Renting a home or apartment is usually much more affordable than buying your own property. However, with surging prices in Australia’s rental market, it may not be worth living in someone else’s home when you can have your own place for roughly the same price. Even though housing prices are also increasing, rental rates have surged just as much. This scenario begs the question: is it finally time to strike out on your own and buy a place to call home?
With rent getting too expensive, more and more people are becoming first-time home buyers in Sydney, enjoying the security and stability that owning a property has to offer. Although rentals come with a degree of flexibility that property ownership does not, the price may be too high to justify it.
The Rise of Rental Prices
The pandemic has worsened the diversity in Australia’s rental offerings. According to CoreLogic’s Rental Review for March, rental rates increased nationwide by 3.2 per cent, the largest quarterly increase since March 2007. It’s important to note that Perth and Darwin are responsible for driving this growth while Melbourne and Sydney markets are still undergoing challenges.
Unfortunately, the surge in rental prices wasn’t limited to capital cities. Regional units also saw rental growth of 4.8 per cent, whereas capital city units saw only a 2.9 per cent jump. Regional house rental prices rose by 4 per cent, and their capital city counterparts grew by 3.3 per cent. The rise in prices in the housing market is inescapable, as it increased nationwide.
The country’s vacancy rates went through a rollercoaster ride due to the pandemic. The vacancy rate dipped in April to 1.8 per cent, although it is now back to pre-pandemic levels. Still, Melbourne’s vacancy rate is 4.2 per cent, and Sydney’s is at 2.9 per cent. Surprisingly, the vacancy rate in other capitals is close to zero; Hobart’s is 0.5 per cent, Adelaide and Darwin are at 0.6 per cent, and Canberra at 0.8 per cent.
Sydney and Melbourne have such wildly different rental rates because they were significantly affected by the border closures and lockdowns. Every year, these cities welcome thousands of migrants, who usually start their new life in Australia with a rental property. International students are also known to flock to these cities and rent out places during their studies. However, because of the pandemic, these cities have seen few to no migrants or foreigners.
Becoming a Homeowner
With these skyrocketing rental prices, it may be worth considering purchasing your own property. Even though house prices have risen sharply this year, the growth rate slowed in April and is expected to continue slowing. However, interest rates are lower than ever, which means that it may be more affordable to buy a property than rent one in some cases. This is good news for those who struggle with bad credit, as they have better chances of securing a mortgage with more reasonable terms.
If you’d like a better handle of the situation, it’s best to consult a mortgage broker in Sydney, who will give you a more comprehensive review of the housing market. They’ll also give you an estimate of the deposit you’ll have to pay for the neighbourhoods you’re looking to buy in, helping you determine if it’s finally time to become a homeowner.
Now that rental prices are almost matching housing prices, it may be high time to purchase your own property and enjoy all the benefits of becoming a homeowner. You won’t have to deal with cranky landlords and find peace in having a space to truly call home while making the most out of every payment you make.
If you’re hoping to learn how to buy a house with bad credit, get in touch with us at Wealthy You! We are the best mortgage brokers in Sydney that can offer you a wide range of mortgage solutions to meet your specific financial needs. Contact us today to get started!