SMALL apartments in Carlton and Melbourne’s CBD could be rent-making machines for investors, as new data shows it’s cheaper to buy than lease one-bedroom units in the suburbs.

Research from the Real Estate Institute of Victoria shows buyers could repay a mortgage on a median-priced single-bedroom home in the suburbs for substantially less than it would cost to rent the same property — also making them ideal for first-home buyers.

But while the figures indicate units in these areas could be goldmines for investors seeking rental income, experts say capital growth gains are typically less fruitful in inner-city Melbourne due to an apartment glut.

Buyers advocate Frank Valentic said the huge supply of apartments in suburbs like Carlton and Melbourne also meant vacancy rates were generally high: “rental returns can be quite good in some of these areas, as long as you have a tenant in.”

REIV has calculated that a mortgage on a $210,000 Carlton unit — the median price for a one-bedroom — could be paid off for $221 a week. This is $135 less than the suburb’s median weekly rental price.

The data also shows paying off a median-priced $335,000 one-bedroom unit in Melbourne would cost a buyer $352 a week in mortgage repayments — $49 less than the median rent.

Also cheaper to buy than rent are two-bedroom units in Carrum Downs ($28 weekly saving) and Sunshine ($21) and one-bedrooms in Southbank ($18) and Noble Park ($9).

The figures are based on median homes prices by bedroom, a 10 per cent deposit and a three-year fixed interest rate of 4.5 per cent.

Mr Valentic said investors would be better off apartment-hunting in Carrum Downs and Sunshine than Carlton, Southbank and the CBD, as there were fewer apartments and therefore more opportunity to find tenants and earn capital growth.

But Hocking Stuart’s Justin Mellar said Carlton drew a high number of renters due to its closeness to universities, major hospitals and the CBD.

Amal Khabbaz and husband Omar Correa recently bought a one-bedroom unit on Lygon St, which they plan to rent out after a year of living in.

“We thought it would be good value in the long term. We imagine the property will be pretty easy to rent because there’s a high student population here,” Ms Khabbaz, 32, said.

Cheaper to buy than rent: weekly fixed mortgage payment* vs. weekly median rent

Carlton, one-bedroom unit: $221 vs. $356 ($135 difference)

Melbourne, one-bedroom unit: $352 vs. $401 ($49 difference)

Carrum Downs, two-bedroom unit: $282 vs. $310 ($28 difference)

Sunshine, two-bedroom unit: $289 vs. $310 ($21 difference)

Southbank, one-bedroom unit: $447 vs. $465 ($18 difference)

Noble Park, one-bedroom unit: $201 vs. $210 ($9 difference)

Pakenham, two-bedroom unit: $264 vs. $273 ($9 difference)

Mitcham, one-bedroom unit: $303 vs. $310 ($7 difference)

Melton South, three-bedroom house: $257 vs. $265 ($7 difference)

Pakenham, three-bedroom unit: $294 vs. $300 ($6 difference)

Ascot Vale, one-bedroom unit: $265 vs. $270 ($5 difference)

Werribee, two-bedroom unit: $246 vs. $250 ($4 difference)

Craigieburn, two-bedroom unit: $292 vs. $295 ($3 difference)

Melton, three-bedroom house: $258 vs. $260 ($2 difference)

Source: news.com.au