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The Suburbs Cheaper to Buy Property than Rent

The Suburbs Cheaper to Buy Property than Rent

Could the gap between renting and owning a piece of Australian real estate be narrowing?

Despite the nation’s cooling housing market over recent years, home affordability is an ongoing issue with five of Australia’s major housing markets ranking last year as “severely unaffordable”.

But thanks to some data crunching, property portal Domain has identified Australian suburbs in major capital cities where it’s cheaper to buy a home than rent one.

With the reserve bank cutting rates twice in the past six weeks to historic lows, falling interest rates is the main factor creating affordability for first home buyers, bringing the typical mortgage rate down to around 3.5 per cent, with forecasts it’s likely to go lower.

Too good to be true?

While some suburbs in the findings may not be worthwhile investments, Domain research analyst Eliza Owens says the data is a tool to provide would-be home buyers insight to the local property market.

“We thought it would be an interesting data set, particularly in giving hopeful home buyers perspective in what housing costs can be,” Owens told The Urban Developer.

The standout suburbs?

Owens says the biggest surprise from the findings was the buying options for units located in inner Melbourne and inner Brisbane.

“In these suburbs, it was actually cheaper to pay off a mortgage on that typical purchase point than it was to rent,” Owens said.

“So inner city suburbs of Brisbane like Bowen Hills, Fortitude Valley and Spring Hill have an average rental premium of $57 in rent over the median mortgage repayment.

“Melbourne’s inner city suburbs included Southbank, Melbourne, and North Melbourne with the data showing it worked out to be around $1000 to $2000 cheaper annually.”

Domain compared rent and mortgage repayments across 42 per cent of greater Sydney, but Lakemba was the sole suburb that showed up in Sydney’s findings, with a mortgage repayment on a comparable property cheaper by $1 per week than the median rental price.

But Owens said there are suburbs across greater Sydney where first home buyers could consider buying in if they were able to increase the weekly budget by up to $100.

“They were mainly the western suburbs of Sydney and the northern part of the central coast, areas like Blue haven for example,” Owens said.

“In Blue Haven there was about $35 in the difference between the mortgage repayments and median asking rents.”

While in Queensland, taking in greater Brisbane, Domain saw a spread of 45 suburbs across both housing and unit stock show up in the results.

The calculations

Domain looked at what it costs to buy for a typical first home buyer armed with a 20 per cent deposit, as a key assumption. No added costs are included, such as transfer duties, strata or council rates.

The analysis is based on sales and rent data over the 12-months to April, and the results only includes suburbs that had a minimum of 50 rental and sale observations over the year to April.

Weekly mortgage repayments are based on the median house or unit price for the suburb, on a mortgage rate of 3.5 per cent, taking in the recent cash rate cuts.

Sydney

Suburb Property Type Weekly Mortgage Repayment Weekly Rent Difference between buying and renting
Lakemba Unit $ 369 $ 370 -$1

Melbourne

Suburb Property Type Weekly Mortgage Repayment Weekly Rent Difference between buying and renting
Abbotsford Unit $ 452 $ 455 -$3
Bundoora Unit $ 356 $ 360 -$4
Carlton Unit $ 431 $ 450 -$19
Collingwood Unit $ 456 $ 475 -$19
Dandenong Unit $ 272 $ 295 -$23
Epping Unit $ 321 $ 330 -$9
Kensington Unit $ 413 $ 420 -$7
Melbourne Unit $ 461 $ 540 -$79
North Melbourne Unit $ 408 $ 430 -$22
Southbank Unit $ 519 $ 560 -$41
Windsor Unit $ 389 $ 410 -$21

Brisbane-Greater Brisbane

Suburb Property Type Weekly Mortgage Repayment Weekly Rent Difference between buying and renting
Albion Unit $ 378 $ 380 -$2
Beenleigh House $ 328 $ 340 -$12
Bellmere House $ 329 $ 360 -$31
Bethania House $ 327 $ 345 -$18
Boronia Heights House $ 329 $ 350 -$21
Bowen Hills Unit $ 339 $ 418 -$78
Brassall House $ 327 $ 330 -$3
Bray Park House $ 408 $ 410 -$2
Brisbane City Unit $ 484 $ 490 -$6
Bundamba House $ 304 $ 310 -$6
Caboolture South House $ 312 $ 320 -$8
Calamvale Unit $ 346 $ 395 -$49
Capalaba Unit $ 354 $ 380 -$26
Chermside Unit $ 377 $ 380 -$3
Cleveland Unit $ 405 $ 415 -$10
Collingwood Park House $ 329 $ 330 -$1
Crestmead House $ 320 $ 350 -$30
Deception Bay Unit $ 240 $ 305 -$65
Eagleby Unit $ 221 $ 300 -$79
East Brisbane Unit $ 359 $ 365 -$6
Fortitude Valley Unit $ 358 $ 400 -$42
Goodna House $ 312 $ 315 -$3
Hillcrest House $ 334 $ 350 -$16
Holmview House $ 373 $ 395 -$22
Kallangur Unit $ 272 $ 310 -$38
Kelvin Grove Unit $ 369 $ 400 -$31
Kingston House $ 309 $ 320 -$11
Loganholme House $ 365 $ 395 -$30
Moorooka Unit $ 318 $ 350 -$32
Morayfield House $ 336 $ 350 -$14
Morayfield Unit $ 300 $ 310 -$10
Mount Gravatt East Unit $ 389 $ 400 -$11
Mount Warren Park House $ 371 $ 385 -$14
Nundah Unit $ 359 $ 370 -$11
Raceview House $ 318 $ 340 -$22
Redbank Plains House $ 315 $ 340 -$25
Regents Park House $ 378 $ 380 -$2
Richlands Unit $ 341 $ 360 -$19
Rothwell House $ 383 $ 390 -$7
Runcorn Unit $ 341 $ 400 -$59
Spring Hill Unit $ 367 $ 419 -$52
Springfield Lakes House $ 392 $ 400 -$8
Taringa Unit $ 364 $ 369 -$5
Upper Mount Gravatt Unit $ 401 $ 440 -$39
Waterford House $ 367 $ 400 -$33
Yarrabilba House $ 369 $ 370 -$1

 

Source: theurbandeveloper.com

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Brisbane

Why investors snap up apartments in Aria Property Group’s Brisbane apartment developments

Aria Property Group have pushed the envelope not only on sustainability but value at their newest tower, Trellis in South Brisbane

Aria Property Group always have a steady stream of interest from off the plan investors in their Brisbane apartment developments.

Investors who bought in to one of Aria’s most recently completed developments, The Standard, Aria, located in the heart of the Fish Lane arts precinct, saw great success.

Those who bought pre-completion have secured resales between 10 per cent and 38 per cent more than what they paid. Owner-occupiers showed the greatest keenness on the resales.

The investors who decided to hold on to their apartments are seeing strong 5.48 per cent rental yields throughout the building.

Aria’s latest development, Trellis, also in South Brisbane, is also expected to be a hit with investors.

The 12-story building with 110 apartments is Aria’s most sustainable yet, with 60 percent of the building covered in greenery of some variety. It will feature trellises within which improve biodiversity, as well as solar technology and even Tesla batteries and charging stations.

Aria Property Group

Trellis 20 Edmondstone Street, South Brisbane QLD 4101 

There’s over 1,000 sqm of recreational amenity space, including the Temple of Wellness on the ground floor and the Residents’ Rooftop Club on level 13. That features magnesium baths and an infinity pool with views across Brisbane. Amenity is also high on the priority list for tenants.

Apartments in Trellis start from $739,000 for a two-bedroom, two-bathroom apartment. Three-bedroom apartments are priced from $1,084,000 to $1,224,000.

Completion is forecast for mid-2023.

The Brisbane apartment market has continued to show strength over 2021, after a resilient 2020 in the wake of the pandemic.

Research from property data firm CoreLogic showed Brisbane apartment values rose 0.6 per cent over September, triple the growth of apartments in Melbourne.

At the end of 2020, the median apartment value in Brisbane was at a yearly high of $390,000. Now it’s $430,000.

Unit rental prices have also seen steady growth in 2021, up 3.5 per cent over the past 12 months.

This growth trend is expected to continue, backed in large part by billions of dollars in investment from both private and public sectors as part of the pipeline for the 2032 Olympics.

 

Article Source: www.urban.com.au

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Brisbane

High-End Apartment Shortfall Pumps Up Prices

Upward pressure on the top end of the market looks likely to continue with a 39 per cent fall in the number of new luxury apartment projects predicted over the next three years.

The Rightsizing Report by Knight Frank showed pipeline constraints for properties above $2 million to $3 million would be most felt in Brisbane and Sydney.

Perth and the Gold Coast have more new apartments on the way which may go some way to easing the pressure for this stock.

But demand for apartments above $10 million was even more intense—sales have increased eight times the 10-year average during the first six months of 2021 in Australia.

This contrasts with the middle of 2020 when the global super-prime market took a -61 per cent hit.

Contributing to the success of the Australian market this year were Crown Resorts’ One Barangaroo and Lendlease’s One Sydney Harbour.

apartment

▲ Full-floor apartments in Luxe Broadbeach on the Gold Coast are expected to fetch more than $4.95 million.

Knight Frank head of residential research Michelle Ciesielski said although people were prepared to spend what it took to meet their requirements, it was difficult to find stock.

“The widening gap between this buyer demand and appropriate property supply remains concerning, and residential construction difficulties continue to delay delivery of new product,” Ciesielski said.

“The shortage of suitable product, particularly at the top end of the market where rightsizers play, has been exacerbated by developers unable to easily secure sites in prime locations, adding to the highly pressurised buying environment across Australian cities.”

Buyers in this demographic were increasingly looking for three bedrooms, with developers increasing the share of this configuration from 21 per cent in 2018 to 32 per cent in 2021.

“During the coming years, we will see an increasing number of rightsizers who are seeking a low- maintenance home as their main residence, given the transient global lifestyle that will return for many of the ultra-wealthy population,” Ciesielski said.

“This pent-up demand will continue while new luxury apartment delivery and sales listings remain shallow across almost every prime region of Australia.”

The number of car parking spaces was also contributing to the final sale result with apartments selling for 39 per cent more on average, at $39,800/sq m, with spaces compared to $30,200/sq m without in Sydney, while the difference in Melbourne was 9.2 per cent.

 

Article Source: www.theurbandeveloper.com

 

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Brisbane

Cromwell Spends $185m on Golden Triangle Tower

ISPT has sold its recently renovated tower in Brisbane’s golden triangle for $184.7 million to Cromwell Property Group for its DPF fund.

The 24-storey office tower at 100 Creek Street, Brisbane has a net lettable area of 20,223 square metres.

It is the second purchase for the fund in Brisbane after it secured the former Flight Centre headquarters at 545 Queen Street for $117.5 million in May.

Meanwhile, Cromwell Funds Management Limited sold its nine-storey Icon office tower in Ipswich for $144.9 million a month ago.

The Creek Street building has a mix of tenants, a 6-star NABERS indoor rating, end-of-trip facilities and floor-to-ceiling glass panelling.

The sale follows another golden triangle transaction, in August, when Fortius Funds Management and PGIM bought a similar sized building at 307 Queen Street for $214 million.

The surge of transaction in the area comes as Brisbane occupancy drops to 51 per cent, according to the Property Council of Australia.

Cromwell

▲ The golden triangle is bounded by Edward, Queen and Eagle Streets and is a financial district in the Brisbane CBD.

Cromwell head of retail funds management Hamish Wehl said it was a landmark building and stellar addition to the fund.

“The asset has a sensational location, benefits from great amenity and has been recently substantially refurbished,” Wehl said.

“It’s earnings accretive to DPF and will support the fund’s long-standing track record of paying unitholders a regular reliable income.”

ISPT spent $10 million upgrading the 100 Creek Street building in 2018, giving it new bathrooms, a semi-open foyer as well as creating a French provincial style laneway market.

The direct property fund has an annualised distribution yield of 5.4 per cent with nine office assets in Queensland, NSW, Victoria and the ACT.

The acquisition is subject to Foreign Investment Review Board approval and is expected to settle towards the end of November.

 

Article Source:www.theurbandeveloper.com

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