Rent or buy in Australia? How to actually decide
Last reviewed July 2026 · figures use official 2026-27 rates.
Renting is not dead money and buying is not automatically an investment. Both paths burn cash you never get back. The honest question is which one burns less, and what happens to the money you keep. Run over ten years, the answer is far closer than either camp admits, and it swings on one assumption almost nobody can prove.
The dead money myth
The argument you hear at every barbecue goes like this: rent pays off someone else's mortgage, a mortgage pays off your own, so buying wins. It sounds airtight. It isn't.
Rent buys you housing. So does the interest on a mortgage, and the council rates, the insurance, the maintenance, the strata levies and the stamp duty. None of that comes back either. The only part of a mortgage payment that builds wealth is the principal, and in the early years of a 30 year loan, most of the payment is interest.
What the myth gets right is discipline. Principal repayments are forced saving, and forced saving works. A renter who invests nothing falls behind a buyer every time. The comparison only gets interesting when the renter actually invests the difference.
The comparison that works: unrecoverable costs
Put each side's never-see-it-again money in one column and compare.
| Buyer loses | Renter loses |
|---|---|
| Mortgage interest | Rent |
| Council rates, water service charges | |
| Insurance, maintenance, strata (roughly 1 to 2% of value a year) | |
| Stamp duty and buying costs, spread over your stay |
Everything else is wealth moving between pockets. The buyer's principal becomes home equity. The renter's deposit, still sitting in their hands, can go into shares or super. A fair fight compares the two loss columns, then lets each side keep growing what they kept.
A worked example: $800,000 home vs $650 a week
Take a buyer with a 20% deposit ($160,000) borrowing $640,000 at 5.75%, against a renter paying $650 a week for the same home.
The buyer's first year: about $36,800 in interest, plus roughly $12,000 in rates, insurance and upkeep. Call it $48,800, or about $940 a week. The renter loses $33,800. Renting the identical house is nearly $300 a week cheaper in unrecoverable costs.
Now the other side of the ledger. If the home grows 4% a year, the buyer gains $32,000 in value, shrinking their true cost to under $17,000. The renter, investing the $190,000 they never handed over (deposit plus stamp duty) at 7%, earns about $13,500, shrinking theirs to about $20,300. Buying edges ahead.
Change one number and it flips. At 3% property growth the buyer gains $24,000 and falls behind the renter. That is the uncomfortable truth of this whole debate: the result hangs on your guess about future price growth, and nobody knows it. Our rent vs buy calculator runs this exact simulation over ten years so you can test your own assumptions instead of borrowing someone else's.
What tips it toward buying
Staying put. Stamp duty and buying costs are a one-off hit of 4 to 6% of the price, and selling costs another 2 to 3%. The longer you stay, the thinner that spreads. First home buyer help. Grants and duty exemptions can hand you $30,000 to $50,000 that a renter never sees, and the First Home Guarantee removes LMI on a 5% deposit. For an eligible first home buyer the maths starts several years ahead of where it starts for anyone else; our deposit guide walks through the schemes. No tax on the gain. Your own home is exempt from capital gains tax, which makes 4% housing growth worth more than 4% share growth after tax. Leverage. A 10% rise on an $800,000 home is $80,000 on your $160,000 deposit. Leverage cuts both ways, but over long periods it has been kind to Australian property owners. Certainty. No landlord can end your lease, sell the house from under you, or lift the rent 15% in a hot year.
What tips it toward renting
A short horizon. If there is a real chance you move cities, change jobs or upsize within about seven years, the entry and exit costs alone can wipe out years of growth. Expensive suburbs. In areas where prices are very high relative to rents, typical of inner Sydney and Melbourne, the rent for a home can run at barely 2 to 3% of its price while ownership costs run higher. You can live in the postcode for less than it costs to own there. Strata and upkeep. Apartment owners routinely pay $5,000 to $10,000 a year in levies before a single repair. Actually investing. The renter only wins if the deposit and the weekly difference genuinely get invested. Spent, they build nothing, and buying wins by default. That discipline gap, not the maths, is why buying works out better for most people in practice.
How to run your own numbers
Do it in this order. Get the true cost of the loan from the mortgage repayment calculator. Add your state's duty with the stamp duty calculator (NSW, VIC, QLD, SA or WA), remembering first home buyers often pay none. Check what a small deposit really costs with the LMI calculator. Then put it all into the rent vs buy calculator and try three growth scenarios, not one: pessimistic, middle, optimistic. If buying only wins in the optimistic case, that tells you something. If it wins in all three, so does that.