Buy or Rent in Singapore

Here are some points that you can consider in deciding whether to buy or rent a property.

Sufficient initial capital. When one makes a property purchase, the initial capital outlay is 10% (5% can be from CPF, 5% is to be cash). In renting, one will typically be looking at between 1-3 months rental sum for the security deposit.

Tax and depreciation shelter. Property buyers enjoy tax and depreciation shelter whereas tenants do not. If a loan was taken up for the purchase, the interest component (being an expense item) reduces the taxable income.

Look from an investment point of view. It has been well documented that there is strong correlation between real estate growth and the country’s economy. If the GDP is expected to rise significantly in the mid to long term, it would be quite likely that home prices follow suit. This will give home buyers potential on getting good returns for their investments, whereas tenants do not enjoy any returns on the rental paid out.

Real estate as an inflation-hedging tool. Real estate has often been used as a hedge against inflation – the effects are transferred onto the tenants through rental increments. Inflation will work against the tenants when the market rises.

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