Trying to decide whether to rent or buy a home in Australia? This guide breaks down the financial and lifestyle factors you need to consider, from upfront costs and ongoing expenses to how long you plan to stay in a property. It’s not just about monthly payments — it’s about building long-term wealth, understanding opportunity costs, and making the choice that suits your situation.
Let’s dive in
Renting — Pros and Cons
Renting isn’t just for those who can’t afford a deposit. It can be a smart and flexible choice depending on your financial goals and lifestyle. Understanding the pros and cons can help you decide if renting is right for your situation.
Pros of Renting
- Flexibility to move – You can easily relocate for work, lifestyle changes, or travel once your lease ends.
- No maintenance costs – Repairs and maintenance are typically handled by the landlord, saving you time and money.
- Lower upfront costs – Compared to a home deposit, a rental bond and a few weeks’ rent in advance are much more affordable.
- Access to better locations – Renting can allow you to live in a suburb or area that might be too expensive to buy in.
- Predictable expenses – Aside from rent, you won’t face large, unexpected repair or maintenance bills.
- Freedom from property value risk – You don’t have to worry about market downturns or falling property prices.
- Easier to change lifestyle – Whether you want to downsize, upgrade, or move closer to work, renting makes it simple.
Cons of Renting
- Lack of ownership – Your rent payments go to the landlord and do not build equity or ownership in an asset.
- Limited control – You can’t make renovations or design changes without approval from the landlord.
- Rental increases – Rising rents can make budgeting difficult and reduce financial stability.
- No long-term security – A landlord can decide not to renew your lease or may sell the property, forcing you to move.
- Restrictions on pets and personalisation – Many rentals have strict rules that limit how you can use the space.
- Less financial leverage – You miss out on the potential capital growth that comes with owning property.
Read more: Rentvesting — The Pros and Cons of It All
Buying — Pros and Cons
Just like renting, buying a property has its own set of advantages and challenges. Whether it’s the stability of homeownership or the financial commitment it requires, it’s important to weigh both sides before making your decision.
Pros of Buying a Property
- Predictable repayments – With a fixed-rate mortgage, your repayments remain consistent, making it easier to budget long-term.
- Freedom to renovate – You can personalise your home as you wish — paint, remodel, or extend without asking for permission.
- Long-term stability – Homeownership gives you security. You won’t be asked to move out because a landlord decides to sell.
- Building equity – Every mortgage payment increases your ownership share in the property, contributing to your net worth.
- Appreciating asset – Over time, property values often increase, allowing you to build wealth through capital growth.
- Forced savings – Paying a mortgage is a disciplined way to save, as your repayments go toward owning a tangible asset.
- Potential tax benefits – Some costs related to investment properties may be tax-deductible, improving your long-term financial position.
- Retirement security – Owning a home outright by retirement reduces housing costs and provides peace of mind.
Cons of Buying a Property
- High upfront costs – You’ll need to cover stamp duty, legal fees, inspections, and a deposit — often tens of thousands of dollars.
- Ongoing expenses – Property maintenance, rates, and insurance are all your responsibility.
- Less flexibility – Selling a home takes time and can make it harder to relocate for work or lifestyle reasons.
- Market fluctuations – Property values can drop, especially if you buy in an overheated market.
- Interest rate risk – If you’re on a variable-rate loan, rising interest rates can increase your repayments significantly.
- Opportunity cost – The funds tied up in your home could have been invested elsewhere, potentially earning higher returns.
Read More: How to Buy a House in Australia
Things To Consider When Deciding Whether To Rent Or Buy
When it comes to deciding whether to rent or buy a home, there’s no single right answer. It all depends on your personal goals, finances, and lifestyle. Before making a move, think about the following key factors:
How long you plan to stay
If you’re planning to travel or move within the next six to twelve months, buying might not be the best idea. Property purchases come with upfront costs like stamp duty and selling fees — which can outweigh short-term gains. In that case, renting gives you flexibility and the freedom to spend that money on experiences (like finally seeing the Eiffel Tower in France!).
The cost of housing in your area
Location plays a huge role in the rent vs buy decision. For example, if you’re dreaming of living in high-demand suburbs like Mosman in Sydney or Paddington in Brisbane, buying can be tough without a seven-figure deposit. Renting, on the other hand, might let you enjoy those areas while investing your savings in a more affordable property elsewhere.
The opportunity cost of buying
Opportunity cost is what you give up when you choose one option over another. For example, tying up your savings in a home deposit means you can’t invest that money elsewhere — such as in shares, superannuation, or other assets. It’s worth comparing the potential returns from investing versus property ownership to see which gives you the best outcome over time.
What Do The Numbers Say? Sunk Costs And Break‑Even Analysis
Deciding whether to rent or buy a home in Australia can feel overwhelming. The truth is, the numbers tell a powerful story. By understanding sunk costs and the break‑even point, you can make a financially smart decision that fits your lifestyle.
What Are Sunk Costs?
A sunk cost is money you’ve already spent and cannot recover. In other words, it’s gone — no refunds or returns.
When comparing renting vs buying, sunk costs help highlight the financial trade‑offs:
- Renting sunk costs: This is simply the total rent you pay over time. For example, recent data shows median rents in Australia reached about $650 per week in mid‑2025.
- $650 × 52 = $33,800 per year (national median baseline)
- $650 × 52 = $33,800 per year (national median baseline)
Buying sunk costs: Mortgage payments are split into interest (which is unrecoverable) and principal (which builds equity). Only the interest portion is a true sunk cost.
Example: Calculating Mortgage Sunk Costs (2025 Scenario)
Suppose you buy a $500,000 property in Queensland (Brisbane area) with:
- 20% deposit ($100,000)
- Interest rate – assume approximately 5%
- Annual maintenance & property‑fees – assume 1% of property value ($5,000/year)
- Stamp duty & exit costs – assume typical range for Queensland
Under these assumptions, the interest component might amount to ~ $20,000/year for early years. Add maintenance ($5,000) → total ~ $25,000/year of sunk costs.
In this case, if renting costs national median ~$33,800/year, buying’s sunk cost is somewhat lower — but only under these favourable assumptions.
What Is the Break‑Even Point?
The break‑even point is when buying becomes financially smarter than renting. It takes into account:
- Up‑front costs: deposit, stamp duty, purchase fees
- Ongoing costs: mortgage interest, maintenance, insurance, property taxes
- Rent payments: total rent over the years
- Opportunity costs: potential gains if you invested your deposit instead
According to recent data national dwelling values rose 6.1% over the year to October 2025. In Brisbane, median house values hit ~$1,000,422 in May 2025 with roughly 6.2% year‑on‑year growth.
Example: Renting vs Buying in Queensland (2025 Outlook, 20‑Year Horizon)
Assumptions:
- Property price: $500,000
- Deposit: 20% ($100,000)
- Interest rate: ~5% per annum (variable)
- Rent: Using a Queensland context – median weekly rent for houses is around $650 in 2025 for major markets.
- Maintenance & other fees: 1% of property value per year
Years in Home | Renting Cost | Buying Cost | Better Option |
3 | $101,400 | $95,000 | Rent |
7 | $461,400 | $180,000 | Buy |
10 | $650,000 | $250,000 | Buy |
15 | $975,000 | $315,000 | Buy |
20 | $1,300,000 | $380,000 | Buy |
Renting cost = $650 × 52 × years
Buying cost estimated interest & maintenance only; principal excluded (equity builds)
Notes:
- The break‑even point appears at around 7 years or less in this scenario.
- Over 20 years, buying may lead to savings of about $920,000 versus renting.
- These figures assume moderate growth and stable interest/maintenance costs
Factors That Shift the Break‑Even Point
Several key variables influence when buying overtakes renting:
- Deposit size: Higher deposits reduce interest, shortening the timeline.
- Interest rates: Higher rates increase costs and push break‑even further out.
- Property growth: Greater appreciation shortens the break‑even period.
- Rent growth: Faster rent increases make buying more attractive sooner. According to ABS data, in many parts of Queensland rents rose ~52% versus incomes over 5 years.
- Maintenance costs: Older properties or homes with large upkeep extend buying costs.
In Brisbane and fast‑growing Queensland markets, strong demand and value growth mean break‑even may be 5‑6 years. In slower regional areas it might extend to 8‑10 years or more.
Key Takeaways
- Short‑term stay (under 5 years): Renting offers flexibility and avoids high upfront costs.
- Medium‑term stay (5‑7 years): Buying may break even, depending on interest rates, growth, and rent trends.
- Long‑term stay (7+ years): Buying generally delivers better financial outcomes through equity growth, wealth accumulation, and protection from rent inflation.
Understanding sunk costs and the break‑even point gives you a clearer, data‑driven view of whether renting or buying aligns best with your financial and lifestyle goals.
Rent And Invest vs Buy: Opportunity Cost Explained
When weighing up renting versus buying, it’s easy to overlook one key factor — opportunity cost. This is the return you miss out on when your money is tied up in a property instead of other investments.
In simple terms, if you use your $100,000 deposit to buy a home, that cash stops earning investment returns. But if you rent instead and invest that same amount, it continues to grow — and that growth can be powerful over time.
What Is Opportunity Cost?
Opportunity cost represents the value of the road not taken. For home buyers, it’s the investment return forgone by putting a deposit into real estate rather than, say, index funds or term deposits.
Let’s say you rent a home and invest your deposit instead:
- Investment return: assume 5% per year (a conservative long-term share market average)
- Rent: $650 per week
- Home value growth: 6% per year
- Mortgage interest rate: around 5% variable
- Maintenance & fees: 1% of home value annually
Example: Renting + Investing vs Buying (20-Year Outlook)
Years | Rent + Invest (5% return) | Buy + Equity Gain (6% growth) | Better Option |
3 | $116,000 (rent cost + interest earned) | $115,000 (cost after growth) | Tie |
7 | $275,000 | $320,000 | Buy |
10 | $380,000 | $500,000 | Buy |
15 | $585,000 | $805,000 | Buy |
20 | $830,000 | $1,180,000 | Buy |
Assumptions:
- $100,000 invested at 5% annual compound interest
- Rent payments increase 3% per year
- Property value grows 6% per year
- Mortgage costs remain stable
What the Numbers Show
In the first few years, renting and investing may perform slightly better because investment returns compound quickly while avoiding upfront buying costs such as stamp duty and maintenance.
But over time, property equity growth outpaces investment returns, especially if home prices keep rising as they did in 2025 (up 6.1% nationally according to Cotality Market Insights).
By year 7, the homeowner typically pulls ahead — and by year 20, they’re hundreds of thousands ahead thanks to equity and leverage
Factors That Can Change the Outcome
Several factors can shift the balance:
- Investment performance – Higher-risk portfolios might outperform housing short term.
- Property market growth – Slower growth can make renting + investing more appealing.
- Interest rates – Higher rates delay break-even for buyers.
- Rent growth – Rapid rent inflation pushes renters’ costs up faster than investors’ returns.
- Tax considerations – Negative gearing and capital gains tax affect both strategies differently.
Key Takeaway
Renting and investing your deposit can look smarter in the short term, especially if markets are uncertain or you need flexibility. However, if you’re planning to stay for the long term (7 years or more), buying and building equity usually wins — particularly in growth markets like Queensland, where prices continue to trend upward.
In the end, it’s not just about rent versus mortgage payments — it’s about how your money grows over time and where it works hardest for you.
Rent Vs Buying Calculator FAQs
How long should you stay in a home for buying to be worth it?
Buying a home usually makes financial sense after five to seven years. By then, your upfront costs—like stamp duty and fees—are spread out, and your property’s value growth often outweighs what you’d spend on rent. Staying longer also builds equity and stability, giving you a stronger financial position over time.
What if you rent but invest your savings instead of buying?
Renting and investing your deposit can be smart in the short term, especially if property prices stay flat or you want flexibility. However, buying provides long-term wealth through capital growth and shields you from rising rents. Over time, home ownership usually wins once equity growth and leverage are factored in.
What assumptions are used when comparing renting vs buying?
Most comparisons assume property prices rise by around 3% each year, rents increase about 2%, and maintenance costs average 1% of the property’s value annually. You can adjust these figures to match your local market and interest rate.
How much of your salary should you spend on rent in Australia?
Financial experts recommend spending no more than 30% of your gross income on rent. If rent takes up more than that, it may strain your budget and make saving for a home deposit difficult.
Is rent-to-own worth it in Australia?
Rent-to-own agreements can help first-home buyers enter the market sooner, but they come with risks. You’ll often pay above-market rent and face penalties if you don’t buy. Always get independent financial advice before signing.
Is it better to rent or buy a house in Australia in 2025?
In 2025, buying still offers better long-term returns in many areas due to steady property growth and rising rents. But if you value flexibility or expect to move within a few years, renting may make more sense. The best choice depends on your goals, budget, and time horizon.
Speak To Our Team Of Experts Today
At Hunter Galloway, we are experts in getting home loans approved and work with several banks that specialise in helping first-home buyers.
If you would like to chat about buying a home and need finance, give us a call on 1300 088 065 or book a free assessment online to speak with one of our experienced mortgage brokers.
We will give you the actual strategies that have helped other home buyers like you secure a property when there have been 5 other offers on the table!
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