Domainfax has run another fluffer piece trying to argue that buying a home is not much more expensive than renting:
If you’ve ever thought the cost of your rent was so expensive you could afford a mortgage instead, you’re not far wrong.
Australian tenants pay just $62 less a week in rent than homeowners pay on an average mortgage, a new analysis of a survey and government statistics shows.
“While renting may be preferable to some people due to lifestyle factors, taking out your own mortgage isn’t much more costly than rental payments – and this allows you to build up equity in your property,” Finder.com.au spokeswoman Bessie Hassan said.
Renters pay $1200 a month in rent compared to mortgage holders’ repayments at $1467, according to the comparison website, which matched its survey findings and Australian Bureau of Statistics finance data.
Domain Group data shows Sydney’s median advertised weekly rent for a house was $550 in March 2017, while for an apartment it was $530.
In Melbourne, house rents recorded over the same period were $420 a week while apartments were $395…
Renters who had a consistent rental history of making payments on time might be able to use this to their advantage, Ms Hassan said.
“There are some banks that accept rent as genuine savings, which can lend weight to your ability to pay back a mortgage,” she said.
This analysis doesn’t pass the laugh test.
As reported by CoreLogic, average gross rental yields collapsed to record lows in April:
As shown above, nationally the average gross rental yield was just 3.0% (houses) and 4.0% (units) in April, with Melbourne’s gross yield at just 2.7% (houses) and 4.1% (units) and Sydney’s at just 2.7% (houses) and 3.8% (units).
Regardless, gross rental yields are well below the current discount variable mortgage rate of 4.55% for owner-occupiers.
Remember, these are gross yields we are talking about, which don’t incorporate other significant costs associated with buying/owning a home, including:
- Maintenance
- Council rates
- Body corporate levies
- Stamp duty
- Legal and conveyancing fees
Add these into the mix and the costs of buying a home versus renting are even worse.
