Most buyers underestimate the full upfront and ongoing cost of purchasing property:

• Deposit: Most lenders require 20% to avoid lenders mortgage insurance (LMI). On a $750,000 property, that is $150,000. If you put down less than 20%, LMI adds $10,000–$25,000 to the purchase cost.
• Stamp duty: A major and often underappreciated cost. On a $750,000 property in NSW, stamp duty is approximately $29,000 for an established home (first home buyers may be exempt up to $800,000 in NSW under the First Home Buyer Assistance Scheme). Rates vary significantly by state.
• Conveyancing and legal fees: $1,500–$3,000 for a residential purchase.
• Building and pest inspections: $400–$800, essential before exchange.
• Mortgage registration and loan establishment fees: $500–$1,500 depending on lender.
• Moving costs: $1,000–$5,000 depending on distance and volume.
• Ongoing ownership costs: Council rates ($1,200–$3,000/year), strata fees if applicable ($3,000–$10,000+/year for apartments), building insurance ($1,500–$3,000/year), water rates, and maintenance (budget 1% of property value per year - $7,500 on a $750,000 home).
• Mortgage interest: At a 6.5% rate on a $600,000 loan (80% LVR on $750,000), annual interest in the early years is approximately $39,000 - roughly $750/week just in interest, before principal repayment.

Renting is often cheaper in cash-flow terms than buying the equivalent property - but this comparison requires honesty:

• Rent vs mortgage repayment: In most Australian capital cities in 2026, renting a property costs significantly less per week than the mortgage repayment on the equivalent property at current interest rates. The gap is particularly pronounced in Sydney and Melbourne.
• Renter's insurance: $200–$500/year for contents insurance - renters do not pay building insurance or council rates.
• No maintenance costs: The landlord is responsible for property maintenance and major repairs.
• Bond: 4 weeks rent upfront, but returned (with interest) at lease end - not a sunk cost.
• The opportunity cost of the deposit: A $150,000 deposit invested in a diversified index fund returning 8% annually grows to approximately $324,000 over 10 years. This is the real alternative to the deposit that most rent vs buy comparisons ignore. The deposit is not free - it has an opportunity cost.

Buying a home typically has high upfront transaction costs (stamp duty, conveyancing, inspections) that take years to recover through capital growth. The break-even point - where the total cost of buying equals the total cost of renting the equivalent property, including opportunity cost - is typically 7–12 years in Australian capital cities at current price-to-rent ratios.

This means buying almost certainly makes sense if you plan to stay for 10+ years. It is a genuine trade-off if you plan to stay 5–7 years, and often worse than renting financially if you plan to stay fewer than 5 years (even before accounting for the possibility of property price declines).

Buying is more likely to be the better financial decision when:

• You plan to stay for 10+ years: Transaction costs (stamp duty particularly) are amortised over a long holding period, and capital growth has time to compound.
• You are buying in a high-rental-yield area: Gross rental yields above 4–5% (common in regional cities and some outer suburbs) reduce the financial advantage of renting.
• You have the deposit without depleting other savings: Raiding your emergency fund or retirement savings to fund a deposit leaves you financially exposed.
• You would otherwise spend the saving (not invest it): The rent vs buy comparison assumes the renter invests the deposit equivalent. If the alternative is lifestyle spending, buying enforces disciplined wealth accumulation that the equivalent renter does not achieve.
• Interest rates are falling: Rising rates favour renters (mortgages become more expensive); falling rates favour buyers (refinancing reduces costs and property values typically rise).

For eligible first home buyers, government schemes can significantly change the buying economics:

• First Home Guarantee (federal): Allows eligible first home buyers to purchase with a 5% deposit without paying LMI - the government guarantees the remaining 15% of the 20% threshold. Income caps apply ($125,000 single, $200,000 couples in 2024-25).
• First Home Super Saver Scheme (FHSS): Voluntary super contributions (up to $15,000/year, $50,000 total) can be withdrawn for a first home deposit. Contributions are taxed at 15% inside super versus your marginal rate outside - a meaningful tax saving.
• State stamp duty exemptions and concessions: Most states offer stamp duty exemptions or concessions for first home buyers up to various price thresholds. NSW exempts properties up to $800,000; Victoria has concessions for properties up to $750,000. Check your state's revenue office website.
• First Home Owner Grant: A one-time payment of $10,000 (varies by state) for eligible first home buyers purchasing a new or substantially renovated home.

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