Rent vs Buy Calculator

Compare the long-term financial impact of renting versus buying a home

Property Details

$
$
%

Costs & Growth

$
%
Historical average: ~4-5% in major cities
%
%
For investing the deposit if renting

Buying Costs

$
$
Legal fees, inspections, etc.
$
$
~0.5-1% of property value

Selling Costs (Future)

%
$
Legal, marketing, etc.

💡 How This Comparison Works

🔑 Key Concept

This calculator compares your net wealth position after a set timeframe. It's not just about monthly costs—it's about long-term wealth accumulation.

The Buying Scenario:

  1. Property grows in value over time (based on your growth rate)
  2. Loan balance decreases as you make monthly payments
  3. You pay ongoing costs (rates, maintenance, interest)
  4. Net position = Property Value - Loan Balance - Selling Costs

The Renting Scenario:

  1. You invest your deposit instead of buying (plus stamp duty & buying costs)
  2. Investment grows based on your expected return rate
  3. You pay rent which increases annually
  4. Net position = Investment Value (your accessible wealth)

Key Factors That Affect the Outcome:

Favors Buying
  • High property growth rate
  • Low interest rates
  • Long timeframe (10+ years)
  • Low rent relative to mortgage
Favors Renting
  • High investment returns
  • High interest rates
  • Short timeframe (< 5 years)
  • High buying/selling costs

Important: This is a financial comparison only. Buying a home provides stability, security, and lifestyle benefits that aren't captured in these numbers. Consider both financial and personal factors when making your decision.

📚 Common Questions

Why does the calculator assume I invest my deposit if renting?

If you rent, you keep your deposit liquid instead of tying it up in property. The calculator assumes you invest this money (e.g., in shares, ETFs, or other investments) to grow your wealth. This makes the comparison fair—both scenarios are building wealth, just differently.

What's a realistic property growth rate?

Historically, Australian capital city property has grown around 4-5% per year on average. However, this varies significantly by location and time period. Some areas see higher growth, others lower. Be conservative with your estimates.

What investment return should I use?

The ASX 200 has historically returned around 8-10% per year (including dividends) over long periods. However, this comes with volatility. Conservative investors might use 6-7%, while more aggressive investors might use 8-10%. Past performance doesn't guarantee future returns.

When does the "break-even" point matter?

The break-even point shows when buying becomes financially better than renting. If you plan to move before this point, renting might be better financially. However, if you're planning to stay long-term, buying typically wins due to property appreciation and forced savings through mortgage payments.