New Trends in the Australian Property Market: Why Buying is Now Smarter Than Renting
- Alison Wong
- Apr 9
- 8 min read
1. Current Market Conditions and Opportunities in Australia
Following the post-pandemic market correction, the Australian property market is entering a new growth cycle. Although the interest rate hikes over the past two years have caused some buyers to adopt a wait-and-see approach, property prices have not seen significant declines. Instead, they’ve begun to steadily rebound — driven by strong housing demand, increasing migration, and a persistent shortage in construction supply.
Strong Performance Across Major Cities:
Adelaide has become one of the fastest-growing markets in Australia, with a monthly increase of 0.8% and an annual growth rate exceeding 11%, demonstrating strong capital growth potential.
Melbourne follows closely behind, with a monthly rise of 0.5%, and property prices are gradually returning to pre-pandemic levels.
Sydney, as a traditional core market, has seen more moderate growth (0.3% monthly increase), but premium suburbs and high-end properties remain highly sought after by investors.
Perth has also delivered impressive results, with an annual growth rate of over 11%, supported by a resurgence in the mining sector and a robust Western Australian economy.
source:Corelogic
At the same time, the rental market remains extremely tight, with vacancy rates at historic lows. This has triggered intense competition among renters, pushing many to pay significantly higher rents or struggle to secure suitable accommodation.
In some popular suburbs, annual rent increases have reached 15–20%, and rents across all eight capital cities have been steadily rising year over year. For renters, the financial pressure continues to grow. In this environment, the trend of “renting is no longer cheaper than buying” is becoming increasingly apparent.
Rather than spending more on rising rental costs, now may be the time to enter the market early — especially with the possibility of interest rate cuts in the future — and take advantage of long-term capital gains from property ownership.
Source: Corelogic
2.The Financial Logic: Why Buying Is More Cost-Effective Than Renting
From a purely financial perspective, buying a property is essentially a combination of passive savings and asset investment.
Let’s assume you’re paying $2,000 in rent each month—that’s $24,000 per year, or a total of $240,000 over ten years. This entire amount is a sunk cost—it generates no returns, does not build any equity, and is purely a consumption expense.
What’s more concerning is the current rental crisis across Australia. Rental prices in major cities are increasing at 8–10% annually, meaning your future housing costs will continue to rise, while your ability to build personal wealth remains stagnant.
Let’s compare that same $2,000 monthly housing expense under a home ownership scenario:
Scenario | Home Purchase |
Property Price | $500,000 (entry-level home) |
20% Deposit | $100,000 |
Loan Amount | $400,000 (assumed interest rate: 6%) |
Monthly Repayment | Approx. $2,400 (similar to rent) |
10-Year Financial Comparison:
Renter:
Total rent paid: $240,000
Assets: $0
Homeowner:
Property appreciation (3% p.a.): $500,000 → $672,000 (gain of $172,000)
Principal repaid: approx. $120,000–$150,000
Net wealth = Deposit ($100,000) + Principal repaid ($150,000) + Capital gain ($172,000)
Total wealth built: approx. $422,000
Even after accounting for interest payments, maintenance, and other costs, homeowners would have accumulated significant wealth over the decade—while renters’ $240,000 would have completely vanished.
3. Long-Term Advantages of Homeownership
Owning a home isn’t just a financial decision—it also reflects lifestyle quality and long-term planning.
Homeownership is not only about having a place to live—it’s about building a foundation for different stages of life and accumulating tangible assets and a sense of stability.
Stability For renters, the risk of eviction and frequent rent increases are constant stressors. Homeowners, on the other hand, enjoy control over their living environment and stability in their monthly repayments (especially with fixed-rate loans).
Autonomy and Flexibility Owning a property means greater autonomy in your living space. You can redesign the space according to your needs, renovate, or even have pets without needing the landlord's consent. From style to functionality, you have the freedom to create a home that is entirely yours—something that is often difficult to achieve in a rental property.
Asset Accumulation and Wealth Planning Buying a property is a crucial step in wealth accumulation. Each monthly mortgage payment not only secures housing but also gradually builds your net worth. Over the long term, properties have strong appreciation potential, making them an excellent asset for retirement savings, educational funds, or future investments.
Government Support Programs The Australian government offers various grants and incentives for first-time homebuyers, including the First Home Guarantee, Home Buyer Scheme, Help-to-Buy, and stamp duty reductions. These policies significantly lower the barriers to entry, creating favorable conditions for first-time buyers to take advantage of.
In summary, buying a home is not just about solving the problem of where to live—it's also a solid wealth planning strategy that helps you build a secure foundation for the future while enjoying a stable living situation today.
4. Debunking the Myth of "Renting is Better than Buying"
Many people believe that renting offers flexibility and avoids the burden of interest payments, but this perspective often overlooks the hidden costs and opportunity costs of renting.
The Rising Trend of Rent In a market with tight supply, rent prices are generally on the rise and can be influenced by market fluctuations and landlord decisions. Renters have no control over future housing costs and must face the stress and risk of relocating and finding new rental properties.
Expenditures that Don't Build Equity Monthly rent payments don’t contribute to building any form of wealth. Even after renting for many years, you end up with nothing to show for it. In contrast, every mortgage payment you make increases the equity in your home, serving as an investment in your own asset.
Mortgage Payments vs. Rent In many cities, mortgage payments are now comparable to local rental costs. Given that you’re already committing to a fixed monthly payment, why not invest that money into your own property? Over the long term, this choice proves to be more financially beneficial.
Long-Term Stability of the Property Market While property prices may fluctuate in the short term, historical data shows that the Australian property market has a trend of stable, long-term growth. With a well-established legal framework and strong financial regulations, the overall risks are manageable. As long as the goal isn’t to trade properties for short-term gains, purchasing real estate remains a prudent investment strategy.
The notion that "renting is better than buying" is often based on short-term flexibility, but when viewed from a long-term perspective, buying offers greater advantages in terms of wealth accumulation, life stability, and cost control.
5. Financial Simulation: A Real Comparison Between Buying and Renting
Taking a $700,000 apartment as an example, we will compare the financial impact of buying versus renting over a 10-year period. This simulation uses conservative estimates (3% annual growth rate) and takes into account actual holding costs, allowing you to clearly see the long-term differences between the two options.
A. Deep Analysis of Buying Scenario
Initial Investment:
Property Price: $700,000
Down Payment (20%): $140,000
Loan Amount: $560,000 (variable interest rate of about 6%)
Monthly Expenses Breakdown:
Mortgage Repayment: About $3,800
Additional Holding Costs (monthly allocation):
Council Fees: $150
Property Management Fees: $300
Insurance: $50
Total Monthly Expense: About $4,300
10-Year Cumulative Benefits:
Property Appreciation: Calculated with a 3% annual growth rate:
Year 5 Value: $811,492
Year 10 Value: $940,739
Capital Appreciation: $240,739
Principal Repayment: Over 10 years, approximately $180,000 of the principal is repaid.
Net Asset Composition:
Initial Down Payment: $140,000
Repaid Principal: $180,000
Capital Appreciation: $240,739
Total Net Worth: $560,739
Tax Benefits:
Owner-Occupied: No Capital Gains Tax
Investment Property: Eligible for negative gearing tax benefits
B. Comprehensive Calculation of Renting Scenario (Using Weekly Rent of $680, Monthly Rent $2,900)
Monthly Expenses:
Rent: $2,900
Renters Insurance: $30
Total Monthly Expense: $2,930
10-Year Cumulative Rent Expenditure (with 5% annual rent increase):
Year 1: $34,800
Year 5: $42,285
Year 10: $51,310
Total Rent Payments Over 10 Years: $455,218
Opportunity Cost Analysis:
Investment of $140,000 (5% annual return):
Value After 10 Years: $228,000
Net Financial Position:
Investment Returns: +$228,000
Total Rent Payments: -$455,218
Net Result: -$227,218
Key Comparison Table
Comparison Item | Buying ($4,300/month) | Renting ($2,930/month) |
10-Year Total Expenditure | $516,000 | $455,218 |
Property Appreciation | +$240,739 | $0 |
Principal Accumulation | +$180,000 | $0 |
10-Year Net Worth | +$560,739 | -$227,218 |
Living Stability | Permanent Ownership | Possible Relocation |
Inflation Resistance | Strong | None |
If the $4,300 monthly mortgage feels burdensome, consider:
Purchasing a property around $600,000 (monthly payment about $3,700).
Opting for a first-home buyer plan in a more affordable area (down payment as low as 5%, Help-to-Buy minimum 2% deposit).
Investment Portfolio: Split the down payment between property and other investments.
Renting-Savings Plan: If renting temporarily, save the $1,370 difference each month.
Conclusion: Even at a $2,900 rent level, buying a property still offers superior long-term wealth accumulation compared to renting. Over time, rent increases will quickly close the gap between renting and buying monthly payments, while the wealth effect from property appreciation remains an advantage that renting can never match.
6. Summary and Actionable Advice: Stop Paying Off a Landlord's Mortgage—It's Time to Work for Your Own Future
When we look at it from the perspective of financial returns, life stability, and overall life planning, it’s easy to come to a conclusion—buying a property is far more than just owning a place to live. It is a long-term investment, a tangible way to accumulate assets, and a comprehensive preparation for your future.
Especially in the current market environment—with rents continually hitting new highs, limited rental property options, increasing moving costs, and rising uncertainties—while government subsidies for first-time homebuyers are still available, this is the "golden window period" for many first-time buyers. The sooner you take that first step, the sooner you gain financial control, and the less pressure you will face later from rising interest rates or skyrocketing property prices.
Here are three specific action steps for those who are still hesitating:
Assess Your Financial Situation Conduct a thorough review of your current savings, income stability, and the loan amount you can potentially secure. It’s advisable to contact a mortgage broker or bank advisor to check if you qualify for government first-time homebuyer subsidies or stamp duty exemptions, which can help reduce the cost of getting into the market.
Understand Potential Markets and Regional Hotspots Many people mistakenly believe that there are no "affordable options" in Australia’s property market. In reality, places like Brisbane, Adelaide, and Perth still offer many high-potential, low-entry price areas, some of which are in the midst of infrastructure investment and population growth, making their future appreciation promising. Savvy buyers should actively study market trends and keep an eye on emerging regions.
Seek Professional Advice and Support Don’t go it alone. An experienced real estate advisor or mortgage expert can provide tailored advice based on your situation, helping you find properties that match your budget and goals and guiding you through the buying process. Often, a single professional consultation can help you avoid costly mistakes and save money down the road.
Final Reminder: Every dollar you pay in rent is helping your landlord pay off their mortgage; but every dollar you pay on your mortgage is an investment in your future, building your assets and sense of security. Instead of remaining a passive renter, why not become an active owner who takes charge of their future?
Now is the best time for you to start planning.
Alison’s Story
Born in Hong Kong an moved to Australia, I have been associated with real estate all my life. As the plane slowly landed on the runway of Melbourne Airport, my life and career also changed to another runway. I changed from a Hong Kong real estate agent to an Australian real estate agent, and successfully obtained the Australian lawyer qualification.
When I was working in a law firm, I was surrounded by highly educated professionals. Even though their wages are very well, and they are absolutely the elites in society, but their lives are full of hard labor, and it’s hard for them to get rich through buying properties.
So I spend all my time and effort on learning financial and real estate investment knowledge, hoping to achieve financial freedom as soon as possible, and let my parents who have worked hard for many years live a good life.
Now I will share with you the knowledge and experience of investing in Australian real estate, and embark on the road to financial freedom together.
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The original intention of Miss Alison to establish investwithalison.com is to provide neutral Australian real estate information through this platform and help investors establish the most suitable investment strategy.
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