This Chart Of Mortgage Payments Versus Rental Prices Shows Why Australians Have Been Going Nuts For Property

It was cheaper to buy than rent a home in Australia last year, as the Reserve Bank cut rates to stave off a post-mining boom recession.

The average variable mortgage rate offered by the big four banks fell to a record low of 5.91% last September, a month after the RBA cash rate hit a record 2.5%.

That drove monthly mortgage repayments well below rental prices, especially for first homebuyers, who paid an estimated $1,700 a month on an average loan size of $291,200.

The shift, illustrated in the following chart, could help explain the frenzied property market, which last year sparked fears of a price bubble:

The last time average mortgage repayments dipped below average rental prices was between late-2008 and 2009, in the wake of the GFC.

Loan sizes – for both first homebuyers and others – continued to grow steadily throughout the period, but interest rates fell from an about 8% in November 2008 to a low of 5.75% in May 2009.

Monthly mortgage repayments were calculated by Business Insider Australia from big-four average variable mortgage rates from Canstar and average loan size data from the Australian Bureau of Statistics. Rental prices were sourced from Australian Property Monitors.

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