Where it’s cheaper to buy than rent in Darwin

The unit at 5/144 Smith St, Darwin City, is for sale. Picture: realestate.com.au

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Darwin is the only Australian capital where it is cheaper to buy a home than rent one, with fresh data showing it is more economical to pay off a house than lease it in more than 70 per cent of suburbs.

New Compare the Market research found it was cheaper to buy than rent across 34 of 37 suburbs in greater Darwin.

That figure is less than 10 in most other Australian capital cities.

The comparison service looked at median rent and median home price data from CoreLogic and median loan sizes after deposit to determine whether it was cheaper to pay rent or a mortgage each month.

When broken down into unit and house markets in each Darwin suburb, there were 41 markets where residents would save money by buying a home instead of renting.

There were 26 suburbs where it was cheaper to buy than rent a house and 16 suburbs where residents could save money by paying off a unit rather than renting.

In the suburbs of Bakewell, Coconut Grove, Darwin City, Driver, Gray, Johnston, Millner and Rosebery it was cheaper to buy than rent both houses and units.

The home at 5 Earl Pl, Millner, is for sale for offers over $750,000. Picture: realestate.com.au

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Darwin real estate agent Ursula Watson, of Real Estate Central, said Darwin first homebuyers in particular were keen to get out of rentals and into their own homes.

“They’ve been watching the market closely and it’s skyrocketing in terms of rental prices, so they’re getting onto (buying their own homes),” she said.

“Units are starting to take off in the city because people would rather buy a unit than fork out the high rental prices.

“Buyers are getting to a stage now where a lot are joining forces with friends to buy or young first homebuyers are asking parents for help.”

Ms Watson said in her main patch of Zuccoli prices were being driven up by strong competition between owner occupiers trying to get out of the rental market and investors.

“Zuccoli prices are starting to rise above that first homebuyer amount because of it,” she said.

Ms Watson said while many renters could afford to service a mortgage often it was the lack of a deposit that stood in their way.

“For first homebuyers especially, it’s having that deposit but also timing for some,” she said.

“They’re already renting and by the time they talk to a mortgage broker and start attending open homes their lease is either ending too soon or too late.

Ursula Watson, of Real Estate Central.

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“Whether renters are ready to buy now or just thinking about it, they 100 per cent should go speak to a mortgage broker.

“Sometimes they’ll be surprised by how much they can borrow or it gives them an idea of what they need to do to reach their goals.”

Compare the Market property expert Andrew Winter said Darwin was in contrast to Australia’s other capital cities, with it often being a more affordable option to pay off a home loan rather than pay rent.

“If you call Darwin home, intend on staying and have a healthy deposit saved, then buying a property of your own is probably a no-brainer,” he said.

“And, if you’re struggling to buy a property in some of the bigger capitals, Darwin could be a good place to ‘rentvest’.

“Just remember to do plenty of research before buying into an area that you are unfamiliar with, and understand the risks that can come with areas populated through ‘boom’ industries like mining.”

The home at 195 Flynn Cct, Bellamack, is for sale for offers over $760,000. Picture: realestate.com.au

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CoreLogic Head of Research, Eliza Owen said despite rent values increasing almost 40 per cent nationally in the past five years, rising purchase values and a high interest rate environment meant mortgages were generally more expensive.

“However, this research highlights the rare pockets (such as Darwin) where individuals might have an easier time serving a mortgage and reaping the benefits of owning, provided they have the 20 per cent deposit,” she said.

“A lot of the markets where mortgages are lower than rental costs are lower-priced areas with high rental demand.

“These are markets where temporary accommodation might be more in demand, like mining towns with a fly-in-fly out workforce, or tourist destinations with a more seasonal workforce.

“Understanding the market trends and being prepared to act when the time is right can make all the difference.”

DARWIN SUBURBS WHERE IT’S CHEAPER TO BUY THAN RENT

(Source: Compare the Market)