Interest rate hikes can be bad news for homeowners, but higher mortgage costs can impact renters too as these costs often get passed on by landlords. In some parts of Australia, it may even be cheaper to buy a home than it is to rent. And with tightening rental supply pushing up rents, and house price increases slowing down across Australia, now may be a good time to consider your options to get out of the rental cycle and into your own home.
Rising rental costs
In many parts of Australia, rental costs have increased significantly and families are struggling to find rental properties they can afford. A record low number of available rental properties and a return to Australia’s capital cities is driving much of the demand for rentals, while interest rate hikes are forcing some landlords to push up rents.
According to SQM research, capital city rents rose 14.7 per cent in a year, while unit rents rose 11.2 per cent. Meanwhile, across the country, residential property rental vacancy rates fell to 1 per cent in March, half the total number of vacancies reported 12 months ago and the lowest vacancy rate since 2006.
A cooling housing market
At the same time as rental costs are rising, house prices are softening in places across the country, and there are signs that the housing market may continue this trend. In CoreLogic’s May 2022 report, property price growth in non-capital cities slowed from a peak of 6.6 per cent in the first quarter of 2021, to 4.7 per cent for the same time in 2022.
Tighter lending conditions and higher average fixed interest rates are likely hitting the top end of the housing market and driving the cool-down, while a big jump in listings is providing home buyers with greater choice, more time for decision making, and more opportunity for negotiation.
Cheaper than renting
In a survey by Great Southern Bank, around 42 per cent of the 1500 first home buyers surveyed pay less on their mortgage than renting, while another 26 per cent pay about the same.
Government-backed incentives on offer to eligible first home buyers combined with a slow-down in house price rises means buying a home could be a more affordable option for many first home buyers than ever before, and possibly even cheaper than paying rent!
Find out what your options are when it comes to buying a first home and getting out of the rent cycle. Talk to a mortgage broker who understands the Australian property market and has first-hand experience helping first home buyers – just like you – get into their own homes. Contact Mortgage Express today to find a mortgage broker who can help you.
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