With national rental yields sitting near 3.8% and variable home loan rates above 6%, the weekly cost of owning a home is now well above the rent on a similar property in most capital cities. That does not make renting the better choice for everyone, but it does mean the comparison deserves real numbers. For first home buyers weighing whether to buy now or keep renting, the useful question is how much of each option is money you never get back.
Compare the Costs You Never Get Back
Rent is entirely an expense. A mortgage repayment is partly an expense and partly savings, because the principal portion reduces your debt and builds equity. Comparing rent against your full repayment overstates the cost of buying.
A fairer comparison looks at the costs of owning that you do not get back. These are the interest on the loan, council and water rates, insurance, strata fees if there are any, maintenance, and the return you give up on the cash used for the deposit and purchase costs.
A Worked Example on an $800,000 Home
Consider an $800,000 home bought with an $80,000 deposit and a $720,000 loan at 6.2% over 30 years. Repayments are about $4,410 a month, but in the first year only around $8,500 of that goes to reducing the loan. Interest makes up roughly $44,400 of the year’s repayments.
Add around $12,000 a year for rates, insurance and maintenance, using 1% of the property value as a common allowance for upkeep. Then add the return forgone on the deposit and purchase costs. If $110,000 went into the deposit and stamp duty and could otherwise earn 4%, that is another $4,400 a year.
Together, the unrecoverable cost of owning comes to about $60,800 in the first year, or roughly $1,170 a week. At a 3.8% gross rental yield, renting a similar property would cost around $30,400 a year, or about $585 a week.
The Break-Even Growth Rate
The gap in that example is about $30,400 a year. Spread across an $800,000 property, the home would need to rise in value by roughly 3.8% a year just for owning to match renting on a cost basis.
That is the real test. Over long periods, Australian home values have often grown by more than that, but there have also been extended stretches when they have not. National values have fallen for five months in a row this year, so buyers in 2026 are starting at a point where short-term growth is uncertain. The longer you expect to hold the property, the more time there is for growth to close the gap and for the one-off purchase costs to be spread out.
What Changes the Answer?
Several things can tip the balance. A larger deposit reduces the interest bill. First home buyer stamp duty concessions in some states can remove a large upfront cost, and the 5% Deposit Scheme lets eligible buyers avoid lenders mortgage insurance with a small deposit. Lower interest rates, a property in a higher-yielding area, or a plan to hold for 10 years or more all improve the case for buying. Rising rates, a short expected stay or high strata fees improve the case for renting.
Renting Only Wins If the Difference Is Saved
The numbers above assume a renter puts the money they save into investments or savings. If the weekly difference is spent instead, the renter ends up with neither the equity from owning nor a growing investment balance. Ownership works partly as forced saving, because the repayment schedule builds equity whether or not you feel like saving that month.
Renting also carries less control. Leases end, rents rise, and tenants have limited say over renovations or how long they stay. Those factors sit outside a cost comparison, and they matter to many households.
Where Rentvesting Fits
Some buyers split the decision. They rent where they want to live and buy an investment property somewhere more affordable, an approach known as rentvesting. It can get a foot in the market sooner, although it changes the tax position, the loan type and access to first home buyer concessions, so it suits some situations better than others.
Running Your Own Numbers
Every part of this comparison depends on your local rent, the price of the home you would buy, your deposit and the rate you can secure. A broker can show what you would actually be approved for and the repayments that come with it, which gives you the real inputs to compare against your current rent. For tax questions, such as the treatment of an investment property, a registered tax agent is best placed to help.
Key Takeaways
- Compare rent with the unrecoverable costs of owning, such as interest, rates, insurance, maintenance and forgone returns on your deposit.
- On an $800,000 home with a 10% deposit at 6.2%, first-year unrecoverable costs are about $1,170 a week against rent of about $585 a week.
- In that example, the home would need to grow by roughly 3.8% a year for owning to match renting on cost.
- Larger deposits, stamp duty concessions and longer holding periods all improve the case for buying.
- Renting only comes out ahead if the money saved each week is actually invested.
- Rentvesting is one way to split the decision, but it changes your tax position and access to first home buyer concessions.