Is it better to rent and invest or buy a house in Sydney?

At 2026 prices ($1.61M median house), renting and investing the $322k deposit comes out ahead by $392k over 30 years at 4.5% property growth and 8.5% share returns, after tax on both sides: the home leaves $5.83M after the loan and selling costs, the portfolio $6.23M after capital gains tax. Sydney needs 4.78% annual growth to break even against shares on these assumptions; its 5.4% 30-year historical average clears that bar and its 4.5% forward rate does not clear it. The bar is nearly the same in every city (4.78% to 4.79%) because rent is modelled as a flat 3.5% gross yield nationwide.

Is it better to rent and invest or buy in Melbourne?

At 2026 prices ($978k median house), renting and investing the $196k deposit comes out ahead by $615k over 30 years at 4.0% property growth and 8.5% share returns, after tax on both sides: the home leaves $3.06M after the loan and selling costs, the portfolio $3.68M after capital gains tax. Melbourne needs 4.78% annual growth to break even against shares on these assumptions; its 5.1% 30-year historical average clears that bar and its 4.0% forward rate does not clear it. The bar is nearly the same in every city (4.78% to 4.79%) because rent is modelled as a flat 3.5% gross yield nationwide.

Is it better to rent and invest or buy in Brisbane?

At 2026 prices ($1.13M median house), buying comes out ahead by $228k over 30 years at 5.0% property growth and 8.5% share returns, after tax on both sides: the home leaves $4.73M after the loan and selling costs, the portfolio $4.51M after capital gains tax. Brisbane needs 4.78% annual growth to break even against shares on these assumptions; its 5.1% 30-year historical average clears that bar and its 5.0% forward rate clears it. The bar is nearly the same in every city (4.78% to 4.79%) because rent is modelled as a flat 3.5% gross yield nationwide.

What assumptions were used in this comparison?

All scenarios use a 6.2% mortgage rate, 20% deposit, 8.5% annual share returns, and a 30-year time horizon, on the Beat the ASX model run on the current Property vs Shares engine. Median prices are indicative house-only medians for 2026, drawn from CoreLogic/Cotality reporting; no capture date is recorded for them, so treat them as approximate. Property growth rates are conservative forward-looking assumptions: Sydney 4.5%, Melbourne 4.0%, Brisbane 5.0%, Perth 5.0%, Adelaide 4.5%, Hobart 3.5%, Canberra 4.0%, Darwin 3.0%. Rent is estimated as a flat 3.5% gross yield of each city's median price, not from city-specific rental data. Both paths are cashflow-neutral — the investor puts mortgage-minus-rent savings into shares each month. The home is a main residence (no capital gains tax); the portfolio pays capital gains tax at sale under the 1 July 2027 reform, with the gain added to $135,001 of other taxable income and taxed through the resident brackets. The break-even growth rate is nearly the same in all eight cities, 4.78% to 4.79%. The bar depends on the CGT treatment assumed here (the 1 July 2027 reform, with the Act's deemed sale at 1 July 2027 valued by an estimate from growth, the 30% minimum tax, and the brackets on the gain); a different treatment gives a different bar, which is why every ranking of a city against it on this page is "on these assumptions".

Property · March 2026, updated October 2026 · 8 min read

Should you buy or rent
in Australia? I modelled
every city

On the current Property vs Shares engine, with tax on both sides, investing the deposit beats buying a home in six of the eight capitals and buying comes out ahead in Brisbane and Perth, at the forward growth rates used here. The margins are much smaller than an untaxed comparison suggests: the home is free of capital gains tax, the renter’s share portfolio is not. Here’s the full breakdown.

Tepuy Solutions March 15, 2026 Updated October 2026

⚠️ Updated September 2026: Tax assumptions in this article have been updated to reflect 2026-27 Budget changes. The negative gearing figures reflect the new rules for properties purchased after 12 May 2026; if you purchased before that date, negative gearing is grandfathered. CGT works differently and is not grandfathered by purchase date: the 50% discount is kept on the part of a gain that accrued before 1 July 2027 and CPI indexation plus a 30% minimum tax applies to gains accruing from that date, however long you have held the asset. Model your specific situation using our calculator. Enacted law (Acts No. 49 and 50 of 2026, including the Treasury Laws Amendment (Tax Reform No. 1) Act 2026): for individuals and trusts the 50% CGT discount is kept on the part of a gain that accrued before 1 July 2027, whenever the asset is sold, and gains accruing from 1 July 2027 use CPI cost-base indexation, with a 30% minimum tax for resident individuals that does not apply in a year they receive the Age Pension or certain other income-support payments. New residential dwellings and affordable housing keep a discount (50%, or up to 60% for affordable housing) instead of indexation and the minimum tax, with a choice of indexation where the Act allows, and a pre-CGT asset is treated as sold and reacquired on 1 July 2027 so that only the gain from that date is taxed; the Act's other conditions apply.

The rent vs buy debate in Australia generates more heat than light. Most articles either make a sweeping claim ("renting is dead money") or dismiss buying entirely ("Sydney is unaffordable"). Neither is useful.

The reality is more nuanced — and more interesting. Whether buying or renting and investing beats depends on three numbers specific to your city: the purchase price, the local rent, and the plausible property growth rate. Change any one of these and the conclusion flips.

So I modelled it properly for every major Australian city using 2026 median prices, current mortgage rates, and historically grounded growth assumptions. The method is cashflow-neutral over 30 years and is the Beat the ASX model, run on the same Property vs Shares engine: the home is your main residence, so it pays no capital gains tax, and the renter’s share portfolio pays capital gains tax when it is sold at the end, under the 1 July 2027 reform, with the gain added to $135,001 of other taxable income (the bottom of the 37% bracket) and taxed through the resident brackets. Tepuy’s full property vs shares calculator models stamp duty, council rates and rental income on top of this; run it there for a figure that includes them.

The methodology

The comparison is cashflow-neutral. This means both the buyer and the renter have identical total monthly cash outflows. The renter invests their deposit upfront and adds the difference between the mortgage payment and rent to their portfolio each month. This is the only honest way to compare — anything else is comparing different savings rates, not different assets.

Assumptions used across all cities Mortgage rate: 6.2% p.a. (current variable average) · Deposit: 20% · Share return: 8.5% p.a. (conservative ASX 200 long-run average) · Time horizon: 30 years · Every dollar figure on this page is computed by the current engine at these settings, generated in October 2026 · Property is the home’s net proceeds after repaying the loan and paying a 2% agent fee on sale; shares are the portfolio’s net proceeds after a 0.2% a year fund fee, capital gains tax and brokerage · Tax: the home is a main residence (no capital gains tax); the renter’s portfolio is taxed at sale under the 1 July 2027 reform (the 50% discount on the part accrued before that date, CPI indexation and the 30% minimum tax on the part from it, Acts No. 49 and 50 of 2026), with the gain in the year of sale added to $135,001 of other taxable income, the bottom of the 37% bracket, and taxed through the resident brackets; the 8.5% return is modelled as growth with no dividends (dividend yield 0%), so nothing is taxed while it is held · Owner costs: maintenance at 1% and insurance at 0.3% of the home’s value a year, paid by the buyer and invested by the renter · The break-even rate is about 4.78% (4.78% to 4.79% by city). The bar depends on the CGT treatment assumed here (the 1 July 2027 reform, with the Act’s deemed sale at 1 July 2027 valued by an estimate from growth, the 30% minimum tax, and the brackets on the gain); a different treatment gives a different bar, which is why every ranking of a city against it on this page is “on these assumptions”. Note that the calculator’s own page shows about 4.32%: that is its shipped 20-year default, a shorter horizon than the 30 years used here, and not a comparable figure. Use the calculator to run your own numbers · Property growth: city-specific (see table below) · Rent: estimated as a flat 3.5% gross yield of each city’s median price, not from city-specific rental data — which is why the break-even growth rate comes out nearly the same, 4.78% to 4.79%, in all eight cities, and why the purchase price changes the dollar figures but barely the percentage (a bigger portfolio gain pays a slightly higher average tax rate) · No stamp duty, council rates or rental income modelled — use the full calculator for those.

The property growth rates are the most important assumption. They are conservative forward-looking assumptions, not historical averages: Sydney 4.5%, Melbourne 4.0%, Brisbane 5.0%, Perth 5.0%, Adelaide 4.5%, Hobart 3.5%, Canberra 4.0%, Darwin 3.0%. Seven of the eight sit at or below that city’s own CoreLogic 30-year average — the exception is Perth, whose 5.0% is marginally above its 4.9%. Each city’s historical average is stated alongside its forward rate in the city sections below, so you can see the gap in either direction. Because they differ by city they change the dollar outcomes materially — and Brisbane’s 5.0% and Perth’s 5.0% sit above the bar, so both come out as buy cases.

The full city comparison

City	Median price	Deposit	Prop growth	Property, net (30yr)	Shares, after tax (30yr)	Winner	Margin
Sydney	$1.61M	$322k	4.5%	$5.83M	$6.23M	Invest	$392k
Melbourne	$978k	$196k	4.0%	$3.06M	$3.68M	Invest	$615k
Brisbane	$1.13M	$226k	5.0%	$4.73M	$4.51M	Buy	$228k
Perth	$1.03M	$206k	5.0%	$4.31M	$4.11M	Buy	$207k
Adelaide	$981k	$196k	4.5%	$3.55M	$3.80M	Invest	$241k
Hobart	$779k	$156k	3.5%	$2.11M	$2.85M	Invest	$746k
Canberra	$1.05M	$210k	4.0%	$3.29M	$3.95M	Invest	$659k
Darwin	$710k	$142k	3.0%	$1.66M	$2.54M	Invest	$880k

$2.54M

A $142k deposit on a $710k Darwin house growing at 3.0% a year leaves $1.66M after the loan and selling costs at the end of 30 years; renting and investing the deposit plus the mortgage-minus-rent savings leaves $2.54M after capital gains tax. Investing wins by $880k. Darwin needs 4.79% annual growth to break even on these assumptions — above its 4.5% 30-year historical average, which falls short of it by about 0.29 of a point. Its 3.0% forward rate is below the bar, so investing comes out ahead here. An earlier version of this article said Darwin needed a much lower growth rate and was the one defensible buy case. That was wrong: with a flat 3.5% gross rental yield nationwide, the purchase price all but cancels out of the bar. The structural risks (resource sector dependence, population volatility) remain on top of that.

Run your own numbers

These are median scenarios. Your rent, deposit, and income will change the result. Try the quick calculator with your actual numbers — takes 30 seconds.

Try the quick calculator → Full model with CGT, stamp duty, and depreciation →

What actually determines the outcome

After running eight cities, three variables dominate the result:

Property growth rate is the swing factor. At Melbourne’s $978k median, 4.0% growth leaves investing $615k ahead; 5.5% growth leaves buying $704k ahead. Getting this assumption right matters more than any other input, and the future is uncertain.

The price-to-rent ratio matters enormously. After the 2020–2025 boom, price-to-rent ratios have blown out across every capital, which is what a flat 3.5% gross yield stands in for here. A city with a genuinely higher rental yield than 3.5% would face a lower bar than this model shows.

Share returns are the other side of the ledger. All scenarios use 8.5% as a conservative long-run assumption for the ASX 200’s total return, dividends included (modelled as growth). At 10% a year, investing wins in all eight capitals; at 7%, buying wins in six (all but Hobart and Darwin); at 6%, in all eight.

The honest conclusion: with tax on both sides, the gap between buying and renting is far narrower than an untaxed comparison suggests, because the home is free of capital gains tax and the portfolio is not. At the indicative 2026 medians and forward rates used here, investing the deposit wins in six capitals and buying in Brisbane and Perth. The question is “do you believe your city will beat about 4.78% a year for 30 years?” On these assumptions six of the eight 30-year averages clear that bar (Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra); Hobart and Darwin do not. Note what that bar is and is not: it comes from a flat 3.5% national rental yield, so it is a property of the assumptions, not a measurement of any individual city.

The cases this analysis misses

This comparison is intentionally simplified. It does not capture several factors that could materially change the result for your situation:

Stamp duty is a large upfront cost in every state and takes years to recoup; it is not in the figures above. This weakens the buying case, particularly in shorter time horizons. The full Tepuy calculator includes state-specific stamp duty for all 8 states.

Rental income on investment properties improves the property case but introduces vacancy, management fees, and maintenance costs. For owner-occupiers, rental income is irrelevant but the mortgage interest is not tax deductible — which weakens the property case slightly.

Negative gearing can significantly improve after-tax returns for investment properties, particularly for high-income earners — for properties held before 12 May 2026, or new builds. Negative gearing is being quarantined for established properties purchased after that date, from 1 July 2027, with losses on those properties usable only against rental income or a future capital gain on that property, instead of offsetting salary. This is fully modelled in the property vs shares calculator with FIFO CGT and Division 40/43 depreciation schedules.

Leverage risk cuts both ways. A mortgage of four times the deposit (an 80% loan, as modelled here) magnifies gains in rising markets — but also magnifies losses in falling ones. The shares investor has no forced leverage, which means their downside is limited to their portfolio value. This asymmetry is not captured in an expected-return model.

Summary: what city are you in?

City	Verdict	Strength	Key driver
Brisbane	Buy	Close	Forward 5.0% vs 4.78% bar; hist avg 5.1% clears it, on these assumptions
Perth	Buy	Close	Forward 5.0% vs 4.78% bar; hist avg 4.9% clears it, on these assumptions
Adelaide	Invest	Close	Forward 4.5% vs 4.78% bar; hist avg 5.2% clears it, on these assumptions
Sydney	Invest	Close	Forward 4.5% vs 4.78% bar; hist avg 5.4% clears it, on these assumptions
Melbourne	Invest	Clear	Forward 4.0% vs 4.78% bar; hist avg 5.1% clears it, on these assumptions
Canberra	Invest	Clear	Forward 4.0% vs 4.78% bar; hist avg 5.0% clears it, on these assumptions
Hobart	Invest	Clear	Forward 3.5% vs 4.79% bar; hist avg 4.4% does not clear it, on these assumptions
Darwin	Invest	Clear	Forward 3.0% vs 4.79% bar; hist avg 4.5% does not clear it, on these assumptions

If you want to run your specific scenario — your rent, your deposit, your income, and your city — the quick calculator gives you an instant result. If you want the full analysis including CGT, stamp duty, negative gearing, and Monte Carlo risk modelling, the full Tepuy calculator is the most comprehensive free tool available in Australia.

How to cite this data

Headline findings (30-year horizon, after tax on both sides, on the assumptions above): investing the deposit comes out ahead in six capitals and buying in Brisbane and Perth. The margin runs from $207k in Perth to $880k in Darwin, and the property growth rate needed to match shares is nearly the same in every city (the break-even rate, stated in the summary table above); on these assumptions six capitals’ historical averages clear it (all but Hobart and Darwin).

Cite as: Tepuy Solutions, “Rent vs Invest in Every Australian City: 2026 Data”, first published 15 March 2026, last modified 22 October 2026. https://tepuysolutions.com/blog/rent-vs-invest-every-australian-city

Method: see The methodology above and the Tepuy methodology page. To rerun a city with your own numbers, use the rent vs invest calculator or the Beat the ASX breakeven calculator.

Disclaimer: This article reflects Australian tax law as at September 2026, including changes announced in the 2026-27 Federal Budget (Acts No. 49 and 50 of 2026) — the quarantining of negative gearing for established residential property purchased after 12 May 2026 (from 1 July 2027), and the replacement of the 50% CGT discount with CPI cost-base indexation plus a 30% minimum tax for gains accruing from 1 July 2027. The two have different triggers: negative gearing turns on the 12 May 2026 purchase date, and property purchased before then remains grandfathered for that purpose indefinitely. CGT does not turn on the purchase date at all — the part of a gain that accrued before 1 July 2027 keeps the 50% discount whenever the asset was bought, and gains accruing from that date are indexed with a 30% floor even on long-held assets. New residential dwellings also keep a 50% discount (with a choice of indexation instead), and the affordable housing discount of up to 60% is retained. This article is for informational and educational purposes only. It does not constitute financial advice. All scenarios use simplified models and illustrative growth assumptions. Actual property and share returns will differ. Stamp duty, maintenance, rental income, franking credits, and individual tax circumstances are not fully modelled. Always consult a licensed financial adviser before making investment decisions. Growth rate assumptions are based on historical CoreLogic data and do not guarantee future performance. Enacted law (Acts No. 49 and 50 of 2026, including the Treasury Laws Amendment (Tax Reform No. 1) Act 2026): for individuals and trusts the 50% CGT discount is kept on the part of a gain that accrued before 1 July 2027, whenever the asset is sold, and gains accruing from 1 July 2027 use CPI cost-base indexation, with a 30% minimum tax for resident individuals that does not apply in a year they receive the Age Pension or certain other income-support payments. New residential dwellings and affordable housing keep a discount (50%, or up to 60% for affordable housing) instead of indexation and the minimum tax, with a choice of indexation where the Act allows, and a pre-CGT asset is treated as sold and reacquired on 1 July 2027 so that only the gain from that date is taxed; the Act's other conditions apply.

Should you buy or rentin Australia? I modelledevery city

The methodology

The full city comparison

City by city breakdown

Sydney 🏙️

Melbourne 🏙️

Brisbane 🌞

Perth ☀️

Adelaide 🍷

Hobart 🌿

Canberra 🏛️

Darwin 🌴