Rent vs Buy Calculator

The real trade-off: renting and investing vs buying

Buying a home in Australia costs far more upfront than most people budget for. Stamp duty, conveyancing, building inspections and Lenders Mortgage Insurance can add $30,000 to $60,000 or more before a single mortgage repayment is made. That's exactly why renting and investing the difference is a legitimate wealth-building strategy, not a consolation prize for people who can't afford to buy. Over short-to-medium holding periods, the maths genuinely can favour it.

The comparison most people make, whether the mortgage repayment is bigger than the rent, misses the real picture. A buyer commits a deposit plus ongoing mortgage repayments, council rates, maintenance and insurance. A renter pays rent but keeps their deposit liquid and invested, and if renting is cheaper month to month, that gap can be invested too.

The number most buyers never think about is the opportunity cost of the deposit. A $180,000 deposit tied up in a property isn't compounding in a diversified share portfolio. Over a decade that gap becomes enormous, a real cost of buying that never shows up on a bank statement. Buying locks up capital but provides leverage and forced savings. Renting keeps capital liquid and investable, but only actually builds wealth if the renter invests the difference rather than spending it.

The true cost of buying in Australia

The upfront costs go well beyond the deposit. Stamp duty is usually the biggest single line item and varies enormously by state, on top of that budget for conveyancing ($1,500 to $2,500), a building and pest inspection ($500 to $800), and Lenders Mortgage Insurance if your deposit is under 20% (on a $900,000 property with a 10% deposit, LMI alone can add $15,000 to $25,000). Our LMI calculator and stamp duty calculator can put real numbers on both for your situation.

Here's how stamp duty for a standard, non-first-home-buyer purchase compares across three price points and the five most populous states (2025 rates):

Standard, non-first-home-buyer rates. First home buyer concessions apply in some states, NSW exempts eligible buyers up to $800,000, VIC up to $600,000. Use the calculator above for your exact figure.

Ongoing ownership costs add up too: council rates ($1,200 to $3,000 a year), strata or body corporate fees ($3,000 to $15,000 a year for apartments), maintenance (a rough rule of thumb is around 1% of the property's value a year), and landlord or building insurance. Selling costs matter as well, agent commission runs 2 to 3% of the sale price plus marketing costs of $5,000 to $15,000. On a $1,000,000 property, round-trip transaction costs can hit $80,000 to $100,000, roughly 8 to 10% of the property's value, and the property has to grow enough just to cover that before any real profit shows up.

The 5 variables that swing the answer

• Property growth rate. The national 5-year compound annual growth rate sits around 6.8% (CoreLogic/Cotality), with a 10-year average closer to 5.7%, but the spread between cities is huge, Perth rose roughly 76% between March 2020 and October 2024, while Melbourne rose only around 9.9% over the same period.
• Rental yield. Lower yield means renting is relatively cheaper. CoreLogic's July 2025 gross yields: Sydney 3.1%, Melbourne 3.3%, Brisbane 3.6%, Adelaide 3.8%, Perth 4.2%.
• Investment return on the renter's portfolio. The ASX 200 has returned roughly 10% p.a. nominal long-run including dividends, though a more conservative modelling assumption of 8-9% is worth using given returns aren't guaranteed.
• Holding period. The single most important variable, since transaction costs are largely fixed regardless of how long you hold. Breakeven is typically 7-10 years.
• Leverage. Buying with a mortgage lets you control a large asset with a fraction of your own capital, which amplifies both gains and losses. Mortgage interest is a non-equity cost, just like rent.

Where Australian markets stand right now

Median dwelling values (CoreLogic, September 2024): Sydney $1,193,000, Adelaide $809,000, Perth $805,000, Brisbane $883,000, Melbourne $779,000. Median weekly rents for houses and units (Domain Rental Report, December 2025): Sydney $800/$750, Brisbane $670/$650, Perth $700/$650, Adelaide $620/$525, Melbourne $580/$580.

Affordability has genuinely deteriorated. ANZ/CoreLogic data (September 2024) puts the national figure at 50.6% of gross household income needed to service a new mortgage, a record high, against 33.0% for median rent, and 10.6 years to save a 20% deposit at a 15% savings rate. Sydney is worst, at 62.1% of income and around 13 years to save a deposit. For the fuller picture on why that's happened and what's actually within your control, see our guide to housing affordability in Australia and our breakdown of how much deposit you actually need.

Worked example: renting and investing vs buying over 10 years

A $900,000 property in Brisbane, two people with $210,000 in starting capital either way. Assumptions: 6% p.a. property growth, a 3.6% rental yield ($670/week, or $2,903/month), a 9% p.a. investment return, a 6.2% p.a. mortgage rate over 30 years (P&I), rent growing at 3% a year, and maintenance, rates and insurance running at roughly 1% of the property's value a year.

Buyer: $180,000 deposit plus roughly $30,000 in stamp duty and conveyancing (QLD) uses the same $210,000. The $720,000 loan costs about $4,410/month. Over 10 years that's roughly $415,000 in interest and $114,000 in principal (about $529,000 in total repayments), plus around $122,000 in maintenance, rates and insurance as the property grows. At 6% p.a. growth, the property is worth around $1,612,000 after 10 years against a remaining loan balance of about $606,000. Sell and pay roughly $45,000 to $50,000 in agent commission and other selling costs, and the buyer is left with around $960,000, a net gain of roughly $750,000 on their original $210,000.

Renter: invests the same $210,000 upfront, then invests whatever gap exists each month between what the buyer is paying (mortgage plus maintenance) and what rent actually costs, starting at $2,903/month and growing with rent. Both the lump sum and the monthly top-ups compound at 9% p.a. That portfolio grows to roughly $901,000 after 10 years.

Net result: buyer around $960,000 versus renter around $901,000, the buyer ahead by roughly $60,000 in this specific 6%-growth, 9%-return, 10-year scenario. That's a much closer race than the raw property value might suggest once transaction costs and the renter's compounding are properly accounted for, and it's genuinely sensitive to the assumptions: nudge property growth down to 4% p.a. and investment returns up to 10% p.a., or shorten the hold to 5 years, and the renter comes out ahead instead. Run your own numbers, including your own city's rent and growth assumptions, in the calculator above.

Figures above are illustrative, rounded, and modelled using this calculator's own methodology (see the disclaimer below for what it does and doesn't account for), rather than a generic rule of thumb. Your actual result depends entirely on the inputs you use.

3 myths worth clearing up

"Rent is dead money." Rent buys real housing. Mortgage interest, rates, maintenance and insurance are also non-equity-building costs, only the principal portion of a mortgage repayment builds equity, and in the early years of a loan that's a small fraction of each payment.

Ignoring the opportunity cost of the deposit. A $180,000 deposit invested at 9% p.a. becomes roughly $426,000 over 10 years. That foregone growth is a real cost of buying, even though it never appears on a mortgage statement.

Ignoring transaction costs. Stamp duty plus agent commission can total 8 to 10% of the property's value round-trip. The property has to grow by that much just to break even on transaction costs alone over a short hold, which is exactly why the holding period matters so much more than most people assume.

So, should you rent or buy?

Buying tends to win with a 10+ year hold, in a high-growth market, where rental yield is low (property is expensive relative to rent), and where your life circumstances are stable. Renting and investing tends to win over a short-to-medium horizon (under 7 years), with a genuinely high-conviction investment alternative and the discipline to actually invest the difference rather than spend it, in high-transaction-cost states like Victoria, or where flexibility to relocate matters more than certainty.

Neither path is universally better, which is exactly what our rentvesting guide also gets into, since renting where you live while buying elsewhere is a genuine third option that borrows a bit from both sides of this comparison. And if you land on renting and investing, our compound interest explainer is a good next read on why starting that investing early matters so much.