Homebuyers in several Victorian suburbs could save hundreds of dollars a month by purchasing a property instead of renting, with areas like Kerang, Morwell, and Melbourne’s inner suburbs offering potential savings on monthly costs. According to recent research by Compare the Market, there are 15 suburbs across the state where buying a home is more affordable than renting, with savings reaching up to $700 per month.
In Melbourne’s CBD, renters are facing significant financial strain. The median monthly rent in the area stands at $2,882, while monthly mortgage repayments are typically $2,193, offering renters a potential saving of $688 a month if they buy instead. This trend is not limited to the capital; even in regional areas, homebuyers are coming out ahead financially.
Interestingly, no suburbs in metropolitan Melbourne made the list of areas where buying is cheaper than renting; however, several regions further afield, including Morwell, Moe, and Ararat, offer opportunities for prospective buyers looking to make the leap into homeownership.
For those considering units, the trend holds true within Greater Melbourne. There are 16 areas in this region where the monthly mortgage repayments are lower than the cost of renting. Notably, in suburbs such as Carlton, Travancore, and Flemington, homebuyers could save up to $647 per month on apartments.
West Melbourne also stands out as an area where, despite being close to the city center, buying a unit may be cheaper than renting. A two-bedroom unit at 1112/65 Dudley Street, listed for $470,000-$505,000, is in the same price range as the suburb’s median unit price of $489,000, offering substantial monthly savings compared to rental prices.
Regional areas, such as Morwell, also present opportunities for potential buyers. A three-bedroom house on Church Street is listed for $350,000, which is below the median house price in the suburb of $330,000. With mortgage repayments of around $1,585 per month compared to rent prices of $1,808, buyers can save $223 a month.
With predictions of lower interest rates in 2025, owning a home is expected to become even more affordable, particularly as fewer new properties enter the market due to high construction costs. In January, there were 4,417 new homes approved across the state, but only 1,800 were units, a significant drop from the previous month.
Property expert Andrew Winter highlighted that this unique situation in Victoria, where mortgage repayments are lower than rental prices, is a result of slower property value growth compared to rent prices. He also noted that Melbourne’s CBD is an outlier, making this opportunity particularly striking for would-be homeowners in the city.
However, Tenants Victoria chief executive Jennifer Beveridge pointed out that while many renters dream of homeownership, high rent costs often make it difficult to save for a deposit. She urged for more attention to rental affordability in the short term while advocating for a rent fairness formula to ensure that rental costs do not rise too rapidly.
Despite these challenges, the outlook for 2024 may be brighter for renters, as rental price increases are expected to slow, providing some relief for those working towards saving for a future home purchase.
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