Renting vs Buying Property in Singapore: The Pros and Cons
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0:14 - Buying or renting is a personal choice. What are the pros and cons in buying vs renting?
Everyone has their own reasons for purchasing a property. If it is for your own use and enjoyment, then the financial calculation, as well as the profitability, comes secondary to your family’s enjoyment and comfort.
From a financial perspective, buying a property has a lot of upfront cost: cost of acquisition, stamp duty, renovation. These upfront costs might be 2-3 years’ worth of rentals. For instance, if you have a 2% yield on your property, that is equivalent to 2 years worth of stamp duties that you pay. There are also ongoing costs of maintenance: MCST bills, property taxes, etc.
In the case of renting there is the disadvantage of having low stability. With the owner having sway over the period of your stay.
For those that are staying in a home for 10-15 years, the stability of homeownership outweighs the rental part of the equation. But those that want to look at the financial side, renting beats buying.
3:41 - Singapore has the world’s second-highest homeownership rate of 91.5%. Under what circumstances would you tell people to buy vs rent?
In the case of rentals, the benefit would be that you are paying monthly instead of a lump sum. Additionally, you won't need to pay property taxes and MCST bills. The downside not being able to use CPF.
However, for homeowners in general, if you are sufficiently wealthy to buy a home with cash and a loan, without touching your CPF preferably, and still having sufficient savings to pay off your loan during times of distress, this would be the most prudent way to own a home.
6:49 - For the next 5 years, would you recommend people to buy or rent?
With the current trend of oversupply and fall in rents, we think that the argument for renting would be stronger.
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Part 1 (Are Singapore developers overdeveloping?): • Are Singapore develope...
Part 2 (What Type Of Real Estate Should You Invest In Singapore Now?): • What Type Of Real Esta...
Part 3 (Renting vs Buying Property in Singapore): • Renting vs Buying Prop...
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Ku Swee Yong is the CEO and the Key Executive Officer of International Property Advisor Pte Ltd. He is currently an adjunct faculty lecturer at Lee Kong Chian School of Business in Singapore Management University.
From Nov 2013 to Nov 2016, he was concurrently the CEO of Century 21 Singapore. Prior to running his own practice, he was a Director in the Real Estate Centre of Expertise at Société Générale Private Bank, responsible for advising clients on real estate investments, the Director of Marketing and Business Development at Savills Singapore and the General Manager at Far East Organization’s Indonesia office.
He has authored 5 books on the property market. Between 2016 and 2020, he also taught at the Department of Real Estate in the National University of Singapore and the School of Design and Environment in Ngee Ann Polytechnic.
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This video was shot in April 2019.
Video credits to: www.propertysou...
Uploaded with permission from Property Soul
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