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Increased housing supply in areas like Parramatta is giving buyers more options. Picture: AAP

Record low interest rates and falling property prices have created a “once in a generation” situation where it is cheaper to own property than to rent it.

New research revealed paying off a mortgage on units in some Sydney pockets has become up to $400 per month cheaper than the typical rent – despite rents also falling in recent months.

Homeowners got some of the biggest savings in areas with a high concentration of new housing, especially high-rise apartments, the analysis of mortgage and property sales data revealed.

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The areas included a cluster of suburbs sandwiched between Sydney Olympic Park and Parramatta such as Granville, Merrylands, Homebush and Guildford.

Paying a mortgage on a median priced unit in these areas was about $100-$430 cheaper per month than renting.

Apartment owners also got considerable savings further west in Penrith and Liverpool.

In Sydney south, monthly mortgage costs for units were more than $100 cheaper than rent in Eastgardens, Mascot and Wolli Creek.

Mortgagees got similar savings in Lakemba, Wiley Park, Punchbowl, Bankstown, Arncliffe and Rockdale.

This was assuming the mortgagee had a 3.5 per cent interest rate – marginally higher than the lowest mortgage rate currently on offer from lenders.

Additional costs of home ownership such as strata fees, which vary considerably by building, were not factored in and it was assumed the mortgage holders used a 20 per cent deposit for their purchase.

Freedom Property Investors founder Scott Kuru said the higher entry costs of homeownership were part of the reason it was cheaper to pay down a mortgage than rent in some areas.

Paying a mortgage was cheaper than renting in many of the areas with a high concentration of high-rise apartments.

“Some people can get trapped in the rent cycle,” he said, adding that there were fewer households with the savings needed to purchase property at the moment but the same families still had to pay rent.

Coupled with the increased supply of housing in the areas, this meant there was less competition for properties up for sale compared to the level of demand for rentals, Mr Kuru said.

Buyer’s agency DDP Property’s CEO Zaki Ameer said there was “a once in a generation opportunity for renters to move into home ownership”.

Mr Ameer estimated monthly mortgage repayments were up to 55 per cent cheaper than rents on same value properties in many instances in Sydney.

The cheaper mortgage costs in many of Sydney’s emerging unit hubs have come despite heavy reductions in rents since the COVID-19 pandemic started.

Rents have been falling in recent months.

CoreLogic’s quarterly rental review report released earlier this week revealed Sydney rents dropped by an average of 1.3 per cent over the three months to June.

But the drops in average rent were largely driven by changes within inner Sydney areas where tenants were mostly overseas students, hospitality workers and travellers in short-term rentals.

“Closed international boarders created a significant shock to rental demand,” CoreLogic head of research Eliza Owen said.

Mr Kuru said the fact that it was cheaper to pay off property in so many areas suggested that the state government should put more focus on lowering the entry costs of home ownership.

“Most households can afford to pay off (a home loan) but saving the $100,000 or more you’d need for a deposit is too hard,” he said.

“Billions of dollars are being thrown around at the moment but more should be done to help families get a home.”

Mr Kuru said the state government’s announcement this week of an extension of stamp duty exemptions for buyers of new properties priced under $800,000 needed to go further.

“All it’s going to do is help the people who were already ready to buy something, the people who can already afford a deposit. It does nothing for the people who can’t get there.”

AVERAGE MONTHLY SAVING OWNING VS RENTING (units)

Granville $430

Homebush $306

Eastgardens $265

Lakemba $261

Liverpool $257

Penrith $241

Sydney Olympic Park $234

Mascot $233

Merrylands $231

Punchbowl $222

Wolli Creek $215

The post Owning units up to $400 a month cheaper than renting in parts of Sydney appeared first on realestate.com.au.

Inner city suburbs have seen an explosion of new rental listings.

Some tenants could benefit after Melbourne recorded its biggest quarterly drop in rent prices on record.

But there’s little silver lining for renters working in coronavirus impacted industries, advocates say.

Rent across the city slumped 1.1 per cent in the June-ending quarter, the Australian Bureau of Statistics found.

It marked the biggest decline since ABS started recording the metric in 1972.

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Another research firm, CoreLogic, reported a 0.6 per cent fall in Melbourne’s median rent for the month of June.

The city’s average rent was $453 across all dwellings, according to CoreLogic data.

But despite these figures appearing to signal improved affordability for renters, Victoria’s peak tenant advocacy body warned they formed part of a “more complex picture”.

“Renters in the private rental market are over-represented in vulnerable industries, such as hospitality and retail,” Tenants Victoria chief executive Jennifer Beveridge said.

“Renters tell us they have lost their jobs or have fewer hours due to the impact of coronavirus. They tell us they struggle to meet rent payments.

“Some have moved in with family and friends, but we know not everyone has that fallback option.”

CoreLogic head of research Eliza Owen said job losses in hospitality, tourism and the arts had contributed to rental price drops, by reducing demand for properties.

Madeline Byrne rents with Vinny an Italian Greyhound in her household. Picture: Sarah Matray

Signage for a rental in Carlton North. Picture: AAP Image/James Ross

“Households in these sectors are more likely to rent than in other industries,” Ms Owen said.

Realestate.com.au director of economic research Cameron Kusher said the price fall was a “clear indicator” of the profound impact the pandemic was having on the property market.

“We have virtually no migration, there is new stimulus encouraging purchasing from first-home buyers who otherwise may have been renters, and then there’s the fact unemployment is rising and younger people are most affected,” Mr Kusher said.

He added the moratorium on rental evictions, in place until September, meant it was unlikely the next quarter’s results would see another sharp drop.

But after that, it was “likely rental rates will fall further”.

“It will take quite some time to recover to previous highs,” he said.

Philip Webb chief executive Anthony Webb said a number of tenants had vacated properties to take advantage of record-low interest rates and stimulus packages to purchase a home.

He added landlords had been forced to make concessions to keep their properties tenanted.

“There’s been a fear for landlords that if they don’t adjust their rents or accept applicants that come through, (their property) might sit vacant for a while,” he said.

A Victoria St, Melbourne apartment recently had its rent slashed from $430 to $325.

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The post Biggest drop in Melbourne rental prices on record: ABS appeared first on realestate.com.au.

The Maylands property at 104 Phillis Street has served as a home and corner shop over the years. Pic: realestate.com.au

A historic Maylands property that once served as a popular corner shop is being offered to househunters for the first time in more than 60 years.

The combined shopfront and two-bedroom house at 104 Phillis Street is on the market with a $730,000 to $760,000 price guide.

While it has seen better days, the local heritage listed property promises character charm and a rich history.

Selling agent Judy Morris, of Klemich Real Estate, said the 1905-built property used to be the go-to place for locals wanting to pick up a few groceries and send letters.

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It was popular among local residents back in the day. Pic: realestate.com.au

Many locals hope it will be restored to its former glory one day. Pic: realestate.com.au

“The owners took it over as a shop in 1954 and it was the post office, the bank, the land titles office, they did births and deaths, and haberdashery and drapery,” she said.

“When the Coles shopping centre opened on the corner of Payneham Road and (Nelson Street) it closed down.

“The locals are very keen to see it returned to some sort of shop.”

Ms Morris said it was attracting a lot of interest from prospective buyers, most of which were keen to use the property as a combined residence and commercial space.

From a home office to a cafe, she said the former shopfront offered plenty of potential.

The property is also a two-bedroom residence. Pic: realestate.com.au

It needs a little TLC though. Pic: realestate.com.au

It has old school character charm. Pic: realestate.com.au

“Some people are looking at it maybe being an art gallery too,” Mr Morris said.

“All those things are subject to council approval though.

“Quite a lot of young people are really quite passionate about it and wanting to restore it.”

The building is on a 754sqm block and has two separate entries.

It includes the shopfront with wine cellar, two bedrooms with fireplaces, a dining room, kitchen, sunroom, bathroom and laundry.

Outside there is a rainwater tank, separate toilet and shed.

The post Chance to restore an old Maylands home and corner shop to its former glory appeared first on realestate.com.au.

The Gold Coast is officially the luxury real estate capital of Australia, according to new figures ranking premium property growth in cities around the world.

The Gold Coast has also bucked the trend worldwide by recording positive growth over the COVID-19 pandemic period.

The $25 million sale of 2 Heron Ave, Mermaid Beach set a new Queensland record.

Knight Frank’s Prime Global Cities Index Q2 2020 tracks movement in prime residential prices in local currency across 45 cities worldwide.

Prime property is defined as the most desirable and expensive property in a given location, generally including the top 5 per cent of each market by value.

A resort-style mansion at 1-3 La Scala court, Isle of Capri fetched $11.75 million in May.

Five Australian cities – the Gold Coast, Sydney, Perth, Brisbane and Melbourne – were ranked in the top 24, with the Gold Coast coming in at number 10.

The Gold Coast was the strongest performing city in Australia, recording annual price growth of 3.4 per cent followed by Sydney and Perth (3.0 per cent), Brisbane (2.5 per cent) and Melbourne (1.2 per cent).

Over the past quarter, the Gold Coast’s luxury property market recorded positive growth of 1.2 per cent, tracking ahead of Brisbane and Sydney with 0.3 per cent.

The sale of 15 Southern Cross Dr, Cronin Island for $12.45m was the second-highest on the Gold Coast this year.

Knight Frank National Head of Residential Shayne Harris said demand for luxury property was likely to continue, with cashed-up individuals wanting more spacious homes.

“During the pandemic we’ve seen the ultra-wealthy make their next residential property purchase decisions based on liveability, so places like southeast Queensland will become more attractive in a post-COVID world,” he said.

“It is unlikely we will see significant volumes of distressed prime sales as we saw in 2008, during the global financial crisis.”

The red roofed house at 10 Goodwin Tce, Burleigh Heads sold for $7 million.

Manila was the world’s top performing city, with annual luxury residential price growth of 14.4 per cent, followed by Tokyo (8.6 per cent) and Stockholm (4.4 per cent).

“Manila, Tokyo and Seoul are Asia’s top performers year-on-year, with Stockholm, Geneva and Paris leading Europe’s rankings,” said Knight Frank’s Head of Residential Research Australia Michelle Ciesielski.

“However, five of these six cities registered flat or falling prime prices in the three months to June.

“We expect the index to display muted growth in the second half of 2020 before recovering in 2021.”

The post Australia’s luxury real estate capital revealed appeared first on realestate.com.au.