Rent vs Buy in Australia
An honest long-term cost comparison for Sydney, Melbourne, and Brisbane — including the break-even point, true ownership costs, and when each option wins financially.
The break-even concept
Buying isn't automatically smarter than renting — it depends on time. Upfront costs (stamp duty, legal fees, inspection) are a sunk cost you need to recover before buying becomes financially better than renting. That recovery period is the break-even point.
In Australian capital cities, break-even typically falls at 5–10 years. If you plan to stay less than 5 years, the maths almost always favour renting. Beyond 7–10 years, buying generally wins — especially when factoring in equity accumulation and zero CGT on primary residences.
True monthly cost comparison — $700k property
Assumes: 20% deposit ($140k), $560k loan at 5.85% for 30 years, owner-occupier (non-FHB). Stamp duty amortised over 10 years. Ownership costs include council rates, maintenance, and insurance (~1.5% p.a.).
| Cost | Sydney | Melbourne | Brisbane |
|---|---|---|---|
| Mortgage (P&I) | $3,295 | $3,295 | $3,295 |
| Ownership costs | $875 | $875 | $875 |
| Stamp duty (÷120 mo) | +$219 | +$261 | +$204 |
| Total buying cost | ~$4,389 | ~$4,431 | ~$4,374 |
| Equivalent rent | ~$2,800 | ~$2,200 | ~$2,400 |
| Monthly buying premium | ~$1,589 | ~$2,231 | ~$1,974 |
Buying costs are higher month-to-month, but build equity. Renting premium could be invested — a disciplined renter in Melbourne investing $2,231/month at 7% p.a. accumulates ~$390k over 10 years. Equivalent rent approximations based on March 2026 median rents for a comparable property type.
Price-to-rent ratio by city
The price-to-rent ratio divides the property price by annual rent. Higher ratios mean renting is comparatively cheaper. As a rule of thumb: below 20× favours buying; above 25× favours renting (assuming invested savings).
Median prices approximate for March 2026. Annual rent based on median weekly rents × 52. High ratios in all three cities reflect Australia's elevated property prices relative to rents.
When buying wins vs when renting wins
- ✓You plan to stay 7+ years in the same property
- ✓You can access a 20% deposit (avoids LMI)
- ✓You value security — no landlord risk, renovate freely
- ✓Your rent is above 80% of equivalent mortgage repayments
- ✓Property in your area has historically strong capital growth
- ✓You wouldn't reliably invest the renting 'savings'
- →You plan to move within 5 years (work, family, lifestyle)
- →You don't yet have a 20% deposit in high-price cities
- →Your city has a very high price-to-rent ratio (35×+)
- →You would invest the difference in growth assets
- →Your income is variable or you have career uncertainty
- →You need geographic flexibility to access better opportunities