Rent or buy: what growth would this home need?

A break-even question, not a price forecast

Illustration: $1,000,000 NSW home, 20% deposit, 6.1% loan over 30 years, $10,550 annual ownership costs, $3,600 buying-cost allowances and rent of $750 a week for a similar home. Hold for 10 years; assume 7% total share returns, 3% annual rent and cost inflation, a 3% share-income component, and 2.5% selling costs.

With these inputs, the home needs about 3.9% growth a year for the two paths to finish level.

Calculated using RentVest’s engine and tax assumptions as at 16 October 2026, including the scenario’s 37% marginal rate plus selected Medicare levy. This is a hypothetical return assumption, not an expected return. Buying can lose; the break-even changes when you change costs, tax, investment discipline or the horizon. Your live result may differ as rules, defaults and the assumed purchase date change.

Make both sides comparable

• The buyer uses deposit, duty and buying costs; the renter starts by investing that same cash.
• Each month, whichever path costs less invests the specified share of the difference. Principal repayments build equity but still use cash.
• Compare what is left after the selected period, including selling costs, outstanding debt and the modelled tax on investments.
• Use rent for a comparable home and realistic holding costs. Avoid counting building insurance twice when strata already covers it.

Tax modelling is simplified and assumes the selected residence and investor settings apply. Main-residence exemptions and investment tax depend on circumstances. Check the live assumptions and official guidance rather than treat this as an individual tax assessment.

Try flat prices, a fall and higher rates

In RentVest, set growth to 0%, then test an early 10% fall and a 1 percentage point rate rise. Also reduce the share of the monthly difference invested if you would spend some of it. A result that depends on one optimistic assumption deserves a closer look.

The home mode compares buying to live in with renting and investing in shares. Investment mode compares an investment property with shares. Neither mode is a full comparison of buying a home to live in versus renting elsewhere while owning a different investment property.

Use the share control to keep the inputs with the result. The comparison does not tell you whether housing security, flexibility or a particular location matters more to you.

Sources and assumptions

• ASIC Moneysmart: purchase and ownership costs
• Moneysmart: repayments and rate sensitivity
• ATO: capital gains tax guidance
• NSW duty calculation and the cash needed to buy
• RentVest: editable assumptions, weekly budget and detailed results

The example does not model your personal income, future loan approval, moving costs, all tax exceptions or a guaranteed investment return.