To buy or to rent, that is the lifelong
question when it comes to settling down with a residential property. Though one
with conventional perception favour of owning a residential unit to nestled
down, that’s if your affordability is not an issue nor worries. However, if
your financial capability is not on the sunny side, perhaps renting would be
the way to go while saving up for a unit in future. In Singapore, married
Singaporeans and singles over 35 years old are given grants to buy a HDB unit.
Meanwhile, renting a one bedroom condominiumin city fringe’s Queenstown is easily at $2,500 per month. Over the few
years with the implementation of the cooling measure has directly affecting the
property market price, it has also affect the rental market too. The rental price
has been steadily falling, good news for renters, does this means that renting
has more pros than buying? Or vice versa?
Renting vs Buying: The Pros and cons
1. Upfront or initial payment
Regardless of buying or renting, both
options will need to pay upfront or initial payment before getting the keys.
Well, the only difference when it comes to the initialpayment would be the amount. In Singapore, to buy a house, you will need to
pay an amount of 20-30% downpayment for both private and government housing.
Even before the 20-30% downpayment, you’re also required to pay the booking
fee. One may say that there are grants available from Singapore Housing Board
Development but you’re still required to pay the downpayment upfront. On the
other hand, to rent a residential unit, you are required to put down a two
months rental – one for the advance rental and one for the deposit.
For instance, a 3-bedroom unit condominium
situated in Queenstown is priced at $2,000,000 and the rental is at $2,500, as
for two months rental will cost at $5,000. If you intend to purchase the same
property, the required amount for downpayment is approximate $40,000 to
$60,000. Looking at the rental amount, this sounds like a relieve for those who
is still saving to build their wealth, lighter financial commitment.
Winner: Renting
2. Maintenance costs commitment
As you enjoy your property ownership while
paying off your mortgages, there’s something called maintenance fees, to
maintain your condominium’s facilities like gym, swimming pool and others.
Meanwhile, as a tenant, your monthly rental that you have been paying is not
your property, but the maintenance fees is not for your to bear.
How about if there’s ceiling leakage, moldy ceiling and walls,
bursting pipe and others? These are pretty common encounters when you rent an
older version of HDB (in matured estates). The biggest question is should these
costs and fees bear by tenant or landlord? The answer to this is usually bear
by landlord as it is landlord’s responsibility to ensure the unit is in good
shape for the tenant to continue renting, need us to say more?
Winner: Renting
3. Income generator
While a tenant has lighter financial
commitments compared to landlord who has a tied commitment with their mortgage.
But don’t forget that the rental that the tenant has been paying to cover the
landlord’s monthly mortgage loan. Property owner that rented out their property
is generating a passive income, it is even better if the mortgages loan is paid
off and the rental fee is served as your extra cash.
Besides the monthly income generator,
you’re also entitled to earn capital gain from reselling your property, it
applies to both HDB and condominium. With the yearly inflation, property is
known for hedging inflation and the yearly increment could appreciate your
home’s price. Let’s say with an average of inflation rate at 2.7%, your condominium
in Queenstown value would double in maybe 25 years (compounded). In another word,
that Queenstown’s condominium valued at $1million will probably worth at about
$2million in 25 years (if inflation rate increase steadily). Don’t you get
excited looking at the capital gain figures?
Winner: Buying
4. Proud ownership
Owning a property shows that you are
adulting, in a good way. Many deemed that being tenant has the privilege to
move around exploring neighbourhoods
around especially hipster or cool area like Marine Parade, Queenstown or Tiong Bahru
or even different condominiums or HDB layouts to try on. But, moving around too
much doesn’t seems like a long-term solution to settle down especially a
budding family or newly married couple.
That’s when the thought of buying a
property in Singapore is an achievement to be proud of. Being able to finally
afford a condominium or HDB unit to settle down is enjoying your freedom in
your dream house. A peace of mind for stability in residency, you won’t have to
countdown the number of days of your tenure, don’t have to be feeling
restricted in decorating your home and others. The verdict?
Winner: Buying
In fairness, there’s no definitive answers
to whether renting or buying a property is right. There are factors that will
affect your decision making such as financial capabilities, commitments or
lifestyle. As long as your dream house is realizing, the rest of the factors
does not matter anymore.
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