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SOUTHERN ALPHA

Property · Long-term

Rent vs buy calculator (Australia)

Compare the 10-year net wealth of buying a home with a mortgage vs renting and investing your deposit. Includes stamp duty, maintenance and the opportunity cost of your deposit.

Net wealth buying (yr 10)
$757,006
Net wealth renting + investing (yr 10)
$821,231
Difference
-$64,225
Renting ahead
Break-even year
Not within horizon
Monthly mortgage repayment
$4,410

Net wealth over time

Related calculators

Get a precise upfront cost with our stamp duty calculator, model your repayments with the mortgage repayment calculator, or see how the invested deposit grows with compound interest.

Frequently asked questions

Is it cheaper to rent or buy in Australia?

In the short term renting is almost always cheaper because you avoid stamp duty, mortgage interest and maintenance. Over 7–10+ years, buying typically wins if property growth exceeds 3–4% per year and you stay put — but it depends heavily on price, rent, and what you'd otherwise invest.

What's a fair assumption for property growth?

Long-run Australian capital-city growth has been roughly 5–6% per year nominal, but the last decade was higher. Many planners model 3–4% real (after inflation) to stay conservative.

Should I include the deposit's opportunity cost?

Yes — this calculator does. If you rented, that deposit could be invested. We compound it at the return you set, alongside the monthly difference between rent and the cost of owning.

Does this include stamp duty and selling costs?

Yes. Stamp duty is treated as an upfront cost when buying, and a 2.5% agent + marketing cost is subtracted from the sale price at the end of the horizon.

How long do I need to own to break even?

Most analyses put the break-even between 5 and 10 years, depending on price growth, your mortgage rate, and the rent you'd otherwise pay. The chart below shows where the two lines cross for your inputs.

Renting vs buying in Australia — the honest comparison

The 'rent money is dead money' line ignores that interest, stamp duty, maintenance and selling costs are also dead money. The real question is whether your home's capital growth plus the forced-saving of principal repayments beats what you'd earn investing the deposit and the cost difference.

What the comparison actually measures

Net wealth in year N if you sold the house today (price growth minus loan balance minus 2.5% selling costs), versus your invested portfolio (deposit + stamp duty + monthly difference between rent and ownership cost, all compounded at your expected investment return). Both lines are after-tax wealth you could actually access.

Why buying often wins after 7–10 years

Three reasons: forced principal repayments (a saving plan you can't easily quit), leverage on capital growth (you control a $900k asset with a $180k deposit), and exemption of the main residence from CGT. Renting's main edge is optionality — but optionality has a cost only the long-term renter realises.

The renter's case

  • No stamp duty — that's typically $30–$70k you can invest immediately.
  • No maintenance, rates, or strata. The landlord covers the headaches.
  • Geographic flexibility — chase higher-income jobs without selling costs.
  • Diversification — your wealth isn't 80% concentrated in one suburb.

What this model doesn't capture

Negative gearing if you're treating it as an investment, insurance, body corporate fees, rates, and the personal value of stability. It also assumes you actually invest the difference between rent and mortgage — most renters don't, which is why owners typically end up wealthier in practice even when the maths is closer than it looks.

Assumptions

Ignores income tax (no negative gearing modelling), insurance, body corporate fees, and the personal value of housing security. Selling costs of 2.5% are deducted from the sale price each year so the "wealth if I sold today" line is honest.