Rent vs Buy

I have long been watching the property and real estate market in Australia (mostly with dismay). It seemed to me, as a rational person, that the market was not priced at a level that could be sustained by the current wages of Australians. I read extensively (trying to avoid any articles written by people with vested interests - on both sides) and came across good websites such Bubblepedia that had discussions and analysis by people seemingly of a like mind. 

However, being a scientist I was not willing to stop there, so I spent some time creating a (basic) financial model to analyse the difference over a standard 30 year loan period that buying a house would make versus renting and investing the difference. Feel free to play with the financial model I created below and please email me if you have any questions / suggestions.   

How to use the calculator:
  • User only needs to change green cells in "Inputs" tab
  • Value of first home purchased is determined as a function of the deposit and the selected LVR (80% required to avoid mortgage insurance)
  • Investment option invests the initial deposit and the difference between the mortgage and rent
  • Borrowing to invest can be controlled by the "LVR on Investment" option.