Sydney - Don't bet your house on it...but it can be cheaper to buy.

The gap is narrowing between renting and buying in Sydney, prompting first-home owners to take the plunge into the property market. If buyers take out an interest-only loan, it can be cheaper to buy than to rent.

A combination of slashed interest rates, increasing rents, falling house prices and generous first-home buyer grants means that for the first time in many years, buying has become an economical option.

Agents are reporting large numbers of first-home buyers at property inspections.

Figures compiled by The Sun-Herald show that repayments for a median-priced property of $536,000 in Sydney - taking into account the most recent rate cuts - are $592 a week. A similar-priced property can rent for between $450 and $550 a week.

If the buyer takes out an interest-only loan, the repayments fall to $461 a week - about the same as, or cheaper than, renting.

Australian Property Monitors' senior economist, Liam O'Hara, said conditions were advantageous for first-home buyers. "The gap is narrowing [between buying and renting]," he said.

Interest rates have fallen 4 percentage points since September, while federal and state government first-home buyers grants have been boosted to a maximum of $24,000 for new properties.

Also, Sydney house prices fell 4.2 per cent last year, while landlords increased rents by 16.9 per cent, according to APM data.

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http://www.domain.com.au/Public/Arti...line=Don++39;t bet your house on it...but it can be cheaper to buy.

Sure the gap is lessening- I agree- but virgin home owners also need to count the other real costs that owning property necessitates and for which the landlord is responsible when renting:
ie: borrowing costs, council and water rates, strata fees, building insurance, maintenance (a sorely undervalued cost of home ownership!)

Also, let's face it, most home owners won't take out an IO loan on their PPOR. P and I is overwhelmingly the first choice, and for very valid reasons.

Campaign to push rents down already started. Some of the people will always prefer to rent for reasons highlighted by Jacque. Since gap of owning and renting is shrinking it would make sense to lobby for lower rent prices.

Tenants told to bargain for cheaper rents | smh.com.au

Dudek the market always adjusts itself.

Sure, some landlords including myself increased our rents 6 monthly to keep up with the market but on the other hand, when advertised rents of similar properties are lower we will probably have to drop our rents to keep our tenants.

At the moment, and despite the sudden demand from FHB's to purchase property, there is not a high number of rental vacancies. It's possible that those buyers come from other suburbs or they are disguised investors who are using the opportunity to get into the market and who after 6 months will continue to live with their parents.

cheers