Question 1

Is it cheaper to rent or buy in Australia?

Accepted Answer

It depends on property prices, interest rates, rental costs, and how long you plan to stay. In expensive cities like Sydney and Melbourne, renting and investing the difference can build more wealth in the short term (under 5-7 years). Over longer periods, buying typically wins due to property growth and forced savings through mortgage repayments.

Question 2

What costs does this calculator include?

Accepted Answer

The calculator includes stamp duty (calculated for your state), mortgage repayments, annual holding costs (council rates, insurance, maintenance, strata), and rent increases. For the renting scenario, it assumes your deposit and monthly savings are invested at the specified return rate.

Question 3

How long do I need to own a property before buying is better than renting?

Accepted Answer

The breakeven point typically falls between 5-10 years, depending on your location and market conditions. In high-growth areas with lower rental yields, buying breaks even sooner. The calculator shows your specific breakeven year based on your inputs.

Question 4

Does the calculator account for stamp duty concessions?

Accepted Answer

Yes. If you select 'First Home Buyer', the calculator applies your state's first home buyer stamp duty concessions automatically. This can significantly reduce upfront costs and bring the breakeven point forward.

Question 5

What investment return rate should I use?

Accepted Answer

A diversified portfolio of Australian and international shares has historically returned 7-10% per year over the long term. A more conservative estimate using balanced funds would be 5-7%. The default of 7% represents a reasonable long-term average after fees.

Question 6

What holding costs should I include?

Accepted Answer

Include council rates ($1,500-$3,000/yr), building insurance ($1,000-$2,000/yr), maintenance ($2,000-$5,000/yr), and strata fees if applicable ($2,000-$8,000/yr). The default of $6,000 per year is a reasonable estimate for a house without strata.

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