Quick answer: Staying 7 years, a 1,500,000 home with 20% down at 5% and 3% yearly price growth costs a net 400,675 to buy, against 643,647 in rent at 7,000 a month rising 3% a year, so buying comes out 242,972 cheaper.
How it's calculated
Net cost of buying = down payment + buying costs + loan payments + yearly ownership costs + the return the upfront cash would have earned invested − what you keep when you sell (sale price after selling costs minus the loan balance still owed).
Net cost of renting = the rent paid over the period, rising each year by the rent growth you enter. The home value grows at the price growth rate; ownership costs (maintenance, service charges, insurance) are a share of the value each year.
The longer you stay, the more buying tends to win, because buying costs are paid once and each payment builds equity. Buying costs in Dubai include the 4% Land Department transfer fee; in Saudi Arabia a 5% real estate transaction tax applies to most sales. See the payment with the mortgage calculator and an affordable rent with the rent calculator.
Worked examples
- 1,500,000 home, 7,000 rent, 7 years (defaults): buy 400,675 vs rent 643,647
- Same, staying only 2 years: buy 185,437 vs rent 170,520
- 7 years with no price growth: buy 728,653 vs rent 643,647
Frequently asked questions
Why is there an investment return in the buying cost?
The down payment and fees could have been invested instead. The return they would have earned is a real cost of buying, called the opportunity cost.
Is the answer certain?
No. It depends on prices, rents and returns you enter for years ahead. Try a few values to see which ones change the answer.
Does it include the Islamic finance profit?
Yes, as the rate. A fixed-rate Murabaha or Ijara home finance has the same payment maths as a mortgage.
How long should I stay for buying to pay off?
It depends on the numbers, but buying costs are paid upfront, so short stays usually favour renting. Try different years to find your break-even point.
Which assumption matters most?
Often home price growth and how long you stay. Change them one at a time, because a small change can flip the answer.
What doesn't the calculation include?
Things without a price, such as the stability of owning or the flexibility of renting. Weigh those alongside the numbers.