Why buying your own home might be cheaper than renting

Scott Kuru March 11, 2025 5 min read

Image from Stuff NZ

KEY POINTS

New analysis has found that in several capital city suburbs, monthly mortgage repayments for median-priced apartments can be lower than renting
The biggest potential savings were found in Melbourne, where buying an apartment could save up to $688 per month when compared to renting
While buying may be cheaper than renting in some suburbs, potential buyers need to consider other expenses like council rates, strata fees, and maintenance costs

A comparison of monthly rental costs and home mortgage repayments has produced some unexpected results, finding that in some cases it’s cheaper to buy a well-located apartment in a major capital city than rent one.

The analysis by Compare The Market found no less than 8 well-located suburbs in Australia’s most expensive city - Sydney - and 10 in Melbourne, where it’s cheaper to buy than rent.

There was less choice in other major cities, but the results should give many potential first-home buyers the heart that a property of their own, close to work and good amenities, is not necessarily out of reach.

Renting versus buying

People rent properties, rather than buy, for several reasons.

They might not have long-term plans to stay in an area, and renting provides them with a relative degree of freedom.

They might like the appeal of not having to worry about the often expensive task of property maintenance, leaving major tasks to the landlord to sort out.

However, the overwhelming reason people rent is because of financial considerations, with the main one being that renting is usually a lot cheaper than paying off a large mortgage debt.

I say “usually”, because there are exceptions.

Compare The Market is a services website that offers comparisons on everything from home loans to pet insurance.

The company’s research team recently looked around Australia to find these unusual areas where it may be cheaper to make regular mortgage repayments and own your own home rather than rent.

They assumed a potential buyer would purchase a home at the current median suburb price as calculated by CoreLogic.

A buyer would also have to be able to stump up a standard 20% deposit plus stamp duty and other buying costs.

Compare The Market assumed their “buyer” would also be eligible to take out a 30-year mortgage at the average variable rate of 5.99%, with no ongoing fees.

They then compared this to the average CoreLogic median rent in the same suburb.

The results were provided to News Limited publications, including Sydney’s Daily Telegraph, Melbourne’s Herald-Sun and Brisbane’s Courier-Mail.

The details

The expensive nature of houses in Australian cities (CoreLogic says the median house price in the capitals was $1,008,368 at the end of February 2025) means there are no suburbs in the Greater Sydney, Melbourne, Brisbane or Adelaide areas where it is cheaper to buy and pay off a mortgage rather than rent.

For example, in Victoria, the town of Moe in the Latrobe Valley is the closest place to Melbourne where you could save an estimated $83 a month by buying and paying off a house at the median price, as distinct from renting.

But given Moe is 136 kilometers south-east of Melbourne, it’s hardly a feasible prospect for a daily commute for someone who works in the Victorian capital.

However, it’s a totally different story when it comes to apartments.

“If owning a home is part of your long-term plan, and you have a deposit saved, you might find it’s worth paying a bit more to have a little slice of Australia to call your own,” says Compare The Market’s Property expert Andrew Winter.

Mr Winter, who also hosts the television series ‘Selling Houses Australia’, says that “if you don’t currently need a lot of space, a unit somewhere central and convenient may be a great stepping stone.”

Indeed, Compare The Market has identified a dozen inner suburbs in capital cities where it’s cheaper to buy than rent.

Mar11-SuburbList

The biggest savings came in Melbourne, and surprisingly right in the heart of the city.

Compare The Market says renters in Melbourne CBD could, on average, save a whopping $688 a month if they bought an apartment instead,

CoreLogic says the median monthly rent in Melbourne’s CBD is $2882.

This compares unfavorably to estimated monthly repayments of only $2193.

Buying an apartment in Carlton, just to the north of the CBD, could see savings of $647 a month, with substantial savings also to be found in Travancore, West Melbourne, Southbank, Docklands, North Melbourne and Flemington - suburbs which are all less than 7 kilometers from the city centre.

In Sydney, buying an apartment in Ultimo, at the southern end of Sydney’s CBD, could see savings of $74 a month on repayments on a median-priced apartment when compared to median rents.

Mascot, just 10 kilometers south of the CBD and adjacent to the big jobs hub of Sydney Airport, trumps everywhere else in the Harbour City though, with potential savings of $162 a month.

Substantial monthly savings can also be found in the suburbs of Harris Park ($73) and Rosehill ($109), both of which are less than 3 kilometers from Parramatta, Sydney’s so-called “second CBD”.

In Brisbane too, renters in Spring Hill, just 2 kilometers from the city centre, have the potential to save $188 a month by buying an apartment instead of renting.

It’s the only inner suburb in the increasingly expensive Queensland capital where the maths for buying, instead of renting a house or an apartment, stack up.

In South Australia, Adelaide CBD is the only capital city suburb where it’s cheaper to buy a median-priced apartment and service the monthly loan on it, rather than rent, with potential savings of $229 a month.

The take out

It’s important to note that Compare the Market’s analysis doesn't take into account costs that apartment owners have to bear (that renters don’t) like council rates, strata fees, property maintenance and repairs.

These can be substantial extra imposts for owners on top of mortgage repayments, especially if an apartment building needs substantial maintenance or has building defects.

If you are an investor, these costs are tax deductible, but not if the property is your principal place of residence.

It’s also worth noting that newer apartment buildings in or near CBDs, on average, tend to be smaller and often have fewer bedrooms than older unit buildings further away from city centres.

Nevertheless, the comparison is interesting and should give younger Australians who aspire to home ownership some heart.

If you do your sums carefully, you could well find that in some areas of our relatively expensive capital cities, you may end the month with just as much, if not more, money in your pocket if you buy an apartment rather than continue to rent one.