Trend urges buying today
FIGURES released this week show South Grafton to be one of only 238 suburbs/towns in Australia where it is cheaper to repay a mortgage than it is to rent a home.
The RP Data estimations were based on median property values, the median rental costs and loan repayments on four different types of mortgages - principal and interest (variable and fixed) and interest only (variable and fixed) in the 12 months to June.
The annual Buy vs Rent Report (see page 4 for a Valley-wide table), shows median rent on a South Grafton house, which was valued at $205,540, was $270 a week, whereas the repayments on a principal-and-interest loan with a variable interest rate was $259.38 a week - the difference each month being $43.01 in favour of the mortgage.
Council rates, maintenance costs, stamp duties and other fees were not included in the data.
LJ Hooker Grafton principal Matt Dougherty warned the figures were significantly influenced by the Department of Housing "unloading" about a dozen properties valued between $100,000-$120,000, which had brought the median house price down in South Grafton.
"Some of those will rent for $200 a week in which case a person may be better off buying," he said. Based on a 6.5% variable interest rate and an assumed 10% deposit, the same assumptions as RP Data, the weekly repayments on a 30-year loan for a $120,000 property would be $157.42.
There were 100 homes sold in South Grafton in the 12 months to June according to RP Data figures released last week, while over the same period 158 houses sold in Grafton, 84 in Yamba , 44 in Maclean, 19 in Junction Hill and 19 in Iluka.
"In a small sample size, a dozen can make a big difference," Mr Dougherty said.
Having said that, Mr Dougherty said rent versus repayments was usually about a "line ball" in the Grafton area - "there's not much in it".
Mr Dougherty acknowledged an average 10% reduction in house values in the past 12 months, saying the old rule of real estate never losing value had proven incorrect.
"I've no doubt that in the long term it will come back," he said.
Mr Dougherty said while the volume of sales had dropped off, there was still sales being made by vendors prepared to meet the market.