, record levels of net overseas migration, and more people moving back to big cities for work and school, the number of suburbs where renting is cheaper than buying has grown by a factor of ten in the last year. There’s no question that the difference in cost between paying a mortgage and paying rent is keeping people in rental housing. This is putting even more pressure on the rental market at a time when supply hasn’t kept up with demand. Many renters see homeownership as a way to get out of the rent loop, but it’s not possible for many because the cost of servicing a mortgage has gone up even more in the past year, while rents have only gone up by a small amount.

Buying vs Renting Property

If you are wondering if it is worth it to put your money into real estate, then you should know that it depends on what you want an investment to do for you. As was already said, buying and renting both have excellent points. The decision to purchase or rent a property in Australia ultimately depends on your personal circumstances, financial situation, and long-term goals. Both options have their advantages and disadvantages, and what works for one person may not work for another.

By engaging in a discussion with a property accountant, you can gain a deeper understanding of the advantages and disadvantages of buying or renting, allowing you to make a well-informed decision. Their expertise can help you assess the potential financial returns, risks, and long-term implications associated with both choices.

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General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.