Buy vs rent and invest the difference.
Verdict
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Buy: net wealth
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Rent + invest: net wealth
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What this tool is really comparing
Rent versus buy is not a question of whether you throw money away on rent. It is a question of which path leaves you wealthier after a set number of years. This calculator runs both paths side by side. On the buy side it grows your home at your chosen rate and pays the mortgage down month by month, so your wealth is the home value at the horizon minus the loan still owing. On the rent side it invests your deposit plus costs, then adds any month where the mortgage repayment would have been higher than the rent, letting that surplus compound at your investment return. Whichever ends with the bigger balance wins.
The levers that swing the result
Four inputs move the needle hardest. Property growth and your investment return are the obvious pair, and small changes compound dramatically over a decade. The third is the gap between the mortgage repayment and the rent, because the renter only invests the surplus when renting is genuinely cheaper month to month. The fourth is your horizon. Buying carries heavy upfront costs, chiefly stamp duty, which varies by state and can run past $40,000 on an $800,000 purchase in some jurisdictions. Those costs are baked into your deposit and costs figure, and they take years of growth to recover, which is why short horizons tend to favour renting.
An $800,000 home over ten years
Run the default scenario: an $800,000 home, $180,000 of deposit and costs, a 6 percent mortgage over 30 years, rent starting at $650 a week, property growth of 5 percent, investment returns of 7 percent, and a ten year horizon. The monthly repayment works out to $3,717.
| Path | Net wealth at year 10 |
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Buying comes out ahead by around $354,874 here, largely because $800,000 of property growing at 5 percent is a much bigger base than the $180,000 deposit the renter invests, even at the higher 7 percent return. The gap is the leverage effect of a mortgage.
Try lowering property growth to 3 percent and the verdict can flip, because the renter's 7 percent return on invested cash starts to overhaul a slowly appreciating home. That sensitivity is the real lesson of this tool. The answer is never universal, it hinges on the two growth rates you believe in and how long you stay. Run a pessimistic property scenario and an optimistic one, and if buying still wins in both, you can commit with more confidence.
Where the model simplifies, and a tax note
No ten year model is perfect, so judge the output as a guide rather than a verdict. The buy path here does not subtract ongoing ownership costs such as council rates, strata, insurance, and maintenance, which a real owner pays and a renter does not. The rent path assumes rent rises about 4 percent a year and that the renter actually invests the surplus rather than spending it, which is the hardest assumption to honour in real life. On tax, your main residence is exempt from capital gains tax when you sell, a genuine advantage for the buyer, while the renter's investment gains face CGT, softened by the 50 percent discount on assets held longer than twelve months. The honest tip: if you are likely to move within five years, lean toward renting, because transaction costs rarely pay for themselves that quickly.
Frequently asked questions
Should I include stamp duty in the deposit and costs box?
Yes. The deposit and costs field is meant to capture every dollar you hand over to buy, which means your cash deposit plus stamp duty, conveyancing, building inspection, and loan establishment fees. Lumping them together is what lets the model fairly invest the same total on the rent side.
Why does a higher investment return not always make renting win?
Because the buyer is leveraged. A mortgage lets you control an $800,000 asset with a fraction of that in cash, so even modest property growth applies to a far larger base than the renter's invested deposit. The renter needs a meaningfully higher return, a long horizon, or low property growth to overtake that leverage.