We tend to assume that renting a home is more affordable than buying one, but new data is turning that assumption on its head.

With house prices still climbing and the rental market more ferocious than ever, is it cheaper to buy or to rent in Newcastle, Lake Macquarie and Maitland?

Paying a mortgage is cheaper than renting for more than a third of Australian properties

Analysis from CoreLogic released in July suggests that buying a property is cheaper than paying rent on 36.3% of Australian homes, up 2.4% since February 2020. The figures for regional NSW are even more remarkable. They show that buying a home is now cheaper than renting for 48.2% of properties in NSW’s regions.

Buying has become cheaper than renting for more Australian properties thanks to the very low home loan rates introduced to the market when COVID first hit last year. The average new mortgage rate for owner-occupiers in May 2021 was 2.4%, down from 3.21% in February 2020.

Sales market update

The past year has seen incredible growth in our local property market. Median house prices in Newcastle and Lake Macquarie jumped 24.8% in the last twelve months. Most recently the median spiked from $698,000 in May to $746,000 in July, an increase of more than 8%.

This explosive growth in property prices can be partly attributed to the influx of tree and sea changers from Sydney and other capital cities. It’s also being driven by a lack of available stock. The number of properties on the market has been steadily falling since early 2020, and in June there were only 4465 properties on the market in the Hunter. This is the lowest number in more than a decade.

Rental market update

Just as our local sales market has exploded, the rental market is also running incredibly hot. We were blown away when more than 200 prospective tenants turned up to view one of our rental properties recently.

The vacancy rate for the Hunter region in June was a super low 0.7%. Since the vacancy rate dropped to 0.6% in November last year, our region has been experiencing its lowest vacancy rates in more than 16 years.

Average asking rents are also at an all-time high. In July the average asking rent for units in the Hunter region is $409, and for houses, it’s $471.

Is it cheaper to buy or to rent in Newcastle, Lake Macquarie and Maitland?

According to CoreLogic’s data, 58.1% of properties in the Hunter Valley (excluding Newcastle) are cheaper to buy than to rent. For Newcastle and Lake Macquarie, it’s cheaper to buy than to rent for 27.5% of properties.

So, in which neighbourhoods is it cheaper to buy than to rent? When you compare the median house price with the average weekly rent, it’s cheaper to buy in suburbs like Maitland, Windale and Aberglasslyn.

Suburb Weekly cost of servicing mortgage Average weekly rent
Maitland $335 $390
Windale $340 $385
Aberglasslyn $442 $460

Meanwhile, renting will set you back less each week than buying in places like Valentine, Warners Bay and Belmont.

Suburb Weekly cost of servicing mortgage Average weekly rent
Valentine $728 $620
Warners Bay $630 $520
Belmont $565 $490

And, interestingly, the cost of servicing a mortgage and paying rent each week in areas like Toronto, Morisset and Tingira Heights works out to be roughly the same. This suggests that now is a good time to buy in these areas before the balance tips.

Suburb Weekly cost of servicing mortgage Average weekly rent
Toronto $434 $420
Morisset $417 $420
Tingira Heights $507 $500

Just like CoreLogic’s data, these comparisons assume a 20% deposit, no mortgage or transaction fees, a 2.4% mortgage interest rate and a 25-year loan term.

If you’re looking to buy or rent in and around Newcastle, Lake Macquarie or Maitland, get in touch today.

Altitude Real Estate

Altitude Real Estate

Altitude is known as one of the region's most successful real estate teams for constantly exceeding their client's expectations. Our award winning agents provide our clients with specialised services across all facets of real estate incorporating Residential Sales, Property Management, Strata Management and Project Marketing. Learn More

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