Purchasing a home may be a daunting task for some Australians because of the heavy financing typically involved. However, with a spate of government grants available, along with record-low interest rates, opportunities are opening for many potential buyers to enter the property market.

What support is currently available for first home buyers?

First home buyers (FHB) can take advantage of several state-based grants and stamp duty discounts, significantly cutting the amount of cash needed to secure their dream properties. These include the HomeBuilder scheme, which provides FHBs and owner-occupiers with a $25,000 cash grant to help them purchase or construct a new house or renovate their existing property.

Each state also has its version of the First Home Owners Grant, a one-off grant payable to FHBs who are either purchasing an existing home that has never been lived in or constructing an entirely new house.

Home buyers can also benefit from the First Home Loan Deposit Scheme, which makes it possible to purchase a property with only a 5% deposit and no lenders mortgage insurance.

Apart from these grants, the Reserve Bank of Australia (RBA) has recently decided to make further adjustments to the cash rate, lowering it to another historic low of 0.1%. The central bank also indicated that rates would stay at record lows for at least another three years, giving potential home buyers a sense of certainty.

What are the different costs involved in buying a property?

One of the factors putting off many Australians from buying a house is the complexity of the costs involved. But understanding these expenses can help ensure the right purchasing decisions are made. Here are some of the initial and ongoing costs associated with buying a property.

Upfront costs

Deposit: This is a portion of the property’s value that buyers need to pay directly to the seller. Residential properties typically require a 20% deposit.

Loan establishment fees: Also known as an application fee, this covers the cost of documentation of a new mortgage.

Lender’s mortgage insurance: Lenders often require LMI if the deposit is less than 20% of the property price. This one-time fee is designed to protect lenders from financial loss in the event a borrower defaults on their mortgage.

Stamp duty: This covers the cost of changing the title and ownership of a property. It is a state government-imposed tax, meaning the amount differs depending on the state where the property is located.

Legal fees: These fees cover the legal transfer of the property’s ownership.

Ongoing costs

Loan repayments: The cost of monthly mortgage repayments often depends on the amount borrowed or principal, type of loan, loan term, and interest.

Land tax: State governments, excluding Northern Territory, levy annual taxes to landowners. The cost varies depending on the state or territory and does not include properties erected on the land.

Council rates: These are quarterly or annual fees collected by local governments for the proper maintenance of the council area, and cover garbage collection, plumbing, electrical, and other services. The cost also varies from state to state.

Body corporate fees: Also called strata fees, body corporate fees are rates charged on properties located in a shared block such as apartments, townhouses, units, and flats. These cover the maintenance of common areas and the management of the block.

Building and contents insurance: These types of policies provide cover to the property and its contents from unforeseen damage resulting from natural disasters such as fires and flooding.

Where are the cheapest places to buy a property in Australia?

Property website Realestate.com.au recently revealed a list of towns with the least expensive properties. Many of these locations are in remote regions, and because of this, are often not on the radar of most home buyers. This may all change as remote working gains ground, giving employees more freedom to choose the place they want to live in without considering proximity to the workplace.

Here are the top 10 cheapest places to buy a house according to Realestate.com.au:

Peterborough	South Australia	$69,000
Rangeway	Western Australia	$70,000
Tara	Queensland	$72,000
Charleville	Queensland	$77,500
Laughing Bacchus Winecellars	Yoshi Tannamuri	Canada
Merredin	Western Australia	$80,000
Monto	Queensland	$85,000
Rosebury	Tasmania	$85,000
Queenstown	Tasmania	$91,500
Mount Morgan	Queensland	$100,000
Dysart	Queensland	$103,750

Source: Realestate.com.au

Where is it cheaper to buy a house than to rent one?

Meanwhile, a separate study by mortgage broking firm Aussie has found that in almost 60% of suburbs across the country, paying a monthly mortgage could cost less than paying rent.

The report cited several locations where purchasing a property could be cheaper – including Carlton in Melbourne, where mortgage repayments could be up to $675 less than monthly lease payments, and Coolangup in Perth, where loan repayments could be as much as $597 lower than paying rent.

Monthly repayments in Logan, Brisbane could also be $590 less than rents, while in Liverpool, Sydney, buying a home could mean saving $194 each month compared to renting.

Here are the top five suburbs from each state and territory where it is cheaper to buy a house than rent according to Aussie’s 2020 Buy vs Rent Report.

New South Wales

Broken Hill	-$982	-$986
Werris Creek	-$709	-$793
Wellington	-$668	-$765
Muswellbrook	-$658	-$816
Condobolin	-$657	-$737

 

Victoria

Red Cliffs	-$532	-$668
Terang	-$531	-$657
Kerang	-$497	-$594
Portland	-$493	-$664
Ararat	-$473	-$610

 

Queensland

Healy	-$1,030	-$1,183
Sunset	-$1,009	-$1,146
Townview	-$1,008	-$1,141
Parkside	-$990	-$1,135
Cloncurry	-$907	-$1,015

 

South Australia

Kingston Se	-$614	-$788
Bordertown	-$602	-$697
Whyalla	-$583	-$695
Port Augusta West	-$567	-$664
Port Pirie West	-$540	-$603

 

Western Australia

Nickol	-$1,576	-$1,838
Baynton	-$1,517	-$1,854
Newman	-$1,388	-$1,506
Port Hedland	-$1,208	-$1,496
South Hedland	-$1,194	-$1,339

 

Tasmania

Bicheno	-$1,328	-$1,575
Zeehan	-$777	-$847
Queenstown	-$691	-$753
Ravenswood	-$490	-$627
Mayfield	-$459	-$619

 

Northern Territory

Moulden	-$589	-$773
Zuccoli	-$538	-$822
Driver	-$493	-$710
Gray	-$449	-$657
Woodroffe	-$366	-$591

 

Australian Capital Territory

Charnwood	-$147	-$461
Holt	-$99	-$435
Ngunnawal	-$34	-$390
Latham	$27	-$328
Macgregor	$48	-$309