Last updated: July 2026

Renting vs Buying Your First Home in Australia

The rent vs buy debate is personal. Both options have genuine advantages, and neither is universally "better." What matters is your financial position, how long you plan to stay, and what you value most. Here is how to think about it with real numbers, including the government schemes that are changing the equation for first home buyers.

The Financial Case for Buying

Every mortgage repayment builds equity in an asset you own, while rent builds equity for your landlord
Property is a leveraged investment: a 5% deposit controls a 100% asset, amplifying any capital growth
Your principal residence is completely exempt from capital gains tax when you sell
Mortgage repayments eventually end; rent payments never do
You can renovate, modify, and make the home truly yours

The Financial Case for Renting

Much lower upfront costs: no deposit, stamp duty, legal fees, or LMI
Flexibility to move for work, relationships, or lifestyle without selling costs
No maintenance, repairs, or body corporate fees to worry about
You can invest the deposit difference in shares or other assets
No risk of property value declining in your area

A Real Numbers Comparison

Consider a first home buyer in Brisbane looking at a $700,000 property, using the First Home Guarantee:

Buying with FHBG

Property price: $700,000
Deposit (5%): $35,000
LMI: $0 (waived by FHBG)
Stamp duty: $0 (QLD FHB concession)
Mortgage: $665,000
Monthly repayment: ~$4,200 at 6.5%
Equity built after 5 years: ~$70,000

Renting a Similar Property

Weekly rent: ~$550
Monthly cost: ~$2,383
Upfront cost: bond + 2 weeks rent
Deposit invested at 5%: $35,000
Monthly surplus: ~$1,817
Invested surplus after 5 years: ~$168,000
Equity built: $0 (but investment portfolio)

The buyer pays more per month but builds equity and captures any property growth. The renter pays less monthly and could invest the difference, but owns no property. After 5 years, the buyer may have over $70,000 in mortgage equity plus any capital appreciation on the full $700,000.

Government Schemes Tip the Balance

First home buyer schemes have significantly reduced the traditional barriers to buying. Here is what is available:

First Home Guarantee (FHBG): buy with 5% deposit, no LMI, no income cap, unlimited places
Stamp duty exemptions: most states waive stamp duty entirely for FHBs under certain thresholds, saving $10,000 to $30,000+
First Home Owner Grants (FHOG): cash grants of $10,000 to $50,000 for new builds, depending on your state
FHSS: salary sacrifice into super for a tax-advantaged deposit, saving thousands in tax
Help to Buy: government co-purchases 30-40% equity, slashing your mortgage and repayments

These schemes can reduce upfront costs by $30,000 to $80,000 or more, depending on your state and property type. That is the equivalent of years of additional saving.

When Buying Makes More Sense

You plan to stay in the same area for 5 or more years
You can comfortably afford mortgage repayments (with a buffer for rate rises)
Your target area has a reasonable long-term growth outlook
You qualify for government schemes that reduce upfront costs
You value stability, security, and the ability to make a place your own

When Renting Makes More Sense

You may need to move within 2 to 3 years (selling costs can erode any gains)
You cannot comfortably afford mortgage repayments with a safety buffer
You want career or location flexibility in the short term
You prefer to invest your money differently and are disciplined enough to do so

The Hidden Costs of Each Option

Hidden Costs of Buying

Conveyancing: $1,500 to $3,000
Building and pest inspection: $500 to $1,000
Council rates: $1,000 to $3,000 per year
Maintenance: budget 1% of property value per year
Insurance (building + contents): $1,500 to $3,000 per year

Hidden Costs of Renting

Rent increases (typically annual)
Moving costs when leases end or are not renewed
Contents insurance: $300 to $600 per year
No tax benefit on rent paid
Opportunity cost of not building equity

See which schemes you qualify for

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Frequently Asked Questions

Is it cheaper to rent or buy in Australia right now?

It depends on your city, suburb, and personal finances. In many capital cities, monthly mortgage repayments on a median-priced home are higher than median rent. However, mortgage repayments build equity while rent does not. Government schemes like FHBG and stamp duty exemptions significantly reduce the upfront cost gap.

How long do I need to own a home before buying beats renting?

Most analyses suggest you need to hold a property for at least 3 to 5 years for the upfront costs (stamp duty, legal fees, moving) to be recovered through equity growth and savings versus rent. The exact breakeven depends on local property growth and your purchase costs.

Can I invest my deposit instead of buying?

Yes, and some people choose this path. The key difference is leverage: a $35,000 deposit buys a $700,000 asset (20x leverage via a mortgage). Investing $35,000 in shares gives you $35,000 of exposure. Property also provides a home to live in, while shares do not.

Do government schemes make buying more affordable than renting?

They significantly reduce the upfront barriers. FHBG removes LMI and lets you buy with 5% deposit. State grants provide $10,000 to $50,000 cash. Stamp duty exemptions save tens of thousands more. These do not change ongoing repayments, but they make the initial purchase much more accessible.

Sources: Housing Australia (FHBG) | ATO: FHSS

Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.