Rent vs Buy Calculator
Compare buying a home with renting and investing the difference, and see when buying comes out ahead.
Buying
Renting
Net wealth over time
The renter invests the cash a buyer would spend on the deposit, stamp duty and buying costs. Each year, whoever has lower housing costs invests the difference. The buyer's wealth is the home's value after selling costs, less the loan, plus any investments. Ignores tax on investment returns (a home you live in is usually free of capital gains tax), and assumes rates stay the same.
Printed from ClearCalc (clearcalc.com.au/rent-vs-buy-calculator/). Estimates only, not financial advice.
Is it better to rent or buy?
There's no single answer. Buying builds equity and protects you from rent rises, but it comes with big upfront costs (stamp duty, legal fees) and ongoing costs (council rates, insurance, maintenance). Renting keeps your cash free to invest. This calculator compares the two paths fairly by assuming the renter invests the money a buyer would have spent.
An example
Take an $800,000 home with a 20% deposit, a 6.5% loan over 30 years and about $30,000 stamp duty (roughly what an owner-occupier pays in NSW). The loan repayment is about $4,045 a month. Compare that with renting a similar home for $650 a week, rising 3.5% a year, while investing the $193,000 upfront cash at 7%.
With 5% a year property growth and owner costs of 1.5% of the home's value, renting comes out ahead for the first eight years. Buying breaks even in year nine, and after ten years the buyer is about $12,000 ahead. Change the growth rate by a percent or two and the answer can flip, which shows how much depends on the assumptions.
What makes the biggest difference
- How long you'll stay. Stamp duty and selling costs are paid once, so buying usually only pays off if you stay for many years.
- Property growth vs investment returns. If homes grow faster than your investments would, buying wins sooner.
- Rent compared with the price. Where rents are low relative to prices, renting and investing is harder to beat.
- Discipline. Renting only wins if you actually invest the difference. A mortgage is a form of forced saving.
Costs people forget
Owners pay council and water rates, building insurance, strata fees for units, and maintenance, often 1% to 2% of the value each year. Buyers with less than a 20% deposit usually pay lenders mortgage insurance. Use the stamp duty calculator for your state and the home loan calculator to check repayments.
Not just about money
Owning gives you security and freedom to renovate or keep pets. Renting gives you flexibility to move for work or family and no surprise repair bills. Treat the result as one input to your decision, not the answer.
Estimates only, based on the growth and return rates you enter, which won't be steady in real life. Tax on investment earnings isn't included. If the renter's investments are taxed, buying looks a little better. Consider getting advice from a licensed financial adviser.
Frequently asked questions
How long do you need to stay for buying to be worth it?
Often seven to ten years or more, because stamp duty, buying costs and selling costs take time to recover. With the example figures here, buying breaks even in year nine.
What should I enter for property growth?
Australian home values have grown by roughly 5% to 7% a year over the long run, but growth varies a lot by city and period, and prices can fall. Try a few rates to see how sensitive the answer is.
Why does the renter invest the deposit?
To compare fairly. A buyer turns their savings into a deposit and stamp duty, so the renter is assumed to invest the same amount, plus any monthly saving from lower housing costs.
Does this include capital gains tax?
No. A home you live in is usually exempt from capital gains tax, while investments are not, so the renter's result may be a little high. See the CGT calculator for more.
Official sources used for this calculator include: Moneysmart – Personal loans, Moneysmart – Credit cards, Moneysmart – Saving. See how we calculate.
Reviewed by the ClearCalc team. Last reviewed October 2026. This calculator gives an estimate for general information only. Check important figures with the relevant government agency or a licensed professional.