A lot of people think that it is always preferable to be buying property instead of renting for a long period, since the monthly rent that the residents will pay maybe equivalent to a mortgage loan servicing. In country like Singapore, this is yet more obvious wherein home-proprietorship is taken as an authoritative.

Teaser Pic: Cartoon House

Nevertheless, with the vast rise in property prices over the last decade, there’s been a numerous talk about how too expensive properties are. Whereas the property cooling procedures that are put in place since year 2013 have helped to regularise property prices, rental price has fall down at a much quicker rate as in comparison to property prices.

As stated by data from the Urban Redevelopment Authority (URA), the prices of non-landed private property fell 2.6 percent in 2016, as compared to rental rates last year that is 4 percent decrease in. Does this mean that renting can now offer residents a preferred deal likened to buying property?


From A Virtuously Financial Viewpoint

Let us use two situations for the Singapore’s private property market to check out if it is better to buy or to rent the same property. To offer an accurate contrast, we will use a 2-bedroom condominium unit as of Cityscape @ Farrer Park as a sample:


Scenario 1: Renting property

The rental for a 1,076 square feet apartment in Cityscape is at an mean of $3 per sqft per month. This would propose that the preliminary rental would be about $3,228. Concluding that rental price increase at a 3% annual rise over the next 4 years, the over-all rent paid will be as exemplified below:

Tenancy Monthly Rent Annual Rent Increase

Total Annual Rent

Year 1

$3,230 $38,760

Year 2

$3,327 3 percent $39,924

Year 3

$3,427 3 percent $41,124
Year 4 $3,530 3 percent


Total rent over 4 years


Over a term of four years, the resident would have paid an over-all of $162,168. This amount does not comprise other additional costs of occupancy, such as stamp duties, utilities, compensations or the security deposit.


Scenario two: Buying property

Beholding at a current transaction in November 2016 for a unit of 1,076 square feet in the similar condominium, the marketing price was at $1.5 million. If we conclude that the property buyer gets a 30-year tenure mortgage loan, the amount is $1.2 million.
Preliminary costs would comprise a buyer’s stamp duty (BSD) that is about $39,600 and a down payment of $300,000. This works out to overall total of $339,600.

Of course, a vast amount of the money that goes to purchasing property is the cost of borrowing. Whereas this can be tough to expect, we have done a replication based on two diverse interest rate scenarios:

1.5 percent

2 percent

Monthly repayment

$4,141 $4,435

Annual mortgage payment



Annual maintenance costs $3,600


Property tax

$1,000 $1,000

Total costs per year



Total costs for 4 years $217,168


As of the table, we can figure out that after 4 years, the whole costs of proprietorship would work out to be a minimum of $217,168 (excluding preliminary costs), that is $55,000 additional than renting over the 4 years. Every year, residents will pay some $13,000 less if the residents will rent the same condominium.

But then again consider the scenario wherein the individual is looking to retail this condominium after 4 years. At this idea, the remaining loan principal positions at about $1.07 million. Together with all upfront costs besides what they had paid for the 4 years of ownership, they would be needing to set at least selling price of $1.63 million to break even. This amount is also apart from all miscellaneous payments of agent’s commissions, renovation costs as well as bank administrative fees.

This means that over four years, the proprietor would be needing to have his/her property rise by around 8.3 percent. What this suggests is that if the yearly growth in cost of the home were to be smaller amount than two percent per annum, or if interest rates were to increase to more than 1.5 percent, the owner might have been preferred off renting in the approaching years.

Nevertheless, the financial feature is only one issue out of many for a lot of people deciding on whether to rent or buy. Temporary factors can take in the prospect of migrating to other countries due to family/work, financial obligation issues such as an economizing possibility, as well as the near-period interest rental/rate/price viewpoint.

For those who are looking to purchase a property and trade it within the following 5 to 10 years, the provided sample may give the residents some food for thought, subsequently they may find that the increase may not be as abundant as they wished for.