Is it cheaper to rent or buy a home in Australia?

Rent or buy? Is rent money dead money?
Erin Howell
Written by
Erin Howell
Imogen Baxter
Reviewed by
Imogen Baxter
Last updated
December 4, 2023
0 minute read
Table of contents
Australian couple in room with laptops deciding if it is cheaper for them to buy or rent their home

Homeownership has long been The Great Australian Dream. But with rising cash rates, interest rates, fluctuations in property prices and increasing housing costs, it can be easy to ask yourself what are the comparisons of a rent vs buy scenario.

We will deep dive into some of the considerations you should have before jumping onto the property ladder, the affordability of doing so and introduce some of the alternative options to consider.

Overall, owning a home isn’t always straightforward and neither is the stress of needing to move at the end of your lease or at your landlord’s discretion. Both are significant lifestyle and financial decisions, so it is important to know what option is best for you.

The benefits and disadvantages of renting

Firstly diving into renting, there are several reasons why this is distinctively different to buying a home. Seen as the more affordable option and an easier entry point due to the lower cost of entry compared to buying a home.

Advantages of renting

More affordable

The cost of renting is seen to be more affordable than purchasing a home, due to the upfront investment as well as the ongoing maintenance costs involved with buying a home. When you rent a home you don’t need to pay a large upfront deposit and purchase costs.

Less upkeep

There are significantly fewer maintenance needs in a home you are renting and when something does go wrong you are always able to call on your landlord to fix the issues. Your landlord has a responsibility to ensure a property is habitable and maintain the existing fixtures and fittings.  

More flexibility to move

If you decide you don’t like where you are living or you need the flexibility to move for work or life circumstances, renting provides the ability to leave when your lease is over, or you can break your lease early for a fee if essential.

What is the average rent in Australia?

Disadvantages of renting

Lack of security

Unpredictable rental markets, especially in capital cities such as Sydney and Brisbane, mean you're limited to the available rental pool and the current rental prices. And, as enters typically sign up for a 6-month to 18-month lease. Past this, the certainty of stying inn one place is slim. Tenant’s rights also aren’t as secure as other countries in the world.

Limited freedom

Limited ability to be able to paint your house, hang pictures on the wall and really make it your own. You really can’t feel a sense of belonging or community in an area that you may have to move out of when your lease does end.

Real estate inspections

Consistent inspections by real estate agents to ensure that the house and tenancy agreement is being upheld. In the case that something has gone wrong, your bond is at risk.

No investment potential

A myth about renting is that renting is dead money, this isn’t exactly true as having a place to live is essential and it could be the best option for you. Although it is true that the money you are paying isn’t off your own mortgage and building equity in an asset, like a mortgage, would.

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The benefits and disadvantages of buying a home

Advantages of buying a home

Stability and freedom

The stability to know you won’t get kicked out of your home at the end of a rental period is one of the biggest benefits of homeownership. It gives families the stability and freedom to build relationships in their local community and allows kids to be settled in schools and sporting commitments.

Homeowners also have the freedom to paint, decorate and hang things on walls whenever you wish!

Rise in house prices over time

Capital gains are a great outcome of homeownership. By purchasing a property, you are growing your capital wealth alongside your repayments paying off your mortgage.

Home buyer grants

There are Australian Government schemes that have the purpose of helping get people into their homes.

First-home buyers in Australia have access to grants that support lower deposits, stamp duty exemptions and cash incentives for buying a new home.

You can use the equity in your home

Equity is built up in your home when home prices increase. This can then support you to purchase another property later or use the money to complete renovations on your home.

A home lender can help with the amount you can top up your mortgage for another purchase or renovations.

Disadvantages of buying a home


The upfront costs of buying a home are very expensive and one of the largest barriers to entry to homeownership in Australia.

Some of the costs include:

  • Deposit
  • Stamp duty
  • Upfront fees and charges
  • Mortgage interest
  • Transaction costs

Check out how OwnHome can reduce the upfront costs of buying vs traditional mortgage pathways.

Home may decrease in value

When you purchase a home there is the risk that the housing market falls and your loan is suddenly bigger than the value of your home. Property values often fluctuate in markets and although the long-run average of property in Australia is always trending upwards, in the short term this can present a liquidity risk if you are unable to sell immediately.

Ownership costs are more than just a deposit and loan repayments

The costs of homeownership are larger than the monthly payments of renting. There are ongoing costs to consider including council rates, strata, water rates, maintenance, and unexpected costs, such as repairs.

Mortgage rates rising and so mortgage repayments fluctuate

Mortgage interest can make up most of your monthly repayments on your mortgage in the early years. But in the long term, there are risks to having a mortgage, including interest rate rises, which ultimately impact the cost of your monthly mortgage repayments.

How many times my salary can I borrow for my home loan?

What are my options to get into the housing market?

We have compared the options that are available to start your journey to homeownership in Australia and have written comparisons on the options.

A Deposit Boost Loan

OwnHome’s Deposit Boost Loan bridges the 20% deposit gap. With just 2%* upfront, we’ll cover your 20% deposit, meaning you can access a standard 80% LVR mortgage - offering you a better interest rate and taking LMI out of the equation.

Once you’ve got your mortgage OwnHome’s dedicated team of Buyer's Agents will support you through the property hunt journey, securing you your dream home for a dream price.


To avoid LMI, many opt for a guarantor home loan. In this arrangement, a family member pledges some of their own home equity to the lender and combines that with your smaller deposit to make up the 20% deposit value.

The person providing the additional security guarantee for your loan is called the guarantor.

Low deposit

For Australian first home buyers, saving up for a deposit is one of the biggest hurdles when getting into the property market. This is especially so when the average house deposit amount (usually 20% of the property's value) is larger than the average Australian annual income.

Find out more about the no deposit home loans and low deposit options in Australia.

Typical mortgage

The traditional pathway to homeownership we discussed is a traditional mortgage.

Here’s everything you need to know about the Australian mortgage process.


What is the cheapest city to rent in Australia?

For a cheaper rent alternative, the cheapest capital city to rent a unit in Australia is Adelaide, with a median weekly rent of $443. As of May 2023, the cheapest capital city to rent a house in is Melbourne, where the median weekly house rent is $545.

Is it better to rent or buy a home in Australia?

The choice between renting and buying comes down to your financial circumstances.

Obviously, in the long run, you will spend a lot more money on weekly rent than you will on the average home loan, as there is no “paying off” rent in the same way you can own your home outright.

Taking out a home loan tends to require a significant deposit on top of regular repayments (though low deposit home loan options do exist), which is something many renters do not have access to or the borrowing power to gain. There are far fewer upfront costs for renting, which can make it a better option for those who move around frequently, but for any long-term comparison, paying off a mortgage may land you in a better financial position.

In terms of straightforward costs of weekly rent as opposed to mortgage repayments, there are some places where it is cheaper to rent than buy. In fact, average monthly costs work out cheaper for renters vs. homeowners in 90.9% of Australian suburbs. Corelogic reports that this is the case in:

  • 100% of the ACT
  • 100% of suburbs in Sydney (95.5% of suburbs in the rest of NSW)
  • 100% of suburbs in Melbourne (98.2% of suburbs in the rest of Victoria)
  • 98.1% of suburbs in Adelaide (65.7% of suburbs in the rest of SA)
  • 97.8% of suburbs in Brisbane (64.2% of suburbs in the rest of QLD)
  • 97.6% of suburbs in Hobart (94.9% of suburbs in the rest of Tasmania)
  • 87.9% of suburbs in Perth (40.6% of suburbs in the rest of WA)
  • 51.6% of suburbs in Darwin

Are there any rental assistance schemes available in Australia?

Rental assistance is available to some parties in Australia, but access is restricted. Criteria limit it to mostly those unable to work full time, including:

  • Age Pension recipients
  • Disability Support Pension recipients
  • Carer Payment recipients
  • ABSTUDY Living Allowance, Austudy, or Youth Allowance recipients
  • Special Benefit recipients
  • Parenting Payment recipients
  • Recipients of Family Tax Benefit - Part A at more than the base rate
  • JobSeeker Payment recipients
  • Farm Household Allowance recipients

These may also apply to retirement village fees, mooring and lodging fees (in the case of caravans or houseboats as primary dwellings), or boarding fees.

You may also be able to seek rent assistance if you live in community housing or defence housing. States may also provide rental subsidies to those escaping dangerous situations, so it is worth seeking out your local schemes

This article is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation, or needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS), or other offer documents before making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold).
Prepared by OwnHome Services Pty Ltd ACN 664 492 059. This information does not take your personal objectives, circumstances or needs into account. Always read the disclosure documents for products and services before deciding on a product or service, and consider seeking independent legal, financial, taxation or other advice for your unique circumstances.

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