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Yes, the majority of Queensland homes are now cheaper to buy than rent

Yes, the majority of Queensland homes are now cheaper to buy than rent

New data shows the majority of homes across Queensland are now cheaper to buy than rent, driven by the cost of mortgages hitting rock bottom off Australia’s lowest interest rates ever.

Latest CoreLogic figures showed over 55 per cent of Brisbane homes and 73 per cent of those in regional Queensland were now cheaper to buy than rent, a significantly higher proportion than national data which came in at over a third (36 per cent).

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CoreLogic Research Director Tim Lawless said while some of the smaller capitals and ‘rest of state’ regions were showing a higher proportion of properties where it was cheaper to buy than rent, “compared with New South Wales and Victoria, Queensland is looking very affordable to buy”.

The CoreLogic report said “the analysis is a good reminder for renters to weigh up housing costs and savings, to see if it is time for a change in tenure”.

“If it makes more financial sense to pay for a mortgage than rent, renting households may have been triggered to look for something to buy as interest rates have fallen.”

“The average mortgage rate for owner occupiers taking out a new principal and interest loan in May was just 2.3 per cent; the lowest cost of debt on record,” Mr Lawless said.

He said healthier mortgage serviceability rates across Queensland came off softer housing market conditions that the state had experienced during previous growth cycles compared to NSW and Victoria.

“In fact, over the past ten years, Brisbane housing values have increased at a much lower rate than Sydney or Melbourne. Brisbane values are up 33 per cent since June 2011 compared with a 90 per cent rise in Sydney housing values and a 58 per cent lift in Melbourne housing values.”

“The softer, but more sustainable, rate of growth in Brisbane housing values over the past decade has provided for a substantially more affordable housing market relative to the larger capitals.”

The calculations were based on an 80 per cent loan to valuation ratio (it assumed the buyer had a 20 per cent deposit saved), an interest rate of 2.4 per cent (based on the average new lending rate for owner occupiers reported by RBA at May 2021), and a 25 year loan term.

Analysis by Aussie with CoreLogic found there were 97 suburbs in Queensland where it was cheaper to buy than rent in March – with mortgage repayments lower than $250 a week. A dozen of those suburbs were in Brisbane with 85 spread out across regional Queensland. Source: realestate.com.au