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Commonwealth Bank reveals suburbs across the nation - cheaper to buy than rent

Queensland and Victoria’s buying affordability sharply increases, while other states remain static or marginally decline

Sydney, 29 July 2009:  Housing affordability continues to grow across a number of Australian suburbs thanks to sharp increases in Queensland and Victoria, according toa report released today by the Commonwealth Bank.

The latest Commonwealth Bank ‘Where is it cheaper to buy than rent?’ report, prepared with Rpdata.com, uncovered a 27 per cent increase in the number of suburbs across Australia where it has become cheaper to buy a unit or house than paying rent.

The growth has been driven by significant increases in the numbers of suburbs in both Queensland and Victoria where weekly rents exceed average weekly home loan repayments, with ten more suburbs identified in each state, compared with six months ago.

Other states recorded static results, or even slight declines in suburb numbers, although across the board, the make up of the suburb lists has changed substantially in all states.

According to Ross McEwan, Group Executive of the Commonwealth Bank’s Retail Bank, the volatility in the changing rents and mortgage rates that has driven the changes in the report, underlines the importance of taking a long term view when making a home loan purchase decision.

Most affordable metro and regional suburbs – buy versus rent


Suburb

Type

State

Capital city/region

Value

Principal

Monthly repayment

Monthly rent

Difference

Hackett

U

ACT

Canberra

$237,579

$201,942

$1,177

$1,440

-$262.80

Darlington

U

NSW

Sydney

$252,157

$214,333

$1,249

$1,820

-$570.57

North Dubbo

H

NSW

Regional

$119,477

$101,555

$592

$960

-$368.00

Wagaman

U

NT

Darwin

$237,597

$201,957

$1,177

$1,440

-$262.71

Beachmere

U

QLD

Brisbane

$124,143

$105,522

$615

$1,000

-$384.88

Dysart

H

QLD

Regional

$405,999

$345,099

$2,012

$4,000

-$1,988.29

Angle Park

U

SA

Adelaide

$199,774

$169,808

$990

$1,220

-$230.13

Morgan

H

SA

Regional

$168,789

$143,470

$836

$1,000

-$163.66

New Norfolk

U

TAS

Hobart

$179,836

$152,861

$891

$960

-$68.82

Strahan

H

TAS

Regional

$223,878

$190,296

$1,190

$1,300

-$190.69

Carlton

U

VIC

Melbourne

$250,301

$212,756

$1,240

$1,480

-$239.77

Hepburn Springs

H

VIC

Regional

$301,918

$256,630

$1,496

$2,800

-$1,304.01

Glendalough

U

WA

Perth

$236,960

$201,416

$1,174

$1,200

-$25.87

Baynton

H

WA

Regional

$752,508

$639,632

$3,729

$8,000

-$4,271.34


“These results reinforce the changes that can occur in the market over a period of time, which must be factored into any home buying decision.  Interest rates are currently at a 49 year low, but over the life of a home loan, fluctuations are inevitable.

“As the economy starts to show some early signs of recovery, home buyers need to think about the impact this may have on interest rates and consider the most appropriate home loan for their long term needs, which may be a fixed rate loan, or variable, or combination of the two.

“And on top of housing markets and broader economic impacts, there are also lifestyle and personal circumstances that need to be considered,” he said.


First home buyers supplement

The First Home Owners Grant Boost has had a positive impact on the number of suburbs where first home buyers are likely to find it cheaper to buy a property than rent.  Factoring the boost for established dwellings into the equation provides an additional 109 suburbs where, for first home buyers, it is cheaper to buy than rent. 


Copy of the report

A full copy of the report, including full metro and regional findings, is available at www.commbank.com.au/buyvsrent

 Methodology

The report’s analysis uses a number of assumptions to determine whether housing stock within a particular suburb is cheaper to buy than to rent, assuming a:

  • loan to valuation ratio (LVR) of 85 percent, meaning 85 percent of the property’s value is financed through a home loan. In other words, purchasers will need a 15 percent deposit;
  • variable interest rate of 5.74 per cent per annum which is the current variable rate being offered by the Commonwealth Bank at the time of writing;
  • loan term of 30 years.

Number of suburbs where it is cheaper to buy than rent

July 09

March 09

ACT

2

4

Canberra

2

4

NSW

24

29

Sydney

11

18

Regional

13

11

NT

2

3

Darwin

2

1

Regional

-

2

QLD

26

16

Brisbane

2

2

Gold Coast

2

2

Sunshine Coast

4

3

Regional

18

9

SA

9

6

Adelaide

3

1

Regional

6

5

Tas

7

Not measured

Hobart

2

-

Regional

5

-

Vic

16

6

Melbourne

3

2

Regional

13

4

WA

8

10

Perth

1

1

Regional

7

9

TOTAL

94

74



Note that the analysis does not include expenses such as rates, utilities, insurances or costs of purchase eg stamp duty and legal fees. 


For more information or a copy of the report contact:

Sarah Gibbons

Commonwealth Bank

Ph: (02) 9378 5096

Mobile: 0403 681 515


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