Short answer
A fair comparison looks beyond housing payments to ending net wealth. Buyers own property value less debt and selling cost. Renters can invest the unused down payment and monthly cost differences.
Important variables
- Transaction cost and holding period
- Mortgage rate and amortisation
- Rent and appreciation
- Maintenance, selling cost and investment return
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Worked example
At a €480,000 purchase price and 10% acquisition cost, €48,000 leaves immediately. This start disadvantage spreads over a long holding period but dominates an early sale.
Break-even: What changes the result?
Appreciation and holding period are often the largest levers. The appreciation crossover shows the annual growth needed for equal ending wealth.
Common mistakes
- Comparing mortgage payment with rent
- Treating principal as lost cost
- Leaving out buying and selling cost
- Not investing the renter’s difference
Terms in this guide
Net rentRent excluding usage-related service costs; comparisons must use a consistent boundary.Rent increaseAssumed annual change in rent in the scenario.Rental yieldRental income relative to property value; gross and net versions must be distinguished.Rent escalation rateAnnual nominal change in rent in a scenario.
Sources & assumptions
- RATIOXA — Methodology and formulas (2026-08-17)
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