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Rent vs Buy Calculator

Should you rent or buy in Australia? Compare the total cost of renting versus buying a home over 5-10 years including equity, opportunity cost, and stamp duty.

Updated 2025-26 FYReviewed 4 May 2026Built in AustraliaData stays on your deviceATO sourced data

Disclaimer

This calculator provides estimates for general information purposes only. Results should not be relied upon as professional financial, tax, or legal advice. Tax rates and thresholds are based on publicly available ATO data and may change. Always consult a qualified tax agent or financial adviser for advice specific to your circumstances.

Frequently Asked Questions

Is it better to rent or buy in Australia?
Depends on time horizon, location, and mortgage rates. Generally: BUY if you'll stay 7+ years, can afford 20% deposit + costs, and rates are below 8%. RENT if you expect to move within 5 years, prefer flexibility, are in expensive markets where price-to-rent ratio exceeds 30 (like Sydney inner-ring), or want to invest the deposit elsewhere. The 'opportunity cost of the deposit' is the key variable most people forget.
What's the price-to-rent ratio?
Annual rent ÷ purchase price. Below 5% (ratio of 20+) generally favours renting. Above 7% (ratio of 14 or less) generally favours buying. Sydney/Melbourne ratios often 35-45 (heavily favours renting on cashflow basis). Brisbane/Perth/Adelaide closer to 20-25. Renting is cheaper monthly in most major Australian cities — the wealth difference comes from forced savings via mortgage and capital growth.
What costs do buyers forget?
Stamp duty (3-5% of price), legal/conveyancing ($1,500-$3,000), building & pest inspection ($500-$800), LMI if deposit < 20% ($5k-$30k), council rates ($1,500-$3,000/yr), water rates, building insurance ($1,000-$2,000/yr), strata (apartments, $2k-$8k/yr), maintenance ($1k-$5k/yr typical). Total ongoing costs typically 1-2% of property value/year on top of mortgage.
Does this calculator account for capital growth?
Yes — the calculator projects both rent costs (rising with inflation) and home value (rising at your assumed capital growth rate, typically 4-7% pa for Australian capital cities long-run). It then compares end-of-period wealth: renter's invested deposit + savings vs buyer's home equity. The break-even depends heavily on capital growth assumption — 5% growth often makes buying favourable after 7-10 years, 3% growth often favours renting indefinitely.

What is Rent vs Buy?

Compares the total long-term financial outcome of renting versus buying a home in Australia. Models mortgage payments, rates, insurance, maintenance, and stamp duty for buying; compares to paying rent and investing the saved deposit elsewhere.

How this calculator works

Enter the home price, rent for a comparable property, deposit available, mortgage rate, time horizon, expected capital growth, expected investment return, and rent inflation. The calculator amortises the mortgage, projects home value, tracks rent costs, and projects the alternative investment scenario. Output: net wealth at end of horizon under each scenario.

The Renter's Wealth Strategy

Often overlooked: a renter who invests the deposit + the gap between rent and mortgage payment can build substantial wealth. E.g. $100k deposit invested at 8% for 25 years grows to $685k. Plus the monthly cashflow gap (mortgage payment - rent often $500-$2,000/month in capital cities) invested compounds further. Most rent-vs-buy comparisons forget this 'opportunity cost of the deposit'.

The Owner's Wealth Strategy

Buyer benefits: forced savings via principal repayment (debt-funded compound interest), capital growth (Australian capital cities ~5-7%/yr long-run), stability (no rent increases or eviction), CGT-free main residence exemption on sale. Drawbacks: 5-10% transaction costs every move, illiquid, exposed to local market downturns, maintenance unpredictable.

Key Variables Driving the Result

(1) Time horizon: under 5 years almost always favours renting (transaction costs); 7+ years usually favours buying. (2) Capital growth: 5%+ pa generally tips to buying; 3% or less tips to renting. (3) Investment return: 8% pa investment returns make renting competitive even at 6% capital growth. (4) Mortgage rate: lower rates favour buying; rates above 7% start tipping back to renting. (5) Price-to-rent ratio: above 30 (Sydney/Melbourne) favours renting, under 20 (regional) favours buying.

Stamp Duty: The Hidden Killer

NSW: ~3.5-5.5% of price. VIC: 2-6.5%. QLD: 3-5.75%. Plus legal fees, building inspection, LMI if deposit < 20%. Total acquisition cost typically 4-8% of price. If you move within 5 years, you've effectively wasted ~6-10% (in + out) on transactions. Buying makes sense ONLY if you'll stay long enough to amortise these costs.

Australian-Specific Factors

(1) Negative gearing: only available for INVESTMENT properties, not your home. (2) Main residence CGT exemption: massive tax-free wealth when you sell your home. (3) FHB grants and stamp duty concessions: significant in NSW/VIC/QLD/ACT for first homes under threshold. (4) Compulsory super: 12% SG already forces savings, partially offsetting need for forced-savings via mortgage. (5) Rental yield 3-5% vs mortgage rate 6%: many AU markets are cashflow-favourable for renters short-term.

Updated for the 2025-26 financial year (1 July 2025 to 30 June 2026).

All calculations are performed in your browser — your data never leaves your device. Results are for general guidance only and should not be considered professional financial advice.

Built and maintained by Konstantin Iakovlev. Data sourced from the ATO and official Australian government sources.

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