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Should You Rent or Buy A Property in Singapore?

When it comes to burning questions in the field of real estate in Singapore, this question is probably one of the more common ones: Should you rent or buy a property in Singapore? There is unfortunately not a straight-cut answer to this question. Each individual would have different needs and priorities that should be taken into consideration.

Thus, today, we are not here to dictate a choice for you! Instead, we will walk you through four important considerations you should ponder over to help you make a more informed decision. Furthermore, we’ll highlight how renting and buying a property in Singapore fares on each of these 4 considerations.  Read on!

Considerations to Factor into Your Decision on Whether to Rent or Buy a Property in Singapore

  1. What is Your Current Financial Ability?

Unsurprisingly, the key consideration you definitely have to take note of would be your current financial ability. It is no secret that buying a house is definitely more expensive than renting. It is important to consult a reputable and reliable real estate agent to map out your financial plans. This is to help you reach a well-informed decision.

If the cost is a major concern for you, renting a house may be a better option, as it is without a doubt cheaper than purchasing a property. Just by comparing the initial payment (e.g. deposit for renting and down payment for purchasing), renting a house is already much cheaper than purchasing a property. 

That said, did you know that if you purchase an HDB unit, you’re able to make use of various government grants, especially if you are first-time buyer? These grants can help alleviate a bit of the financial cost of purchasing a property in Singapore. You can also use your CPF money to make home loan repayments when you buy property. However, if you opt to rent a property, you are unable to utilise the CPF money. Thus, if you have a huge chunk of funds sitting idle in your CPF account, you may consider accessing them to pay for your home purchase.

  1. What is Your Current Flexibility/Commitment Level?

Are you intending to stay long-term? Or are you looking to shift to different areas in Singapore sometime in the near future? Buying a house entails a huge commitment – if you’re unsure if you’d want to live in that particular area for a considerable amount of time, it may be wise to think twice before purchasing the house.

On the other hand, renting a property gives you more flexibility.

For example, if due to a shift in workplace, your current rental unit is now located inconveniently far, you can simply look for another location that is better suited to your needs once your lease is up. Zero commitment to a property means more flexibility to move around whenever your situation calls for it.

However, if you’re looking to settle down and are sure of committing to something long-term, then purchasing a property may be a good choice. Of course, you’d then also have to carefully consider the pros and cons of the particular location you are thinking of.

  1. What Level of Maintenance Obligations are You Comfortable With?

A house has to be maintained. For example, the paint may be flaking, or perhaps the pipes may be leaking. This not only takes up precious time and energy to fix the problem, but also requires money. Typically, as a house owner, maintenance obligations are your responsibilities. On the other hand, depending on your contract, for rental units, sometimes these duties are the job of the landlord. Hence, if you’re juggling a hectic schedule and have no time to attend to these home repair works, renting your home may be a good option since all these works may be carried out by your landlord.

  1. How Important Are Capital Gains to You?

Think about what you wish to achieve with the property. Are you looking for some financial gain? Do you view the house as an asset, beyond being just a place to stay? If your answers to the two questions were ‘yes’, then buying a house would be a much better option.

Indeed, in Singapore, owned property is a key asset. Thanks to inflation (average rate of 2.7%), your property value is typically projected to double in 25 years! Thus, owning your property is a great way to earn and grow capital gains.

On the other hand, when you rent a flat, all the rental money goes into the pockets of the landlord. You don’t stand to benefit from the increase in value of the property over time. Thus, if you’re looking for long term capital gains, purchasing a house triumphs over renting a house.That said, although the capital gains of owning a property are astounding, you have to juggle this pro against the fact that buying a house is definitely much more costly than renting. If you’re really struggling financially right now, you might want to consult your real estate agent on whether purchasing a house right now is really the best decision to make.

Concluding Thoughts

It is important to note that these considerations are not meant to be exhaustive. Depending on your own personal circumstances, you may have other extra considerations that you need to take into account. For example, some people place a lot of value on turning their house into a personal sanctuary. This could include revamping the interiors to add a touch of your own identity. If you’ve purchased the property, you’re definitely more than welcome to give your house a makeover to your heart’s desires. However, unfortunately, if you’re a tenant in a rental property, you’ll have to restrict these creative tendencies as the property ultimately still belongs to the landlord.

Furthermore, some points may also not be as relevant to you. Thus, the onus is on you to take the time to prioritise and weigh these considerations based on how they matter to you. All the best!

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