Rent vs Buy Calculator Australia 2025

Compare the total wealth outcome of buying a home versus renting and investing the difference over 5-30 years. Includes state-specific stamp duty, mortgage costs, and investment portfolio projection.

Property

For stamp duty calculation

Ownership Costs

$0 for house

Renting
Assumptions

Long-run median ~5%

CPI-aligned ~3%

Renter's portfolio return (e.g. index fund ~7%)

Enter a property price and weekly rent to compare buying vs renting.

How the Comparison Works

This calculator projects two parallel financial paths over your chosen holding period:

  • Buying path: You pay a deposit, stamp duty, and legal fees upfront, then make monthly mortgage repayments plus ongoing ownership costs. Your wealth is measured as home equity (property value minus remaining loan balance).
  • Renting path: You invest the upfront amount you would have spent buying. Each year, if buying costs more than renting, you invest that difference too. Your wealth is the total investment portfolio value.

The calculator finds the break-even year where buying wealth overtakes renting wealth, and shows the final wealth difference at the end of the holding period.

When Does Buying Win?

Buying tends to outperform renting when:

  • Long holding period: The longer you hold, the more time for property growth to compound and for the mortgage to be paid down
  • Strong property growth: Higher growth rates amplify the leveraged returns of buying
  • Low interest rates: Lower rates mean smaller mortgage repayments and more of each payment goes to principal
  • High rent costs: When rent is expensive, the cost gap between buying and renting narrows

Renting tends to win for shorter holding periods, in high-interest environments, and when investment returns significantly exceed property growth.

Frequently Asked Questions

Is it cheaper to rent or buy in Australia in 2025?
It depends on your city, property price, interest rates, and how long you plan to stay. In most capital cities, monthly mortgage repayments exceed equivalent rent in the early years. However, buying builds equity through loan repayment and property growth, while renting frees up capital to invest elsewhere. Use the calculator above with your specific numbers.
How does the calculator compare buying and renting?
It projects two paths year-by-year. The buying path tracks your home equity (property value minus loan balance). The renting path assumes you invest the money you would have spent on a deposit, stamp duty, and legal fees, plus any annual savings from cheaper rent. The investment portfolio grows at the return rate you specify.
What costs are included in the buying path?
Upfront: deposit, stamp duty (calculated by state), and $2,500 in legal fees. Ongoing: mortgage repayments (principal & interest), council rates, home insurance, maintenance, and strata fees. These ongoing costs are assumed to grow with inflation (at the rent growth rate).
What is the break-even year?
The break-even year is when buying wealth (home equity) first exceeds renting wealth (investment portfolio). Before this point, you would have been better off financially renting and investing. After this point, the leveraged property gains outpace the investment returns.
Does stamp duty make a big difference?
Yes. Stamp duty is a major upfront cost that the renter avoids and can invest instead. In NSW, stamp duty on an $800,000 property is over $30,000. This amount, invested at 7% for 10 years, grows to over $59,000. Stamp duty alone can delay the break-even point by 2-4 years.
What investment return should I use for the renting path?
A diversified Australian index fund (e.g. ASX 200) has returned roughly 7-9% per year over the long term including dividends. The default 7% is a conservative estimate after fees. Adjust higher for growth-oriented portfolios or lower for conservative allocations.
Does this calculator include capital gains tax?
No. Your primary residence is CGT-exempt in Australia, so the buying path has no CGT. The renting path's investment portfolio would incur CGT on sale, but this varies greatly depending on your income and holding period. The comparison is pre-CGT on the investment side, which slightly favours renting.
What property growth rate should I use?
Australian residential property has historically grown at about 5-7% per year over the long term, though this varies significantly by city and suburb. CoreLogic data shows the national median growth rate around 5.5% over the past 30 years. Use 5% as a conservative baseline.

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Tax Accuracy & Sources

Reviewed: March 2026 · Tax year: 2025-26

This calculator uses current stamp duty rates by state. Property growth, rent growth, and investment returns are assumptions — actual results will vary. Does not account for capital gains tax on the investment portfolio, rental income tax implications, or changes in interest rates over the holding period.

Uses 2025 ATO rates.