Where it is even cheaper to buy than to rent

The number of areas where it’s cheaper to pay a mortgage than to rent has plummeted over the past year, but there are still some, CoreLogic says.

House prices have skyrocketed across the country in the past 12 months and that has affected the amount of mortgage repayments.

To analyze what this means for purchase and rental costs, CoreLogic took the median price of first-time buyers in each area, accepted a 20 percent deposit and 30-year mortgage of 2.8 percent, and the 14-day repayments with the Median compared to rent.

It was found that of the 66 areas analyzed, buying for first-time buyers was still cheaper than renting in 42.

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These areas included Wairoa, Gray District, Whakatane, Rotorua, and the far north. In Rotorua, it was about $ 206 less to pay a mortgage than it was renting, while in Wairoa it was about $ 300 less.

However, the analysis showed a sharp drop in the number of areas where it was cheaper to buy than to rent, with 62 areas meeting the bill last year at the same time.

And the areas that cost more to pay a mortgage last year were expensive areas like Auckland, Queenstown, Wellington, and Thames Coromandel.

Kelvin Davidson, Senior Real Estate Economist at CoreLogic, said that has changed and that there are significantly fewer areas where it costs less to buy than rent.

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Porirua, Lower Hutt, Tauranga and Tasman are some examples of areas where paying a mortgage has gone from being lower than renting a year ago to more expensive now, he said.

“The fact that some provincial markets have seen the biggest gains means that it is no surprise that many of the areas that have ‘traded’ have been at the forefront of the recovery over the past year.”

An example was Porirua, where a year ago a first-time buyer could have saved about $ 220 per fortnight if they owned and did not rent a home. It now costs $ 90 more in two weeks to pay a mortgage than to pay a rent.

Davidson said that while it was still cheaper to buy than rent in some areas, there wasn’t a single area that wasn’t affected by the rise in house prices.

Buying has become more expensive everywhere, which means the gap between buying and renting costs has narrowed across the country, with the trend going in one direction, he said.

“At the national level, it was $ 138 less to pay a mortgage than it was a year ago. But as the buy-to-rent margin has moved from negative to positive in more areas, the national number has changed and is now $ 22 more on a mortgage than on rent. “

While the analysis excluded other operating costs such as tariffs and insurance from the acquisition costs, the increase occurred at a time when rents had also increased.

Davidson said this made the change in market conditions over the past year apparent and it was an expression of the affordability issues in the market.

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As renting looked more attractive in more and more areas, it is conceivable that some aspiring first-time buyers are questioning the merits of buying at current prices, he said.

“We’re not saying this will definitely happen en masse. But it’s worth watching, especially since the first in a likely series of official cash rate hikes will come on Wednesday and mortgage rates were already up before that decision.

Higher mortgage rates would directly skyrocket property costs, and while they could also slow house price growth, prices would likely be higher for another year than they are today, he said.

“This could lead some first-time home buyers to choose to rent longer and pursue other options like online stock platforms to build wealth.”

CoreLogic-Figuren At the beginning of the year it was found that in some areas it is cheaper to pay a mortgage than a rent, but it depends on the zip code, with the Aucklanders and Wellingtonians unlucky on that front.

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