iscover
iscover 
There are reportedly 500 unit markets and 600 house markets across the country where a mortgage would be the cheaper option, according to a joint study by Ubank and Cotality (formerly CoreLogic).
Median weekly rent values have jumped by 39 per cent in the last five years to $659 per week.
On the other hand, median weekly mortgage payments are currently at $922 nationally.
The research revealed that for 7.7 per cent of Australian suburbs, mortgage repayments, along with a 20 per cent deposit, are cheaper than renting.
Meanwhile, almost a fifth are within $100 of the weekly median rent.
Darwin was by far the strongest for this trend, as 85.7 per cent of suburbs have a more affordable median mortgage than rent.
The other capitals dropped dramatically, especially the larger ones:
- Perth (2.6 per cent)
- Melbourne (2.3 per cent)
- Canberra (2 per cent)
- Sydney (0.3 per cent)
- Brisbane (0.3 per cent)
- Adelaide (0.3 per cent)
However, even among the more populous cities, there are still opportunities to find cheaper mortgages than rent.
For example, in Sydney, the median weekly rent is $787. The research said the purchase price equivalent would be $704,000.
This is around the median value of units in Canterbury. Outside of the city, San Remo on the Central Coast has houses in this price range.
Melbourne’s median weekly rent is lower, sitting at $610. This puts the purchase price equivalent at $546,000.
Median house prices for this figure can be found in Melton South and Narre Warren for units.
Brisbane jumps for median weekly rent, at $678. The purchase price equivalent would be $606,000.
For this price tag, houses can be purchased in Leichhardt and units in Zillmere.
Finally, in Perth, the median weekly rent is $713. This puts the purchase equivalent at $638,000.
This is similar to the median house value in the suburb of Maddington and the median unit value in Jolimont.
Rentvesting a viable option
The consistent trend that has circulated housing discussion for some time is rentvesting.
Cotality’s head researcher Eliza Owen said this can be an attractive option for those who can’t afford a mortgage where they’d like to live.
“Rentvesting is a strategy where a person rents a property that suits their lifestyle while owning an investment property that fits their budget. As inner-city home prices have risen, this approach has become more popular, particularly among younger buyers,” said Owen.
“Initially, it might seem counterintuitive to pay both rent and a mortgage, but it depends on an individual or couple’s budget, life stage, and desired lifestyle. Rentvesting can offer the best of both worlds, allowing them to purchase a property and rent it out to cover some or all of their ownership costs while continuing to rent the home where they live. It’s important to crunch the numbers and understand what your rent could buy and work from there.”
Ubank said that while rentvesting can help borrowers break into the housing market without the sacrifices of living outside their comfort zone, it does come with its own unique challenges.
"Rentvesting offers the freedom to live where you desire and the potential for financial growth, but it comes with some trade-offs including less security in your primary residence, missing out on first homeowner grants, along with tax and cost considerations,” said Ray Jokhan, chief home lending officer at Ubank.
“At Ubank, we’ve certainly seen it work as a great option for many of our customers, particularly those who want to get their foot on the property ladder but wanting to maintain their lifestyle.”
To assist borrowers in making a decision, Ubank offered some tips:
- Your investment goals: After passive income through rent? Long-term capital growth? Consider how an investment property could fit into your investment plan or chat with a financial adviser.
- Property research: Look at recent sales data or speak to local real estate agents to get an idea of property prices, rental yields, and vacancy rates.
- Consider the costs: There are additional costs for an investment property, including property management fees, agents’ fees, repairs, and other landlord costs.
- Consider your cash flow: You should consider your cash flows, taking into account the rental income from your investment property and the mortgage payments on it as a rentvestor, as well as the rent you will pay where you live.
[Related: Rentvesting no longer the ‘fallback option’]
