Rent is not 'dead money' - it buys you a place to live, just as mortgage interest does. The difference is that mortgage principal repayments build equity. But that framing ignores the substantial costs of ownership that renters don't pay: stamp duty, council rates, water rates, insurance, strata (if applicable), maintenance and repairs, and the opportunity cost of the deposit.

A more accurate frame: both renting and buying have real costs. The question is which set of costs and benefits fits your financial position, life stage, and local market better.

The purchase price is only the beginning. Factor in:

• Stamp duty: $15,000–$40,000+ depending on state and property value (significantly more in NSW and VIC for properties above $1M).
• Legal and conveyancing fees: $1,500–$3,000
• Building and pest inspection: $400–$800
• Lenders Mortgage Insurance (LMI): $5,000–$30,000+ if your deposit is below 20%
• Ongoing council rates: $1,200–$4,000/year
• Water rates: $800–$1,500/year
• Building insurance: $1,200–$3,000/year
• Strata/body corporate fees (apartments): $2,000–$12,000+/year
• Maintenance and repairs: 1% of property value per year is the widely cited benchmark - $7,000–$12,000/year on a $700,000–$1.2M property
• Mortgage interest: On a $600,000 loan at 6.5%, interest in year one alone is approximately $38,000 - most of which is not building equity

In the first 5 years of ownership, many buyers pay more in non-equity-building costs than renters in the same property.

A 20% deposit on a $900,000 property in Sydney or Melbourne is $180,000. If that $180,000 were instead invested in a diversified ETF portfolio returning 8% annually, it would grow to approximately $264,000 in 5 years and $793,000 in 20 years.

This doesn't mean renting is better - it means the deposit has a real alternative use that must be factored into any honest comparison. If the property grows at 7% annually, the capital gain on the $900,000 property is $630,000 over 5 years. In this scenario, buying wins decisively. If property values are flat or decline, renting while investing the deposit may outperform.

Homeownership is the stronger financial choice when:

• You plan to stay in the same location for 7+ years: Stamp duty, agent fees on sale (2–3%), and transaction costs take years to recoup through capital growth.
• Your local market has strong historical capital growth: Sydney, Melbourne, and major capital cities have strong long-term track records. Some regional areas and outer suburbs have weaker historical growth.
• You can afford a 20% deposit without LMI: LMI adds thousands to your entry cost and provides no benefit to you.
• Your mortgage repayment is comparable to or less than equivalent rent: In some markets, this is no longer true - monthly mortgage repayments on recently purchased properties in major cities often exceed comparable rent.
• You value stability, customisation, and security of tenure: These non-financial benefits are real and significant for families and long-term residents.

Renting is the smarter financial choice when:

• You may need to relocate within 5 years: Career changes, family circumstances, or life plans that could require moving make the transaction costs of buying prohibitive.
• Local property prices are elevated relative to rents: When the price-to-rent ratio is very high (property is expensive relative to what it would rent for), the implied return on buying is low.
• You're investing the difference: A disciplined renter who invests the gap between their rent and what a mortgage would cost - plus the would-be deposit - can build substantial wealth over time.
• You can't access a 20% deposit without LMI: The additional cost of LMI and higher interest rates for high-LVR loans disadvantages buyers with small deposits.
• The market is at or near the top of a cycle: Buying at a cyclical peak followed by a correction destroys significant wealth.

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