An outer Melbourne suburb has been revealed as $100 a month cheaper to buy than rent in.
With a further 10 suburbs where tenants could pay just an extra $50 a week to trade a landlord for a mortgage, and house values forecast to fall as rents rise, experts expect the number to grow this year.
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It comes just days after a Moody’s and CoreLogic report forecast Melbourne house values would fall a further 6 per cent across 2019, bringing the estimated total figure for the city’s market correction to 15 per cent — before home values are predicted to stabilise in 2020.
Homebuyers are $107 better off a month than tenants for a $442,000 median priced house in Diggers Rest, according to new figures released by realestate.com.au today.
Those willing to head just out of the city limits to the east of the Dandenong Ranges could have a $394,000 median priced house in Longwarry and be $46 a month better off than those renting in the same suburb.
And there will be more Melbourne suburbs where it’s cheaper to buy than rent by the end of the year, according to realestate.com.au chief economist Nerida Conisbee.
“We are going to see more of those suburbs popping up over the next 12 months,” Ms Conisbee said.
“We are seeing prices decline and rents will be rising because we have seen a pretty big pull back in investor activity and if we see a change in federal government and we have changes to negative gearing and capital gains tax we will see a further pull back in investor activity.
“Which all means less rental housing and higher rents.”
Those investors who held onto properties despite changing conditions would likely see rental yields improve as the city’s population continued to rise, while the number of new homes being built declined, she added.
The realestate.com.au figures assume a 20 per cent deposit and a variable home loan rate of 3.69 per cent.
A rare combination of declining house prices, low interest rates and a rising population that has raised rents across the city is expected to provide significant motivation to even long-term renters.
Real Estate Institute of Victoria vice president Adam Docking said he had encountered families with parents in their 30s who were now getting out of years spent in the rental market.
“It’s just the start of the year, but we are seeing people getting out of rental accommodation and starting to buy,” Mr Docking said.
“I’m wondering if we will see the rental cycle breaking because now there’s such good value.
“They can afford to do it now with the fairer prices.”
DIFFERENCE IN BUYING VS RENTING A MONTH
Diggers Rest: $107
Melton South: -$161
Bacchus Marsh: -$187