Australian renters face living in larger share houses and further away from family as the housing crisis worsens, with new data revealing about a third of homes nationally are now cheaper to purchase than to rent.

Figures published by PropTrack on Tuesday show most homes in areas like Botany, Auburn and Parramatta in New South Wales and Beenleigh in Brisbane are more expensive to rent over 10 years than they are to buy.

That’s despite the fastest increases in mortgage bills on record over the past year and a sharp rebound in property prices nationwide over 2023.

PropTrack economist Paul Ryan said the findings show the 14.6 per cent rise in rents over the past year nationally is squeezing low-income families, making it even harder to escape by saving up for a house deposit.

“It would be cheaper to buy [over the long term], but how do [renters] save that 20 per cent deposit when paying these higher rents?” he said.

With no short-term solutions in sight for the rental crisis, Ryan said the result of falling housing affordability will be tough choices for families.

“Households will really be considering non-optimal housing,” he said.

“Whether that’s sharing with more people or locations that wouldn’t be their first choices … that’s a really bad outcome for a lot of households.”

Units lead the way as cheaper to buy than rent

The PropTrack analysis found that 36.3 per cent of properties nationwide are cheaper to buy than rent for 10 years, with more than half of units (55 per cent) being cheaper to buy than rent.

However, just 29 per cent of houses nationwide are cheaper to buy than to rent, PropTrack said.

Source: PropTrack (click to enlarge).

That gap between units and houses is particularly evident in Melbourne and Sydney where only 1.4 and 2.2 per cent of houses respectively are cheaper to purchase than they are to rent.

That figure rises to 42.7 per cent (Sydney) and 38.5 per cent (Melbourne) for unit properties.

Botany, Auburn and Parramatta led the way for properties that are cheaper to buy than rent in Sydney, while Stonnington West and Port Phillip were the areas in Melbourne.

Perth had the highest proportion of both houses and units that are cheaper to buy than rent, with 74.3 per cent of homes and a whopping 92.5 per cent of units, according to PropTrack.

The Perth suburbs of Kwinana, Gosnells and Swan led the way at 95 per cent of properties.

Buying conditions still ‘favourable’

It’s all grim reading for those without a deposit saved, but for households on the edge of being able to get onto the property ladder, Ryan said that conditions across the market are still fairly “favourable”.

He said high rents are pushing those that can afford it towards buying.

Source: PropTrack (click to enlarge).

“Buying conditions remain strongest in Queensland, South Australia and Western Australia, which points to continued upward pressure on prices in these regions,” Ryan said.

“Looking to 2024, higher interest rates will challenge housing affordability for many. This may slow price growth and rebalance buying conditions across the market.”

Some forecasters are even anticipating a decline in property prices next year as higher interest rates begin to weigh on market confidence.

But Ryan said an ongoing slowing in the rate of growth is more likely.

What happens will ultimately depend on where interest rates end up, with the Reserve Bank set to deliver its final decision of the year next week, potentially taking the cash rate to a fresh high of 4.6 per cent.