Buying a home

The concept

  • Before you start attending open houses and shopping around for lenders, take the time to work out whether renting or owning your home is the best option for you.
  • Consider whether you will get a better return if you invest in a different type of asset, such as shares.    

  • Work out how much you will have to pay in ongoing maintenance, rates and insurance on top of your mortgage repayments and think about whether you will be able to afford it, both now and if your circumstances change.    

  • Lastly, think about how much you value the security of owning your own home and being able to change a property to suit your tastes and needs. 

The detail

It is often said that owning your own home is the Australian dream and that’s reflected in our population statistics – around 70% of Australians live in a home they either partly or fully own1. The advantages are obvious: it offers more security than renting, you can change the property to suit your own tastes and needs, and if you take out a mortgage you are paying off an asset you will one day own outright.

But home ownership isn’t for everyone, and it doesn’t always make financial sense. Some people prefer to rent and use the extra money they would have put towards a mortgage to invest in assets other than property, such as shares. Other people choose to buy an investment property and live in a rental property so they can deduct their loan interest payments and other expenses associated with owning a property. It’s a good idea to think through all the different options available to you before deciding the best course of action. You’ll find some helpful tools online to help you with this, or you can speak to an accountant or a financial adviser.  

Renting vs buying: Pros and cons

Renting and buying both have their advantages and disadvantages. In the table below we’ve summarised some of them for you to think about.





  • Maintenance costs, council rates and building insurance are usually covered by the landlord.
  • It’s relatively easy to move to a different property if you change jobs or want to live in a different location.

  • Rent on a property will often be less than a mortgage on the same property, especially in expensive cities like Sydney and Melbourne.

  • Paying a mortgage is a form of forced saving.
  • You are paying off your own asset, not someone else’s.
  • You can renovate and make improvements to your property (though some changes will require council approval).
  • You may qualify for government assistance (eg the First Home Owner Grant) which will help with some of the costs associated with buying a home.


  • You may be forced to move out of the property without much prior notice.
  • The landlord can increase the rent annually or even more frequently, depending on the terms of your rental agreement.
  • You generally can’t renovate or change any of the fixtures or fittings without your landlord’s approval.
  • Fluctuations in interest rates can have a large impact on mortgage repayments.
  • There is no guarantee that the value of your property will appreciate.
  • There are high costs associated with both buying and selling a property.
  • It can be difficult to save a home deposit, especially if you’re renting at the same time.


Ongoing costs associated with owning a home

Another factor you need to weigh up when deciding whether to rent or buy is the ongoing costs associated with owning your own home. Your mortgage repayments will likely be your largest expense, but you’ll also need to budget for:

  • council rates
  • utilities such as electricity, gas and water
  • maintenance and renovations
  • building insurance unless (the property is part of a strata plan, in which case building insurance is generally included in your strata fees).

The costs will vary according to where you live and what type of property you live in. Older homes will most likely have higher maintenance and renovation costs than newer properties. Freestanding houses generally have higher rates and more land to maintain than a unit or townhouse.

Real estate agents will be able to tell you the council rates and strata fees associated with a particular property, as well as an estimate of the utility costs.


1. Source: Australian Bureau of Statistics, ‘Year Book Australia’, 2012 (housing statistics reference the 2006 Census)