15 July 2026 | See disclaimer
Deciding whether to buy or rent a home in the 2026 property market can be a difficult decision for Australians. In recent years, with national vacancy rates sitting at around 1.1 per cent [1], finding a suitable rental property has become increasingly competitive.
Meanwhile, home prices have risen sharply. According to real estate data and analytics firm Cotality, the national median price to purchase a home in an Australian capital city stood at $1,025,365 as of March 2026. [2]
Regardless of which path you take, you should also consider what insurance cover you’ll need to adequately protect yourself.
In this article, we’ll weigh up the costs and benefits between renting and buying a property, while also breaking down which insurance policies you can take advantage of to protect your property and belongings.
The Australian Housing Market
The Australian property market has become increasingly difficult to navigate, particularly for people buying their first home. Rising property prices, higher interest rates, and tighter lending conditions have created a range of challenges that can make it harder to enter the market. Meanwhile, these conditions can also impact renters trying to find an affordable place to live.
One of the reasons behind these difficulties can be traced to the current Reserve Bank of Australia (RBA) cash rate. The cash rate is a national interest rate which influences all other interest rates. Crucially, it affects mortgage rates for home buyers trying to secure a loan. [3] In May 2026, the RBA cash rate increased to 4.35 per cent. This has been a dramatic change from a few years ago, when the cash rate was as low as 0.10 per cent in April 2022. [4]
These pressures could also affect renters. On March 12 2026, SQM Research (SQM) company released a report that the national vacancy rate for rentals has fallen to 1.1 per cent. [1] Due to a combination of high interest rates, and high demand for rental accommodation, rental prices have also soared. In the last ten years to March 2025, median rents throughout Australia have risen by 48 per cent. [5]
All in all, regardless of whether you’re renting a home or buying, everyone is feeling the pinch in different directions which makes it difficult to assess whether one or the other is better. Let’s go into more detail on the pros and cons of each.
Whether you’re renting or looking to buy, the current market presents challenges for both. Understanding the advantages and disadvantages of each option could help you work out which approach could suit your circumstances.
The Pros and Cons of Buying a Home
| Pros of Home Ownership | Cons of Home Ownership |
|---|---|
Home Ownership When you own your own property, you are not subject to a landlord’s decision to sell the property or move in, which can sometimes result in needing to vacate at short notice. | Upfront Costs Buying a home comes with many upfront costs. Besides saving for a deposit, you have other costs to consider, such as stamp duty, conveyancing costs and a loan establishment fee. |
Property Values Increase While rising property prices [2] can present a challenge for first-time buyers, purchasing a property may give you the opportunity to benefit from long-term capital growth — meaning the value of your property could increase over time. | Ongoing Costs There are a variety of ongoing costs associated with owning a home, such as council rates, maintenance and repair costs, home insurance, your home loan repayments, and body corporate fees if you own a strata titled property. |
Investment Property Investment properties have historically been viewed as less risky compared to other forms of investments. [6] Once you’ve purchased a property you can also use your property’s equity as collateral for a mortgage loan on a new property. | High Interests Rates Interest rates have been steadily climbing, with RBA cash back rates at 4.35 per cent [4] as at May 2026, which heavily impacts all interest rates for home owners paying their mortgage. Homeowners with a variable-rate mortgage may experience changes to their repayment amounts when rates increase. |
Limited Access to First Home Buyer Schemes The First Home Owner Grant may provide some support for eligible buyers. However, the First Home Owner Grant is generally constrained to buying property that is newly constructed or has never been lived in, which can limit how many buyers can benefit from it. |
Securing a property can be difficult and somewhat overwhelming, especially with rising interest rates. Once you’ve purchased a property, it’s worth considering how you’ll protect what you’ve worked hard to secure by insuring the home for the full replacement cost. That’s where home and contents insurance may help.
The Pros and Cons of Renting
| Pros of Renting | Cons of Renting |
|---|---|
Flexibility Without a mortgage, you may have more flexibility to move from city to city or relocate to a new suburb compared to the responsibility of owning a home. And depending on your lease agreement, you may be able to move early and quickly. | Low Vacancy Rates Due to historic low vacancy rates [1], it can be difficult to get your foot in the door and be approved on a rental application. |
No Mortgage Debt Since you don’t have to worry about a home loan to repay, you’re able to leave a property if your circumstances change, either because you want to move to a new neighbourhood or find a more suitable property. Granted, you may have to pay a fee if you break your lease early. | Rising Rents Median rental prices have been steadily increasing, having risen by 48 per cent in the last ten years since 2015. [5] |
No Major Maintenance Costs Any major maintenance works needed, such as a plumbing failure or a pest issue, are typically passed on to the landlord as their responsibility. | Inability to Customise Due to the nature of renting, you’re limited in how much you can customise your space. You’re unable to paint walls, drill holes, or do any kind of cosmetic renovations without landlord approval. |
When it comes to assessing the pros and cons of renting, one of the main forms of resiliency that renters have to protect themselves is through renters’ insurance. As a renter, renter’s insurance can cover the costs of loss or damage to your contents from a range of insured events such as fire, storm and theft. You can also consider adding optional covers to tailor the policy to suit your needs.
What Insurance Do You Need? A Guide for Buyers, Renters and Investors
Insurance isn’t just a “nice to have” when it comes to living in a residence. For prospective homeowners, home insurance is often a mandatory step towards settlement when buying a home. Meanwhile, having contents insurance means renters may have cover for their belongings if an insured event happens.
It all begins with getting the appropriate insurance for your situation:
Buying a Home
If you’re pursuing home ownership as an owner-occupier, you might consider home and contents insurance. These are policies that help cover both your belongings and property from insured events such as vandalism, theft, or natural disasters such as storms or bushfires. When considering home and contents insurance, it’s worth taking the time to think about your sum insured. The sum insured is the amount you are covered for and should be enough to cover the full replacement cost of your home.
To decide how much you want to insure your home and belongings for, you can use a replacement cost calculator
Get a combined Home & Contents Insurance Quote and save 30%^ online on your first year’s premium.
Renting
If you are renting a property, renters’ insurance can help cover you against the loss and damage of your own belongings from a range of insured events. It also covers you for legal liability and additional expenses, such as needing temporary accommodation in an event that causes loss or damage to your contents.
The insurance your landlord has will not cover you for loss or damage of your own belongings in an insured event such as a fire, storm or theft. You can protect your belongings by taking out renters’ insurance.
Get a Renters Insurance Quote and save 15%^ online on your first year’s premium.
Buying an Investment Property
If you’re planning on buying an investment property and intend to lease it to tenants, a Landlord insurance policy can help cover loss or damage to the property from an insured event, or loss of rent incurred due to an insured event which makes the property unlivable. You may also be eligible to add optional extras to cover you for theft and malicious damage caused by tenants or tenant default if the tenant stops paying rent.
Key Questions to Ask Yourself
Before committing to either buying or renting, it may be helpful to reflect on a few key questions about your current financial situation and personal circumstances. The decision tree below may help you identify where you are in your property journey and what your next steps could look like.
Buying Property
Do you have enough money saved for a deposit?
No - If you don’t have enough for a deposit, consider checking if you’re eligible for any first-home buyer programs. These programs may help reduce the amount you need to save upfront, depending on individual circumstances and the state or territory you’re buying in.
Yes - Move on to the next question.
Do you have enough money to pay for other upfront costs?
No - Consider saving a bit longer, perhaps contact a mortgage broker to give you advice on how to find a loan that is suitable to your financial situation.
Yes - Move on to the next question.
Do you have enough money to sustain ongoing costs?
No - It’s best to budget for all ongoing costs such as maintenance, mortgage payments, and utility bills. A steady source of income can allow you to comprehensively pay for all living expenses.
Yes - Move on to the next question.
Do you have the financial resources to cover potential increased repayments as a result of rising interest rates?
No - If you don’t have the financial resources to deal with increasing interest rates, you may have to wait until they start falling again, although it’s difficult to predict when that could be.
Yes - Move on to the next question.
Are you prepared for the possibility of a long-term financial obligation?
No - It’s worth reflecting on whether you’re in a position to comfortably manage regular repayments over time.
Yes - Sounds like you might be ready to buy your own home. It might be time to get in contact with your bank or mortgage broker.
Rental Property Investment
Are you prepared to be a landlord if you buy an investment property?
No - If you don’t think you’re up to the task of managing your own investment property, don’t worry. You can engage the services of a property agent to manage the rental property for you. For a regular fee, they will handle everything from tenant communication to organising property inspections for potential tenants.
Yes - Move on to the next question.
Are you prepared for the possibility of being in debt on your rental property?
No - Keep in mind that becoming a landlord doesn’t guarantee having an external source of income to pay your mortgage. You should always be prepared for gaps in rent between tenants. Having sufficient funds to pay back your rental property without tenants may help you avoid going into significant debt.
Yes - Move on to the next question.
Are you prepared to adhere to all rental laws in the state or territory where the home is located?
No - You must adhere to applicable rental laws if you wish to become a landlord, as breaking any laws could lead you to potential fines or legal prosecution.
Yes - Move on to the next question.
Do you have enough money for landlord insurance?
No - Without landlord insurance, you will be responsible for covering all the costs of loss or damage to the property caused by events like fire and storm, etc., as well as any malicious damage or theft by the tenant.
Yes - Sounds like you might be ready to manage your investment property as a landlord.
Renting Property
Are you prepared to be flexible when looking for a rental property?
No - Consider that due to the low vacancy rates all around Australia, with high rents and lots of competition, it might be difficult to find your dream rental on the very first go. However, if you have flexibility and are willing to compromise, you could likely find a property suitable for you and your circumstances.
Yes - Move on to the next question.
Do you understand all the clauses when signing a rental agreement?
No - Make sure you have an understanding of every single clause in your rental agreement. This not only protects you from accidentally breaking a rule, but also is the main way to advocate for yourselves when dealing with real estate agents or the landlord during rental disputes.
Yes - Move on to the next question.
Are you prepared for possible rental increases?
No - Unfortunately, your landlord may be able to increase your rent at regular intervals depending on the tenancy laws where you live. You must always be prepared for potential rent hikes, as paying for movers and a bond clean is no small expense. Consider budgeting accordingly, as this may help you with your rental payments.
Yes - Move on to the next question.
Do you know the rental laws in the location where you plan to rent?
No - As a tenant, it’s important you stay informed of your rights to make sure you can speak up for yourself if a landlord or real estate company breach their obligations or attempt to increase rent outside of what is allowed by law. Sites like the RTA, if you’re in Queensland, can give you resources on tenants’ rights as well as the rules you have to follow.
Yes - Sounds like you might be prepared to become a tenant and start applying to rental properties. Don’t forget to consider getting renters’ insurance to protect yourself for legal liability and your belongings against loss or damage from a range of insured events.
FAQs
Is it better to rent or buy in Australia in 2026?
There isn’t a clear cut answer as to whether it’s better to rent or buy a home in Australia in 2026, as both have their pros and cons. Take stock on your budget, your state’s first home buyer schemes, current interest rates, and rental vacancies in your area.
What are the hidden costs of buying a house in Australia?
The hidden costs you need to consider before buying a house are stamp duty, conveyancing costs, loan establishment fees and ongoing insurance for your new property.
Does renting really mean you're paying someone else's mortgage?
In essence, while renting does mean that you are paying someone else’s mortgage, you have the benefit of staying flexible in where you can go.
What insurance do I need if I'm buying a home?
As part of the property settlement process, if you’re taking out a loan from the bank, it’s typically a requirement from the lender that you get home insurance either before or on the settlement date of the transaction. Read the laws of your home state to make sure you meet the correct deadlines on time.
What insurance do renters need?
Renters are encouraged to get renters’ insurance to protect themselves against legal liability claims and their belongings against loss or damage from a range of insured events. Don’t make the mistake of thinking that just because you don’t own the home, you don’t need insurance, too.
What is the difference between home insurance and landlord insurance?
The core difference between home insurance and landlord insurance is that where home insurance is designed to cover the home the owner lives in, landlord insurance is tailored for investment properties that are leased to renters.
How much deposit do I need to buy a house in Australia?
The rule of thumb when it comes to saving for a deposit to buy a house is saving 20 per cent of the price of the house you’re looking to buy. But there are also other fees you need to consider before buying a home, such as conveyancing fees and stamp duty. If your deposit is below 20 per cent, consider speaking to a mortgage broker to discuss other options that may be available. Schemes like the First Home Owner Grant can also help significantly with purchasing your first home, which a mortgage broker can assist you with.
