Australian Property News

Renters spend more on housing than those with mortgages

Posted on Wednesday, November 23 2011 at 4:49 PM

Many people believe it's cheaper to rent than have a mortgage, but RP Data reports renters are now paying a larger proportion of their income on housing costs than those with a mortgage.

Researcher Cameron Kusher says owners with a mortgage are paying $408 per week in housing costs, and across the nation owners with a mortgage were spending 18 per cent of their gross income on housing costs.

While renters were only paying $275 per week towards their housing costs, 20 per cent of their income went towards their rent, which is a greater proportion being spent than those with a mortgage.

"Occupancy costs for renters are likely to be lower than those for mortgagees or those who fully own their home, as rates and utilities are generally paid by the property owners," Kusher says.

Just 5.5 per cent of all households in Australia are spending more than 50 per cent of their gross income on housing costs.

Kusher says only 6.9 per cent of owners with a mortgage spend more than 50 per cent of their income on housing costs, compared with 9.1 per cent of renters. He adds this suggests that renters are paying a larger proportion of their income towards their housing costs than those with a mortgage, which is reflective of the fact that mortgagees are typically earning more than those renting.

"It also highlights that as mortgage holders pay down their debt, they're probably looking to refinance to pay less on their mortgage," he says.

"The other particularly important finding which is inter-related was the fact that the vast majority of owners with a mortgage were paying less than 25 per cent of their income on housing costs."

Those with a mortgage in Tasmania paid the lowest amount ($279 per week) while mortgagees in the Northern Territory paid the greatest amount ($486 per week). The survey results also showed the vast majority of Australians were living in a house which they either owned outright (32 per cent) or had a mortgage on (36 per cent).