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Convinced renting is the low risk alternative to buying? You could be right. In these desirable suburbs, by choosing to rent, you’re paying far less than the cost to own the home you live in. 

2020 has thrown a few curveballs. If you were planning to buy this year, you might be having second thoughts. The good news is, right now, it’s a renter’s market.

Whether you plan to buy in the future or not, renting right now makes a lot sense, says Sam Nokes, head of property management at Jellis Craig Stonnington, Richmond and surrounds. He says, in particular, it’s a tenant’s market for inner-city dwellers.

“Some properties have remained popular throughout the COVID-19 downturn but, overall, the inner city is the place for deals,” Nokes says. “Look at the CBDs in most capital cities; there is huge vacancy with next-to-no new tenants entering the market.

“If you want to live in the CBD, now’s the time.”

This property in Woollahra, which sold for $3.2m in 2019, has been snapped up by savvy tenants. Picture: realestate.com.au/rent

When there’s risk in the market, renting is a safer bet, says Nokes.

“We’re facing the likelihood of a long and deep recession and prices might keep going down,” he says.

However, if buying is in your future plans, he cautions on holding out too long.

“If you look at New Zealand, their selling market took off when lockdown ended and those waiting missed their opportunity,” adds Nokes.

Where to find rent at a fraction of the cost of owning

Need some help deciding where to ride out the storm? We looked at realestate.com.au data to find the top 10 suburbs around Australia where the cost disparity between monthly rental payments and monthly mortgage repayments was greatest – in favour of renting.

The monthly repayment, based on the suburb median house price, is calculated with a 20% deposit and 3.02% interest rate for monthly repayments over 30 years. The monthly rent, based on the suburb median rent, is calculated by weekly rent x 52 (weeks) / 12 (months). The data is restricted to two-bedroom properties.

Land value has nothing to do with rent

Topped by Woollahra in Sydney’s east, riverside Nedlands in Perth and North Bondi, part of Sydney’s trendiest beach locale, the list of suburbs where rental payments are cheaper than mortgage repayments is a promising set for any renter concerned with maintaining a hip lifestyle.

Poolside living in North Bondi is yours for the fraction of the cost of buying. Picture: realestate.com.au/rent

In Woollahra, you’ll make a saving of as much as $3,857 a month by renting! That’s not even taking into account what you’ll dodge in the outlay for the deposit.

“What this tells us is that land value has nothing to do with rent,” Nokes says. “A house on a large block and a house on a small block usually don’t differ greatly in rent. Good and great streets also don’t always have a large impact. What matters more to rent is what you get to use, not what you get to own.” 

In suburbs like Woollahra, Nedlands and North Bondi, “what you get” is access to a great lifestyle. If you were planning on moving away from the inner city this year to buy a property in the suburbs, you might want to consider holding onto the lifestyle perks a little longer. It might not cost you that much more if you rent.

On the rental market for $800 a week, there are homes in Mount Waverley you’d pay a lot more to own. Picture: realestate.com.au/rent

In Victoria, which has seen greater economic impacts of the coronavirus pandemic than any other state, it was not inner-city but leafy eastern suburbs around 10-15km from the Melbourne CBD that made the top 10 list of suburbs where rental payments are far less than mortgage repayments.

“Surrey Hills and Mount Waverley are great examples of where the land values have surpassed the rental values because tenants aren’t really concerned with how much land they get,” Nokes explains.

“Both of these areas also have a lot of older properties where the land value is high. These are more likely to be leased out than the large luxury homes that push up sales prices in these areas.”

Scroll down to find the top two suburbs where it’s cheaper to rent than buy in your home state or territory.

Individual states and territories

These are the top two suburbs in each state where it’s cheaper to rent than buy.

Listed by suburb, monthly rent, estimated monthly mortgage payment and the monthly price difference.

ACT had no suburbs where it was cheaper to rent than buy, while Tasmania only had one.

NSW

Woollahra – $3,857.14 – $7,608 – $3,751 cheaper to rent

North Bondi – $4,500 – $7,498 – $2,998 cheaper to rent

QLD

Camp Hill – $1,800 – $2,654 – $854 cheaper to rent

Bardon – $1,842 – $2,491 – $648 cheaper to rent

SA

Prospect – $1,542 – $2,066 – $523 cheaper to rent

Norwood – $1,800 – $2,290 – $490 cheaper to rent

Tasmania

Sandy Bay – $2,357 – $3,085– $728 cheaper to rent

Victoria

Mount Waverley – $1,800 – $4,466– $2,666 cheaper to rent

Surrey Hills – $1,992 – $4,624 – $2,631 cheaper to rent

WA

Nedlands – $1,928 – $5,139 – $3,211 cheaper to rent

Cottesloe – $2,421 – $5,072 – $2,650 cheaper to rent

Still need help deciding on a suburb? Talk to friends, neighbours, the hairdresser, your barista – anyone who’ll listen! – about your options. A second opinion never hurts.

The post Top 10 suburbs where it’s cheaper to rent than buy appeared first on realestate.com.au.

The stability of Aussie home prices is set to be tested from coast to coast, due to the dramatic slump in our population growth.

With immigration effectively paused due to the COVID-19 epidemic, Australia’s national housing body has predicted a fall in demand by as much as 77,000 homes per year for the next three years.

According to new research released from the National Housing Finance and Investment Corporation (NHFIC), the pandemic could hit housing demand to the tune of between 129,000 and 232,000 dwellings over the next three years.

The fall in population growth could hurt real estate.

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Such a scenario could place significant pressure on home values, which so far have showed remarkable resilience despite the economic challenges of the pandemic.

The above figure could represent more than 10 per cent of housing transactions, with the Reserve Bank of Australia asserting around half a million home are transacted on each year.

According to the NHFIC, the worst case scenario would be “a reduction in the population increase – from peak to trough – of 214,000 from 2019 to 2021”.

“This implies a decline of 0.8 per cent of the population over the two-year period, which has only been surpassed by World War I and the unwinding of the peak of the baby boom in 1971.”

Net overseas migration has contributed almost 60 per cent of population growth since 2007.

Such a fall could also have a domino effect on rent prices and the construction industry. It would also inhibit the rebound of the economy from the pandemic enforced recession.

“Large falls in underlying dwelling demand are already putting upward pressure on vacancy rates and downward pressure on rents, particularly in some inner-city areas,” the report reads.

“If sustained, this could cause a contraction in construction activity that would add to the recessionary forces impacting the economy.”

Melbourne’s controversial lockdown has resulted in the most sluggish real estate market in Australia. Picture: Getty

Rising unemployment could also be a factor

“The past two recessions show that rising unemployment tends to lead a decline in natural population growth, the report continued.

“Australia’s second wave of infections is likely to further slow population growth, adding to the depth of the downturn and hindering the pace of recovery in underlying housing demand.”

Due to the different stages of lockdown each state is experiencing and how effective or otherwise state governments have been in dealing with the virus, Australia’s real estate market has splintered in a manner rarely witnessed before. And that could continue.

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“This research highlights the strong relationship between population growth, increasingly through net overseas migration, and underlying dwelling demand with the outlook for population growth due to COVID-19 highly uncertain,” NHFIC CEO Nathan Dal Bon said.

Home value resilience to be tested

All things considered Australia’s home values have shown great resilience since mid-March when COVID-19 hit and lockdowns were first enforced. Over that time, Melbourne dwelling values have been the worst hit, falling 4.6 per cent. However, annually they are up 5.9 per cent and property experts understandably argue the recent price recorded are not as accurate as they might be, due to the lack of sales.

The construction industry could be hit hard by the fall in population growth.

It is this lack of stock which has also helped to prevent a free-fall in prices.

With the likelihood the Morrison Government will announce further homebuying incentives in next month’s Federal Budget, First National Real Estate CEO Ray Ellis points to the importance of new home construction as representing around seven to eight per cent of Australia’s GDP.

“We still expect strong growth in property prices next year. But the pace is the issue without population growth,” he said.

The volatility of the stock market this year and record low interest rates, means property has become as great a safe haven as it ever has been and lack of consumer confidence could also mean Australians continue to hold onto their homes for longer.

Melbourne could be the most vulnerable

In recent years, Melbourne has overtaken Sydney as the location most immigrants choose to live, as such is it is likely its real estate market could be the most vulnerable due to the drop in net migration.

Bruce Warburton, head of sales at Brad Teal, who specialise in the some of the outer areas of Melbourne, such as Sunbury, where many new migrants choose to call home, believes the lack of demand there could lead to a ripple effect into the inner city.

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“The housing market has held up well so far despite the incredible challenges,” he said.

“A lot of people who sell up in places like Sunbury are moving to inner city Melbourne for the lifestyle and for schools. They are don’t want to commute so far and are willing to sacrifice a modern home for something older provided they are closer to the city.

“That option might be out the window for some now if that demand from immigration isn’t there. It’s something the government needs to think about when they are planning for the medium and long term.”

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84 Rae Avenue, Edithvale was one of only a handful of Melbourne homes to sell via online auction last week.

Deals are still being done in Melbourne’s locked-down market, but only a handful of buyers are willing to “take the punt” of purchasing homes sight-unseen.

Just 11 homes went under the hammer in Melbourne last week, according to CoreLogic — down dramatically from 1020 auctions on the same weekend last year.

Seven of them were reported as sold, including that of an Edithvale property that soared $63,500 above reserve at an online auction on Saturday.

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A developer plans to 84 Rae Avenue after winning its online auction.

The Edithvale property near the beach fetched $963,500.

A developer outbid three homebuyers to win the 697sq m landholding just blocks from the beach — which came with plans and permits for two townhouses — for $963,500.

Ray White Carnegie’s Tom Grieve, who ran the auction from his garage, said 84 Rae Avenue sold without any of the bidders setting foot in it. A virtual 3D tour and photos were the only options due to a citywide ban on physical homes inspections being extended t
o at least October 26.

“We put it on the internet at the start of September, hoping we’d get released from (stage four lockdown) on September 14 — in hindsight, that was somewhat optimistic,” he said.

“But we figured, it’s a house, it’s got plans and permits, it’s going to attract interest without inspections. So let’s just leave it there and do the auction.”

Mr Grieve said the vendor also supplied a building inspection to the potential buyers, for a fee, to put their minds at ease.

It turned out an inspection wasn’t too important to the buyer — he planned to demolish the dated three-bedroom house the 70-something vendor had called home for 25 years, and replace it with townhouses.

But Mr Grieve said for most buyers, it was a crucial element of the selling process. He said he had “more than 20 individual buyer inspections booked” across three to four properties for the day physical inspections were due to resume.

“That whole first week back, I’m completely booked,” he said.

Victoria’s peak real estate body is campaigning for one-on-one home inspections to be allowed to resume as part of the next step on the government’s road map to reopening, due to begin from September 28.

The quirky 129 Dorset Road, Croydon attracted eight offers before its sale.

The 1980s build fetched $732,000.

Meanwhile, a Croydon house buyers were lining up to inspect sold before any of them got the chance.

The retro house at 129 Dorset Road sold sight-unseen for $732,000 — above the $660,000-$715,000 quoted range — after Hocking Stuart Ringwood selling agent Travis Milton received a whopping eight offers.

“I had more people interested, but they said they needed to see it in person,” Mr Milton said.

“While it was sensational to get a sale done, there was always going to be that portion of the market who wouldn’t (buy sight-unseen).”

The sale to first-home buyers from the Maroondah area came after the property racked up more than 20,000 views on realestate.com.au, with the 1986 build’s price point and striking design by architect Hank Romyn the major drawcards.

Buyers from Clifton Hill snapped up 22 Coburn Avenue, McCrae without setting foot in it.

22 Coburn Avenue was just 300m from the beach and 18 months old.

Clifton Hill-based buyers also snapped up a contemporary McCrae house without viewing it in person, for an undisclosed sum understood to have surpassed $1.7m.

Belle Rosebud-Dromana director Grant McConnell said the purchasers didn’t have the luxury of waiting until inspections resumed in a month’s time, as they’d already sold their own home.

“That’s where you feel sorry for people, when they’ve sold and they can’t buy anything unless they want to take the punt,” he said.

He said the buyers viewed the 22 Coburn Avenue home — which was only 300m from the beach and 18 months old — via a video walk-through filmed before stage four restrictions kicked in.

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samantha.landy@news.com.au

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Atlassian’s Scott Farquhar has quietly pulled the $37 million renovation plans on Elaine. (AAP Image/Dan Himbrechts)

Atlassian billionaire Scott Farquhar has quietly pulled the $37 million renovation plans he’d unveiled with fanfare earlier this year for his Double Bay trophy estate, Elaine.

Farquhar and wife investment banker, Kim Jackson had local ­architects pitch for the design project, but went with a striking three storey concept with a translucent curved facade from Lazzarini Pickering Architetti, a Rome-based practice headed by expatriate ­architect Carl Pickering.

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The grand mansion Elaine. AFP PHOTO / PETER PARKS

While they await the new plans, approvals, and an estimated two-year build, Farquhar and Jackson, who heads Skip Capital, are holed up in their $16.25 million Bellevue Hill in-between acquisition.

It was three years ago that they paid $71 million to John B. Fairfax for the estate on Seven Shillings Beach, with the deal now ranked as Sydney’s third most expensive.

Their plans were released to media prior to their lodgement at Woollahra Council, which adjoins Elaine on its southern side via its Blackburn Gardens. The application didn’t even progress to the formal advertising in the Wentworth Courier for objections from the public, before it was pulled.

The cancelled plans look very different to this. AFP PHOTO / PETER PARKS

But when the revised proposal does lob, Farquhar will likely have taken steps to have run it past all the interested neighbours. The other key party being his business partner, Mike Cannon-Brookes who spent $100 million next door on Fairwater in 2018 with his wife, Annie.

The Sell envisages the very edgy proposal for a rooftop tennis court will have been ruled out.

There’s always returfing the ­existing lawn court on the 7000sqm estate.

Atlassian’s Scott Farquhar and Mike Cannon-Brookes (AAP Image/Dan Himbrechts)

There are only a dozen or so harbourfronts elsewhere in the east that come with a court, starting with the Paspaley family in Elizabeth Bay through to the Boyer family at Watsons Bay.

They include Edgewater, the Wolseley Rd, Point Piper sold earlier this month for a repu­ted $95 million by the founders of the Katies retail clothing chain Joe Brender and the late Sam Moss.

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The former convent in Balmain that’s now luxury housing.

A Victorian-era building once used by nuns has been transformed into one of the inner west’s most extravagant homes – with a price tag to match.

The eight-bedroom house, one of three homes converted from the former Convent of the Immaculate Conception in Balmain, was listed for sale this week with $12m hopes.

It includes four levels of living space serviced by a private lift, along with a home gym, 600-bottle wine cellar and plush Italian marble finishes.

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The gothic-revival building on Jane St was constructed in 1876 and original housed 10 Sisters of the Good Samaritan and 30 boarders.

It is listed with a $12m guide.

The home is spread across four levels.

An additional wing was added in the 1890s, which was sold off privately and converted into the three houses in the 2000s.

The house at 14C Jane St underwent another renovation in more recent years and is now listed with BresicWhitney agents Adrian Oddi and Shannan Whitney.

Mr Oddi said the home had already attracted interest from overseas buyers despite only just hitting the market.

“The owners have given it a complete overhaul … the buyer pool for this property will stretch well out of Balmain,” he said.

The convent pictured in 2006 prior to the overhaul.

The convent was built in 1876 and a wing was added in the 1890s.

The home includes 702sqm of internal space and abounds with natural light. There are views across the city that take in the Harbour Bridge, CBD skyline and Anzac Bridge.

There are four levels but some ceilings are still 8m high. Finer details include kauri floorboards and Australian cedar doors.

Depending on the configuration, there are at least seven bathrooms, along with a mix of home offices and a multitude of bedroom configurations.

The property is listed on the NSW State Heritage Register and with the Inner West Council as an item of high local significance.

The interior prior to the renovation.

The luxury finishes seen in 2020.

It is one of the most notable examples of gothic-revival architecture in the area.

An old newspaper report from the 1890s described the convent as occupying “one of the most picturesque and lovely sights around Sydney, its grand ‘hall’ is without rival and elegance in any of the scholastic institutions of the city.”

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Designed by architect Edmund Blake, the structure is five bricks thick at ground level, moving to triple brick for the upper floors.

It has council approval for a swimming pool, as well as potential for four-car garaging, according to information provided by BresicWhitney.

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OPINION

Banning physical inspections of homes for renters and buyers is not a proportionate response to the public health risk, writes REA Group CEO Owen Wilson.

Physical property inspections in Melbourne must be reinstated.

Buying, selling and renting property during this health crisis is not a discretionary activity — shelter is an absolute necessity.

Banning physical inspections until October 26 does not appear to be a proportionate response to the public health risks.

Melbourne’s property market has effectively been placed on hold. Picture: Getty

I should make it clear the real estate industry remains committed to ensuring we play an ongoing role in preventing the spread of COVID-19. Real estate agents proved during initial restrictions their ability to adapt to new ways of operating. Precautions were quickly implemented during private inspections, such as adhering to social distancing, sanitisation practices, contact tracing and implementation of COVID-safe workplace protocols.

The inconsistency in the stage four restrictions defies logic and needs to be corrected. Like other professionals and tradespeople who provide important services to the community, real estate agents should be trusted to operate safely in this environment.

The government’s road map is confusing and inconsistent when you consider it is possible to have meetings on building sites with five people, yet a single person can’t inspect a property.

The Victorian government’s roadmap has been confusing and inconsistent when it comes to the real estate industry. Picture: Getty

The ban is having a profound impact on Victoria’s economy and access to safe, secure housing. The flow-on effects include significant social and financial hardship in our local communities.

Over recent weeks we have seen many examples of Melbourne’s extended real estate lockdown leaving buyers, sellers and homeowners in limbo, with many in desperate financial situations.

Some people have sold houses in recent months because of job losses and need to find a place to rent. Others are midway through buying and selling and have had to secure bridging finance, costing much more every week. This adds enormous stress to the process.

In the coming weeks, many Victorians who have deferred their mortgage repayments will be asked to resume payments. Some will need to downsize or perhaps even leave the property market. They cannot do this if the market is unable to operate effectively.

The real estate industry is committed to finding the right balance between the challenges of the health crisis while ensuring the right measures are in place for a functioning real estate sector.

Finally, we remain confident that once restrictions ease, the property market can recover. Let’s allow this essential market to open up again so our economy and communities can return to some form of normality.

This article originally appeared in The Herald Sun. 

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