Renting vs buying: Here’s how much they’d cost you over 30 years
Wednesday, 26 November 2025
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Money in the bank
Adam and Jane* are careful with their money. They like to think long-term and don’t rush into decisions before they’re sure they’ve made a good choice.
Over the years, they’ve saved enough money to put down a deposit on a home, but they’re now having second thoughts.
“Do we buy a house or put the money in shares?” they recently wrote to me.
“Can we afford the increasing insurance and rates on top of mortgage? Or are we better off renting and putting our deposit in the stock market?”
What this comes down to is the classic debate about whether it’s a better idea to rent or buy a house and steadily pay off a mortgage.
Historically, the answer was easy.
Homes were viewed as the best way to secure long-term wealth, and we’ve seen generations pouring their money into the property market rather than investing elsewhere.
But are things changing? Is buying still a better approach than renting? And are there now other, more suitable, ways to build your wealth?
Renting vs buying: what does the latest data say?
The question of which is cheaper isn’t a simple one-word answer. The rental and housing markets are interrelated, driven by corresponding forces on either side.
There’s risk involved with both.
To start, it’s important to understand that the price you see on the for sale sign isn’t the price you actually pay for a house.
If you looked at the cost of a $1 million house (the median Auckland house price) financed over a 30-year term, interest would see you pay a total $1.7 to $2.1 million over the duration of the mortgage (depending on what rates were doing).
Comparatively, if you were paying $650 per week for rent (the Auckland median cost) over the course of 30 years, adjusted for inflation at 2% per annum, you would end up forking out around $1.01m in rent over those three decades.
The difference is that you wouldn’t have a significant asset at the end of that period if you were just paying rent.
ANZ senior economist Matt Galt has run the numbers on the market and tells me that the decision between renting and buying often comes down to the delicate balance between the running costs of homeownership and the shifting cost of renting.
“The biggest cost of owning a home when you first buy it is the mortgage payments, but it’s really important to remember there are also other costs associated with it, including council rates, maintenance costs, house insurance and then other odds and ends like lawyer and real estate agent fees.”
These hidden fees can sometimes catch first-time home buyers off guard, particularly when they’ve spent years paying only a single rental fee.
Generally, these additional expenses are incorporated into the cost of rent, but interest rates can have a big impact on how affordable a house is.
After the pandemic, fixed mortgage rates hit a peak average of 7.7% in 2023 for a one-year rate. This placed enormous pressure on homeowners, who had to cover the repayments while still meeting other demands related to homeownership.
Those interest rates remained stubborn for some time, until the Reserve Bank started aggressively decreasing the Official Cash Rate to stimulate the economy.
At the same time we had those high interest rates, the national average rental price across New Zealand saw a period of slowing growth, followed by a decline, between 2023 and 2025.
Galt tells me these forces made renting the more affordable option during that period, but things are starting to turn around.
Looking at the typical running costs of an average home, where the homeowner has a home-to-value ratio of about 50% (meaning you only owe the bank half the value of the house), Galt says the numbers are now at parity with the cost of renting.
“Home ownership costs have eased as interest rates have fallen, helping to close the gap with rents,” Galt tells me.
Check the small print
There are some important factors to consider here.
The larger the mortgage, the more vulnerable you are to higher interest rates. And on the flip side, the longer you own a home, the more manageable the homeownership costs become.
“When you have a mortgage, the interest rate on it can change quite significantly in a short period of time,” says Galt.
“Whereas rents tend to be a bit more predictable. However, if you do own a home and you’re able to pay down the mortgage, your homeownership costs will typically fall over time. Whereas rents tend to rise over time.'
The point here is that each individual needs to consider their risk appetite and decide what they’re comfortable with.
If you value liquidity and being able to live where you please, then owning a bricks-and-mortar asset probably isn’t in your best interests. On the contrary, if you value stability and are concerned about the prospect of rents rising over time, then homeownership would be a better option.
Tenant protections in long-term rental agreements are robust across many European nations, which makes renting over a lifetime a more viable option. This is not the case in New Zealand, where market supply and demand will often dictate how the rental market changes over time.
Shunning the old favourite
Adam and Jane aren’t alone in mulling whether property really is the best choice to build their wealth long-term.
ASB senior economist Chris Tennent-Brown has spotted a shifting perception on where Kiwis think they can get the best returns.
The bank’s latest Investor Confidence Survey noted Kiwis still view the family home as the best investment overall, but this sentiment has dropped to just 15% of respondents, the lowest level since the report was first released in 2015.
“While property is still on top, it’s with much less conviction than in the past,” Tennent-Brown says.
“New Zealanders are still looking for signs of recovery in the housing market, but it’s clear that confidence in this traditional favourite is being challenged.”
This trend was most pronounced among those under the age of 30, who have turned their eye to other investments.
The under-30s surveyed were particularly buoyant on the topic of the stock market, shares in publicly listed companies ranking the highest in sentiment scores while the house they own or live in ranked worst.
This was in contrast to over-60s, who continue to rate the family home as the best investment return.
Some of this will come down to life stages, with those over 60 having most of their wealth tied into property and those under 30 most often still renting.
However, the overall sentiments show that our view of wealth is changing and that property no longer holds the esteemed place it once did.
Check the returns
One thing the ANZ report didn’t factor in when it came to its comparison of renting and buying was the enormous value that comes with paying down the capital on a mortgage.
Every dollar paid over and above the minimum repayments can be viewed as an investment generating a return in line with the interest rate at that moment.
You may be able to generate higher returns by investing elsewhere, but it can be difficult for some to remain motivated to make consistent investments when they don’t have the long shadow of a mortgage hanging over their bank account. You also need to consider whether you’d be able to put away enough while paying (ever-increasing) rent to offset the fact that you won’t own an asset after the 30-year mortgage period.
Whether you rent or buy, the onus still rests on you to make those consistent payments that will allow your wealth to accumulate over time.
Is homeownership the only way to do this? No.
But there are few things as motivating as the constant threat of losing your home to encourage you to keep those consistent payments coming.
This isn’t so much a question of whether renting or buying is superior, but rather whether you have the discipline to invest without the pressure that comes with a mortgage – and also whether you want to constantly have your fortunes tied to the whims and fancies of the rental market into your old age.
*Disclaimer: The information in this article is of a general nature and is not intended to be personalised financial advice. The names of the individuals in this story have been changed to protect their privacy.
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