New research from digital-bank, Ubank, has revealed that rising rents have reshaped the housing landscape, narrowing the gap between renting and owning to create “a window of opportunity for young Australians to step onto the property ladder in 2025.”
The research conducted by Cotality found that nationally, “median weekly rent values over the last five years have increased by 39% to $659 per week, while the median weekly mortgage payment is $922.”
Highlighting the closing gap between renting and owning, the research shows that in “7.7% of Australian suburbs, paying down a mortgage (with a 20% deposit) is more affordable than renting.”
In almost a fifth of Australian suburbs, the median mortgage repayment is estimated to “be within $100 per week of the median rent.”
Even in the capital cities, opportunities exist to “service a mortgage at a lower cost than renting.”
The research pinpoints that the greatest opportunity “exists in Darwin, where 85.7% of suburbs have a more affordable median mortgage than rent.”
Opportunities to service a mortgage “below the median rental cost also exist in Perth (2.6%), Melbourne (2.3%), and Canberra (2.0%).”
This is rounded out by Sydney, Brisbane, and Adelaide, “where only 0.3% of properties are cheaper to own than rent.”
The research also highlighted what could be purchased across the country if a weekly rent went toward an owner-occupied mortgage instead:
The median weekly rent in Australia, “at $659 per week, is equivalent to paying a mortgage on a home worth around $590,000.”
Based on this purchase price, Cotality estimates there “are approximately 500 unit markets and almost 600 house markets across Australia where a median weekly rent would cover this mortgage repayment.”
For the median weekly “rent in Sydney ($787 per week), the purchase price equivalent would be $704,000.”
This is similar to the current median value of “units in Canterbury in the Inner South West, and houses in San Remo on the Central Coast.”
For the median weekly rent “in Melbourne ($610 per week), the purchase price equivalent would be $546,000.”
This is similar to the current median value of units “in Narre Warren, and houses in Melton South.”
For the median weekly rent “in Brisbane ($678 per week), the purchase price equivalent would be $606,000.”
This is similar to the current median value of units “in Zillmere, and houses in Leichhardt.”
For the median weekly rent “in Perth ($713 per week), the purchase price equivalent would be $638,000.”
This is similar to the current median value of units “in Jolimont, and houses in Maddington.”
For renters interested in home ownership, now is “a good time to take stock by reassessing their financial position and comparing the costs of renting versus buying.”
A weekly mortgage payment would drop “to $856 should the predicted official cash rate fall to 3.1%, even if home values rose another 5% like in 2024.”
With several predicted interest rate cuts this year alone, “purchasing may become a more accessible option than it has in the past.”
While the premium between a mortgage and rent is set to narrow in 2025, for young Australians “who live, work and socialize in cities, buying in premium urban locations typically have a much higher mortgage expense than rents.”
In order to stay at the heart of the action while still “getting on the property ladder, young Australians may also turn to rentvesting.”
Eliza Owen, head researcher at Cotality, said:
“Rentvesting is a strategy where a person rents a property that suits their lifestyle while owning an investment property that fits their budget. As inner-city home prices have risen, this approach has become more popular, particularly among younger buyers. Initially, it might seem counterintuitive to pay both rent and a mortgage, but it depends on an individual or couple’s budget, life stage, and desired lifestyle. Rentvesting can offer the best of both worlds, allowing them to purchase a property and rent it out to cover some or all of their ownership costs while continuing to rent the home where they live. It’s important to crunch the numbers and understand what your rent could buy and work from there.”
According to home loan data produced by the Australian Bureau of Statistics, first home buyer investors “secured 8,283 loans in 2024 – an increase of 12% on the previous year.”
Over the past five years, investor first home buyer loans “have made up about 6% of total first home buyer loans.”
Separate NAB Behavioral Economics data commissioned by Ubank shows a higher “number of younger Australians (10%) compared to any other age group are willing to rentvest in order to purchase their first home.”
Highlighting the importance of lifestyle and location to younger Australians, which can be achieved via rentvesting, “less than a fifth of 26 – 35 year olds were prepared to live in a suburb some way out of a city or town, while under a seventh of 18-35 year olds would be prepared to live further away from work or family.”
Ray Jokhan, Chief Home Lending Officer at Ubank, said:
“Rentvesting offers the freedom to live where you desire and the potential for financial growth, but it comes with some trade-offs including less security in your primary residence, missing out on first homeowner grants, along with tax and cost considerations. At Ubank, we’ve certainly seen it work as a great option for many of our customers, particularly those who want to get their foot on the property ladder but wanting to maintain their lifestyle.”