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Monday, May 16, 2011


Most of the existing free online BUY vs. RENT calculators are not adjusted for Australian market (like the famous NYT calculator), or they provide just a few available settings and options. I tried to a make calculator that will give people opportunity to enter certain assumptions about inflation, house price growth, IR, returns … for 5 years periods and get some meaningful results. I also tried to include as many variables as useful. There are “BUY NOW vs. RENT” and “BUY NOW vs. BUY in 10 YEARS” comparisons that may be useful under current housing conditions (expected house price stagnation or fall).

Calculator provides few different results: It calculates total wealth after the same amount of money is being "spent" using different options. In addition, it calculates number of years after which “BUY NOW” option is financially better off. Or in other words: How long a person has to live in that particular house to be better off financially? If for any reason (even upgrade), buyer sells the home before, he would be better off by renting all the time.
I also added an option for renters to rent cheaper (smaller) home during first 5 years – this could be useful for young families with no children.

There are two sheets in this file: CALC sheet enables user to enter data and assumptions. It also gives basic results: “wealth after 45 years” and “number of years after BUY NOW option is better off financially”. DETAILS sheet provides all calculations and results for each year and each option.

Here is link for xls file download: BUY vs. RENT Calculator 

You need to have spreadsheet viewer or editor installed on your computer to be able to use this file. People who don’t have spreadsheet viewer or prefer not to download file, may use a link to web based spreadsheet version of calculator. It will open file in Google doc frame. You do not need to have Google account to open and use this calculator.


You are free to share calculator links but please do not distribute calculator as downloaded spreadsheet file because any future fix or modification will not affect downloaded file.

Assumptions: Immediate buyer buys home with current savings; renter saves that money and difference between rent and cost of owning a home. After 10 years, "late buyer" buys the same home (for future price), giving 90% of his savings as deposit. During periods when renter or late buyer spends more on housing, immediate buyer saves the difference. Rent and other costs of owning (strata, council etc. grow with CPI). Calculator assumes that renter moves once in 3 years. FHBG is assumed to be nominally the same in 10 years. If you have questions about other assumptions not mentioned please contact me and I will provide you requested assumptions.

Calculator uses assumptions entered by user, default assumptions or calculator results should not be taken as investment advice. I don't have time to fully test it so there might be some errors. I would appreciate any help in finding errors. Please post comment on the blog or contact me on if you find any significant error that needs to be fixed.


  1. Problem with mortgage lenght was fixed. You may enter mortgage between 5 and 30 years

  2. Buying would be a better idea as you can already own it at all. You have the right to use it anytime you want and whether how it will be beneficial for you at all cost. minnesota real estate ce

  3. You need to plan on owning your home for a very long time. Do not buy a home and obligate yourself to paying on a home if you do not plan to stay there too long.

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