Owning a home has long been considered a cornerstone of financial security in Australia. However, rising property prices, increasing interest rates, and the cost of living have made homeownership more challenging for many. As a result, more Australians are questioning whether renting might be a more practical alternative.
A recent analysis published on Your Mortgage examined whether it is cheaper to rent or buy across Australia’s major capital cities. The report compared mortgage repayments with rental costs, taking into account median incomes, property values, and the time required to save for a deposit.
Homeownership Remains Costly in Major Cities
Sydney and Melbourne remain the most expensive cities to buy a home, with mortgage repayments significantly higher than rent. In Sydney, the median house price is AUD 1.47 million, resulting in estimated weekly mortgage repayments of AUD 1,768—more than double the median rent of AUD 811 per week.
Units, while more affordable, still present a financial burden, with repayments averaging AUD 1,029 per week compared to AUD 710 in rent. Melbourne follows a similar trend, though prices are slightly lower. A median house costs AUD 917,132, translating to AUD 1,099 per week in mortgage repayments, compared to AUD 633 in rent.
Units in Melbourne offer some relief, with repayments of AUD 723 per week—closer to the average rent of AUD 566.
More Affordable Alternatives Outside Sydney and Melbourne
In contrast, some capital cities offer a more balanced equation between renting and buying. Brisbane’s median house price of AUD 977,343 results in weekly mortgage repayments of AUD 1,172, compared to a rental cost of AUD 681.
While this still makes homeownership more expensive, the gap is narrower than in Sydney or Melbourne. Units are particularly viable, with repayments of AUD 822 per week—only slightly higher than the AUD 593 rent.
In Adelaide, mortgage repayments for a house average AUD 1,046 per week, while rent stands at AUD 630. For units, the cost difference is minimal—AUD 709 per week in mortgage repayments versus AUD 525 in rent. Perth’s unit market is even more favourable for buyers, with mortgage repayments of AUD 627 per week, lower than the median rent of AUD 631.
The Long Road to Homeownership
Beyond mortgage repayments, the ability to save for a deposit is a key factor in homeownership accessibility. In Sydney, accumulating a 20% deposit for a house would take an estimated 10 years and 11 months, based on saving 30% of a median income. For a unit, the timeframe is reduced to 6 years and 4 months.
Melbourne requires 6 years and 6 months to save for a house deposit, while in Brisbane, this extends to over 7 years. In contrast, smaller cities like Hobart and Darwin offer faster pathways to homeownership, with deposit savings achievable in under five years for units.
The Hidden Costs of Buying a Home
Mortgage repayments alone do not tell the full story. Homeownership comes with additional expenses, including council rates, insurance, maintenance, and strata fees for units. While rent is subject to market fluctuations, tenants generally avoid these ongoing costs.
The question of whether to rent or buy remains complex and highly dependent on location. While Sydney and Melbourne remain challenging for buyers, cities like Perth and Hobart offer more accessible opportunities. For those considering homeownership timeframes is crucial before making a decision.
