🏘️ Rent vs Buy Calculator

The 2025 Australian property market shows significant variations across major cities. Sydney's median house price sits at approximately $1,200,000, Melbourne at $900,000, Brisbane at $750,000, and Adelaide at $650,000. Rental yields vary considerably: Sydney 2.8%, Melbourne 3.2%, Brisbane 4.5%, and Perth 5.0%.

The Reserve Bank of Australia's (RBA) monetary policy directly impacts the property market. As of 2025, the cash rate stands at 4.35%, resulting in average mortgage rates of 6.0-6.5%. Rising interest rates have increased repayment burdens, influencing purchase decisions for many households. First Home Buyers benefit from stamp duty exemptions and deposit assistance, lowering entry barriers.

Stamp Duty: The largest upfront cost, with an $800,000 property incurring approximately $31,000 in NSW, $43,000 in VIC, and $30,000 in QLD. First home buyers may receive exemptions below certain price thresholds—NSW offers full exemption for first homes under $800,000.

Loan Costs: Lenders Mortgage Insurance (LMI) is required when the deposit is below 20%, adding $20,000-25,000 for a $700,000 loan with 15% deposit. Loan establishment fees ($600-1,200), legal costs ($1,500-3,000), and building inspections ($400-800) add to initial expenses.

Ongoing Maintenance: Council rates ($1,200-2,500 annually), water rates ($800-1,500), home insurance ($1,000-2,000), Strata fees for apartments ($1,000-3,000 quarterly), and annual maintenance (1-2% of property value, approximately $8,000-16,000).

Flexibility and Liquidity: Renting requires minimal upfront capital (bond 4 weeks' rent + advance 2-4 weeks), enabling flexible response to job changes or lifestyle shifts. In Sydney, renting at $3,000/month requires $18,000-21,000 initially, versus $290,000 ($240,000 deposit + $50,000 stamp duty/costs) for buying.

Opportunity Cost: Investing the $240,000 deposit in shares/ETFs at 7% annual return generates $16,800 yearly, growing to approximately $480,000 after 10 years through compounding. This must be compared against property capital gains. At 3% annual growth, a $1,200,000 property becomes $1,612,000, but real returns diminish when considering interest, maintenance, and opportunity costs.

No Maintenance Burden: Tenants avoid costs like boiler replacement ($2,000-5,000), roof repairs ($5,000-15,000), and air conditioner replacement ($3,000-8,000), saving an average of $3,000-8,000 annually in unexpected maintenance.

Wealth Building: Mortgage principal repayments increase equity. On a $960,000 loan (80% LVR) over 30 years at 6.2%, initial monthly repayments of $5,900 include approximately $1,000 in principal. After 5 years, around $70,000 in additional equity accrues as the principal portion increases.

Capital Gains: Historically, Australian major city property prices have doubled every 7-10 years (long-term average 7-10% annual growth). A $1,200,000 property appreciating at 5% annually becomes approximately $1,950,000 after 10 years, yielding $750,000 in capital gains. Principal Place of Residence is exempt from Capital Gains Tax, allowing tax-free profits.

Inflation Hedge: Fixed-rate loans maintain constant monthly repayments while incomes rise with inflation. Initially consuming 40% of income, after 10 years with 30% income growth, real burden drops below 30%. Conversely, rents increase 3-4% annually, creating ongoing cost escalation.

Scenario 1 - Sydney $1,200,000 Property: $240,000 deposit (20%), $960,000 loan (6.2%, 30 years), monthly repayment $5,900. Stamp duty $50,000, other initial costs $8,000. Monthly maintenance $1,200. Comparable rent $3,500/month. Assuming 4% annual property appreciation, 3% rental growth, and 7% investment return, buying becomes advantageous after approximately 7-8 years.

Scenario 2 - Brisbane $750,000 Property: $150,000 deposit, $600,000 loan, monthly repayment $3,700. Stamp duty $26,000, initial costs $6,000. Monthly maintenance $900. Comparable rent $2,300/month. Higher rental yields and lower entry costs achieve break-even after approximately 5-6 years.

Key Factors: For stays under 5 years, renting tends to be advantageous; over 7 years, buying becomes favorable. However, outcomes vary significantly based on property appreciation rates, interest rate changes, and individual investment capabilities.

First Home Owner Grant (FHOG): State governments provide $10,000-15,000 for new home purchases (varies by state). Victoria offers $10,000, NSW applies only to new homes, QLD provides $15,000 in specific regions.

Stamp Duty Exemptions: NSW offers full exemption for first homes under $800,000, VIC provides full exemption under $600,000 with partial relief up to $750,000, QLD offers full exemption under $550,000, potentially saving $30,000-50,000.

Home Guarantee Scheme: Federal program enabling 5% deposit purchases without LMI. For a $700,000 property, only $35,000 deposit required, saving approximately $20,000 in LMI. Annual quotas are limited, making early application crucial.

Stability: Home ownership provides long-term housing security without rent increases or eviction concerns. Particularly important for families or those seeking specific school catchments, supporting educational continuity and community building.

Renovation Freedom: Owners can modify, extend, and decorate freely. While tenants cannot hammer nails or paint walls without landlord permission, owners can undertake $50,000-100,000 kitchen/bathroom renovations, enhancing both lifestyle satisfaction and property value.

Rental Mobility: Renting enables flexible response to job changes, overseas assignments, or relationship shifts. Post-lease mobility suits young professionals and contract workers. Property sales average 4-6 months with agent fees (1.5-3%) and marketing costs ($5,000-15,000).

Leverage Effect: Property enables controlling large assets with small capital. $240,000 deposit controlling $1,200,000 asset (5x leverage) yields $60,000 gain (25% return on investment) with 5% appreciation, versus $16,800 (7% return) from stock investment over the same period without leverage.

Diversification vs Concentration: Investing $240,000 in property concentrates in a single asset, risking value decline from local economic downturn, rising crime, or infrastructure deterioration. ETF/stock portfolios distribute across hundreds of companies, reducing risk with high liquidity for immediate cash conversion.

Investment Property Strategy: Some rent their primary residence while living affordably elsewhere, owning tax-advantaged investment properties. Negative gearing deducts loan interest and maintenance from taxable income, targeting long-term capital gains. However, this requires high income and tax knowledge.

Consider Buying When: (1) Planning to stay in the same area for 7+ years, (2) Stable income with 20% deposit, (3) Emergency fund covering 6-12 months separately, (4) Mortgage repayments under 30% of total income, (5) Positive regional property market outlook, (6) First Home Buyer benefit eligible, (7) Family planning in place.

Consider Renting When: (1) Possible relocation within 5 years, (2) Early career stage with income volatility, (3) Insufficient deposit or confident in investment returns, (4) Unwilling to bear maintenance burden, (5) Property market overheating concerns, (6) Current location rent cheaper than mortgage, (7) Valuing lifestyle flexibility.

Professional Advice: Mortgage brokers optimize loan structures, financial planners develop comprehensive financial plans, real estate agents provide market analysis, and accountants assess tax implications. Initial consultation costs ($200-500) can save tens of thousands long-term.

The 2025 Australian property market anticipates moderate growth with interest rate stabilization and population increase. Sydney and Melbourne forecast 3-4% annual growth, Brisbane and Perth 5-7%. Immigration growth and housing supply shortage maintain tight rental markets with continued rent increases.

Potential RBA rate cuts (expected late 2025) could reduce borrowing costs, making buying more attractive. A drop from 6.2% to 5.5% would decrease monthly repayments on a $960,000 loan from $5,900 to $5,450, saving approximately $450.

Final Conclusion: The Australian rent vs buy decision transcends financial calculations, requiring consideration of personal lifestyle, career goals, family plans, and risk tolerance. Use this calculator to compare specific numbers, adopting a long-term perspective for the right choice. Seek professional advice when needed for wiser decision-making.