Rent vs buy in Australia: how to decide

"Rent money is dead money" is the line everyone grows up with, but it's not that simple. Buying has its own big costs that don't build any equity either. What counts is your total net worth in each scenario after several years, not rent versus mortgage.

The costs people forget on the buying side

• Upfront: stamp duty, legal and inspection fees, often 4–6% of the price, gone the day you buy.
• Ongoing: council rates, insurance, maintenance and (for units) strata, commonly around 1% of the property's value every year, none of which builds equity.
• Interest: in the early years of a mortgage, most of your repayment is interest, not principal.
• Selling: agent commission and legals when you eventually sell.

The cost people forget on the renting side

The renter's hidden advantage is the deposit they didn't spend. A buyer sinks (say) $140,000 plus costs into a house; a renter can invest that money instead, plus any month where renting is cheaper than owning. Over years, invested and compounding, that pot is real wealth, and it's the thing a naïve "rent is dead money" comparison ignores.

The number that flips the answer

Two levers decide it: how long you'll stay, and whether property grows faster than your investments would. Buying needs time to earn back those big upfront costs. Sell after 2–3 years and you often come out behind. Stay 10+ years and rising property value plus a shrinking loan usually pull ahead. And if you assume house prices grow faster than your investments would, buying wins sooner; flip that assumption and renting-and-investing can win.

What the numbers can't price

Owning buys you security and the freedom to renovate. Renting hands you flexibility, and none of the maintenance bills or rate stress. The financial comparison is only half the decision, but it's the half most people guess at instead of working out.

Related: first home buyer schemes · offset vs redraw. General information only, not financial advice.