Soaring rent prices have left over a third of homes cheaper to buy than rent, PropTrack data has found.
Recent PropTrack Market Insights data has found that over one-third of homes (36.3 per cent) are still cheaper to buy than rent as of October 2023.
For units, buying conditions remained favourable with 55 per cent estimated to be cheaper to buy than rent while 29 per cent of houses across Australia were cheaper to buy.
According to the data, buying conditions in Western Australia were the most favourable in the country at 78.7 per cent of homes being cheaper to buy than rent, followed by Queensland (53.3 per cent), Tasmania (48.1 per cent), and South Australia (38.9 per cent).
However, the data suggests that conditions for stronger price growth will continue to persist in these states, possibly reducing the share of homes cheaper to buy, according to PropTrack.
The state where buying conditions were least favourable was recorded in Victoria at 16.6 per cent followed by NSW at 24.3 per cent.
PropTrack senior economist Paul Ryan said that favourable buying conditions have remained despite the record pace of interest rate increases.
“This shows that there are still opportunities for buyers across the housing market,” Mr Ryan said.
“A record pace of rent growth – with advertised rents up 14.6 per cent over the past year – has offset higher buying costs in many regions.
“Looking to 2024, higher interest rates will challenge housing affordability for many. This may slow price growth and rebalance buying conditions across the market.”
Furthermore, the Housing Affordability Report November 2023 released by ANZ and CoreLogic indicated that housing affordability has been challenged by the rise in rent values over the course of 2023.
According to the report, advertised rent values increased 8.1 per cent in the year to October 2023 and up 28.4 per cent since the onset of COVID-19.
As of September 2023, prospective renters would need to dedicate 31 per cent of their income (at median levels) to service a new lease, up from 29.4 per cent in 2022 and 26.7 per cent since the pandemic.
“While rents on new leases are still relatively manageable at the median annual income level, the current portion of 25th percentile income required to service an equally low rent lease was over 50 per cent of income in September,” the report stated.