The question whether to buy or rent is perhaps the most basic one there is. It is also one where there is no correct answer. It depends massively on your own personal preferences and situation. It is also something that is very different for those asking the question in Singapore than in most other places in the world, particularly outside of Asia.
The Benefits of Renting
The one area where everyone agrees, is that renting as opposed to buying gives you a whole lot more flexibility, and in more ways than are at first obvious. By renting for a short or mid-range term, you are able to move around the city/island, trying new and different places to live. Then if and when you choose to buy, you are doing so with a knowledge of what area suits you, your needs and your budget. It also means that if you change jobs, or your office moves, it is a lot easier to up sticks yourself and move to a convenient location.
If you would very much like to move out from your family home, the chance of instantly being able to buy somewhere you want, or can afford is unlikely. Renting allows you to do that, get some breathing space while you save for something bigger and better.
As we grow older, and hopefully become more successful, we are able to buy grander places to live, in areas nearer to where we want to be. Renting allows you to upgrade as your circumstances improve. If those circumstances change for the worse, it is also easier to downscale, or even move back into a family home if that is available.
When it comes to the financials, these are not so clear cut, but if you are planning on living somewhere for 5 or less years, usually you would be better off renting. Renting usually begins with 1 or 2 months rent as a deposit, which is a lot more manageable than a S$60,000 downpayment. When you rent you usually will not be liable for such things as maintenance or any electrical, facility or plumbing issues that may arise. Even such things like insurance are a lot cheaper when you rent a property as opposed to own it.
The Benefits of Buying
People who own their own home claim that it gives them piece of mind and a satisfaction that does not come with a rented property (though of course there is the flip side that if things go wrong, your dream home could become an expensive millstone around your neck).
What you lose in flexibility, you gain when it comes to the finances (at least after 5 years). The advantages here play out in different ways. First of all, your mortgage (if you are on a fixed rate one) will be the same every month, so you are able to plan. This amount will also decrease in real terms as your income hopefully improves. When you rent, the monthly rental will likely increase year on year, and also as you upgrade.
When you own your home, you are not just paying for a roof over your head, you are investing, building equity. The money you pay out every month is actually going into something you can hold onto in the future, as opposed someone else’s bank account.
In Singapore, buying a property is the only way you will get your hands on your CPF money that you have been squirrelling away all those years. It is also a way of getting the government to pay for your home, for those who are eligible for HDB grants.
Finally, when you own your home, it is yours to do with what you like. You can knock walls down, paint it whatever colour you want, add or take away features or designs. Depending on your abilities as a decorator/interior designer, we’ll leave it with you to decide whether that is a good or bad thing…