Brisbane CBD among 494 suburbs where you could be better off buying then renting, but very few inner-city options: RP Data

Brisbane CBD among 494 suburbs where you could be better off buying then renting, but very few inner-city options: RP Data
Brisbane CBD among 494 suburbs where you could be better off buying then renting, but very few inner-city options: RP Data

Buying an apartment in the Brisbane CBD could be a cheaper option than renting one, according to the December RP Data Buy vs Rent report.

The latest edition of the theoretical report lists 494 suburbs across Australia where renters should think about doing the sums and perhaps looking at buying an equivalent property (if they can find one) rather than paying rent to a landlord.

This is up from the 388 suburbs in the previous October report and well up from just 238 locations listed in the first report released in August – RP Data updates the report whenever the RBA cuts the cash rate.

However, there are very few inner-city locations where genuine deposit savings are possible, with many of the suburbs on the list being  in remote locations, hundreds and sometimes thousands of kilometres from the nearest capital city – and requiring huge deposits.

The top 20 on the list is dominated by mining towns in WA with inflated rents, but with rental population heavily subsidised by mining companies and with little incentive to consider buying.

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With the average variable interest rate now at 5.65%, Brisbane is the capital city that potentially offers renters the best opportunity to come out financially better off by becoming property owners with 58 greater Brisbane suburbs out of a total of 185 in Queensland.

Brisbane CBD units ranks 52nd out of the 494 suburbs on the RP Data list with a potential saving of $344 a month for those buyers who can find a similar property to the one they are renting and raise a 10% deposit of $45,000.

The median unit price in the Brisbane CBD is $455,000 while median weekly rent is $625.

Recent Brisbane CBD apartment sales around the median include this two-bedroom unit on Albert Street (pictured below), which sold for $445,000 in October.

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A look at rental listings in the Brisbane CBD show there are around 90 or so two-bedroom apartments available for rent around the $600 per week mark, including this fully furnished, air-conditioned two bedroom apartment (pictured below) in the CBD advertised at $580 per week.

brisbcity

There are 48 suburbs in Sydney on the list, 40 in Adelaide, 16 in Hobart, eight in Perth, six in Melbourne and seven in Darwin.

 


 

Other inner-city locations to feature on the Buy vs Rent report include Enmore units in Sydney, units in the Perth CBD, units in Carlton, Melbourne, units in Ascot Vale (Perth) and Wynnum West in Brisbane.

In total there are only 18 inner-city suburbs on the list out of nearly 500 where renters would $100 or more better if they chose to rent.

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The report, meant as a starting point for those considering buying rather than a definitive guide, compares the cost of monthly mortgage repayments (using the scenario of  paying back principal and interest on a variable mortgage rate) with the median rent in that suburb.

It does not consider the potential for capital gains or other costs of ownership such as transaction costs and ongoing maintenance expenses.

It also does not factor in the need to raise what could be a substantial deposit, particularly if you are considering buying nor does it consider the demographic factors within a location.

For example, the location where it theoretically makes the most sense to buy a house rather than rent is Port Hedland in the Pilbara, the epicentre of WA’s mining boom.

RP Data estimates that buyers are over $5,000 a month better off than those that rent with monthly rental costs in excess of $10,000.

However, the median price of a house in Port Hedland is almost $1.2 million, meaning renters could be required to stump up a 10% deposit of $120,000 to secure a loan – out of reach for most.

Furthermore, most renters in Port Hedland and other mining towns, which dominate the top Buy vs Rent locations, would have their rents paid by their mining employee  or might be fly-in-fly-out (FIFO) workers so they would have no incentive to buy.

Another point to bear in mind that some locations considered good options to buy rather than rent would have a scarcity of stock or virtually no stock at all, with the prime example being houses in Docklands, a suburb where apartments dominate.

Docklands houses rank 21st on the list with potential monthly savings for those who choose to buy rather than rent of $846 a month on a variable loan. However, do a search on real estate listings websites and you’ll find just a handful of houses and asking prices approaching $2 million for river-fronted properties.

According to RP Data national research director Tim Lawless, it is meant as a “good starting point for further investigations into whether or not a potential purchaser should consider purchasing within a specific suburb”.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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