Is It Better to Rent or Buy a Condo?

Buying Condo vs Renting Feature Image

For first-time home-buyers, buying a condo can be a great move. Prices are typically lower than standalone homes, and condos can be more convenient with regard to maintenance and location. However, when it comes to buying a condo vs. renting an apartment, how do you make the right choice?

There are pros and cons to both options, depending on what stage you are at in life and your personal finances. But the million-dollar question, then is, should you buy or rent? Here is how you can make the right decision.

Renting or Buying a Condo

Benefits of Buying a Condo

Before we get into the nitty-gritty of your question, “should I rent or buy a condo?”, here’s an overview of the benefits of buying a condo unit or property in Singapore.


While rents keep rising, mortgage rates are still at historic lows. This is perhaps one reason why a young couple or real estate investors prefer buying a condo vs renting a unit. Other advantages of buying a condo include:

  • When compared to other forms of housing, it has been considered that real estate units are available at competitive rates and the condo price is highly affordable–even if for first-time home-buyers.
  • When you own a condo, you have a good opportunity to participate in property market growth and construct equity. You can utilize the market conditions to your advantage.
  • As real estate owners, you only pay for the condo unit during the loan tenure of say 30 years. After that, the property is effectively yours to use for a lifetime.
  • You can make extra cash by renting out your unit to someone else. You’re not only the landlord here but you’ll also earn in the form of rental fees every month.
  • Home prices are steadily spiking in Singapore. As a condo owner, you are possessing an asset that’s growing in value each year. Thus, you’ll likely make more money than you spent when you sell.
  • It is recommended that you purchase a pre-construction condo unit. They are more affordable and the fees in these type of condos are quite low compared to fully-constructed condos, which are built-in established vicinities. Developing condos are currently available at cheap rates. Soon, their prices will boom.
  • A condo owner may be able to take advantage of tax breaks that renters don’t get.


  • Buying a condo means getting a chance to live in a central location. This can be close to all transport lines, necessities, and market areas.
  • Living in a condo unit allows you to use amenities like exercise rooms, pools, saunas, lounges, and more. Everyone cannot own these facilities unless they live in a condo.
  • The condo living is often associated with an increased feeling of community spirit and higher options of socialization.

Can Become a Source of Income

For certain individuals, buying a condo can also help them to generate income. This applies mainly to those people who can afford to purchase real-estate condos with more bedroom units than their household needs, and who are eager to rent them out.

Although this is a possibility even for those who reside in an HDB flat, as the HDB enables rental of individual rooms prior to the Minimum Occupation Period is up so long as they continue to reside in the flat, many individuals are not comfortable with the presence of renters in the same house.

Thus, it really depends on one’s level of openness. Unfortunately, property prices for HDB flats continue to decline. However, if you hold your property for the long term, you’ll still have a chance to pay it off eventually as an investment. Since there’s no capital gains tax in Singapore, every cent you generate on the unit is yours to keep (excluding your payments for home loan interests, legal fees, etc.)

Renting or Buying a Condo

Free to Make Changes

This is probably the biggest all-embracing reason for buying a condo in Singapore. Owning a property means that you are not at the mercy of your landlord (or anyone else for that matter). It is an asset under your name and you have the freedom to design and ‘construct’ its interior as you desire.

Downsides of Buying a Condo

There are a couple of downsides of buying condo vs renting apartment in Singapore, though. These include:

Heavier Financial Costs

There are serious expenses affiliated with purchasing and selling a property, whether it’s a standalone house or a condominium. Buying a condo means you’ll have to pay a down payment of at least 3.5% ( the minimum for an FHA loan). If you prefer the lowest monthly payments and the best interest rates, you’ll also need to place a 25% down payment on a conventional loan.

Real estate buyers need to pay closing costs as well, which can be 3% or more of the loan amount. And owners have additional monthly costs like insurance and property taxes to consider.

There is also a couple of unpredictability around future housing expenses. HOA dues manage to creep up annually, typically much more than expected when the unit requires significant repairs. While you might purchase a condo to prevent ever-rising rents, you may be entering a situation where housing costs climb up to $25 to $100 per year or more thanks to HOA dues.

Condominium vs Apartment

Commission Fees if You Choose to Sell

You also need to consider that selling a home entails paying a commission fee of 5%-7%. When you sum up the cost to purchase plus the cost to sell, the building will have had to appreciate approximately 10% for you to break even. That’s why it is only recommended to purchase a property in Singapore if you plan to live in it for at least 3 to 5 years. Otherwise, you could lose a lot of money when you sell.

Benefits of Renting a Condo

Some pros of renting a condo vs apartment purchasing in Singapore are as such:

Lighter Financial Commitment

Buying a condo or an HDB flat is a huge financial commitment that many people end up paying for all their working lives. When you rent, however, your only upfront expense is the security deposit equivalent to about one or two month’s rental payment. So for those without large savings accounts, this can make renting more approachable. This is one of the pros of renting as it sure beats paying a $50,000 down payment for a home purchase.

In the short term, renting can involve less financial hardship since you are not tied to mortgage payments. Not being chained to paying the mortgage payment also means you can still move back home if you fall upon hard times. Renting here is easier because getting approved for a mortgage loan can be tricky depending on your debts and credit score. Besides the closing, the entire process can take a long time too.

When you have a rented property, you don’t have to worry about any possible interest rates, maintenance costs, insurance, assessments, and taxes that keep changing all the time.

Flexibility for Moving

Most Singaporeans reside in accommodation that either they or their families own. This limits their capacity to move to another area whenever they want. As a renter, however, you have the flexibility of moving when the lease is up. In case you get a new job on the other side of Singapore, you can opt to live near an MRT station.

If you get into a dispute with your neighbours, you can always leave. You can also begin by renting a relatively cheap and small place, and then upgrade when you need more space or you’re earning more.

Buy Condos vs Apartments Renting

Fewer Maintenance Fees

Depending on your rental contract, most repairs and maintenance fees needed on the apartment will be your landlord’s responsibility.

Downsides to Renting a Condo

Your Expenses Have No Returns

In the situation of home-ownership where are confined to a mortgage payment, homeowners’ equity grows with every monthly instalment paid (they own more of their home). For renting, you make monthly payments as well. However, it doesn’t establish your equity. Hence, you are assisting in building the landlord’s equity instead.

Less Flexibility to Make Changes to the Unit

It may be true that repairs and maintenance expenses for the building are your landowner’s responsibility. But if you want to refurbish your rented apartment, you do need to get your landlord’s approval first.

What to Consider Before Buying or Renting

Some of the things to consider before you buy a condo or rent an apartment in Singapore include:

Financial Capabilities

When it comes to a rented property, renters get to have a chance to enjoy life in peace without having to pay any mortgage interest rate per month. With a home purchase, however, these financial obligations can be frustrating in the long run.

Thus, it is safe to say that all the different factors of buying a condo or renting narrow down to the same point–affordability. Therefore, you need to think about your finance and your monetary capabilities.

Renting Condo vs Apartment Units

Recurring Cost for Buying

Monthly Loan Payment

You’ll rather make loan payments to the bank if you buy a condo. Contrary to renting, these loan repayments can be obtained from your CPF. Except for maintenance, the difference in the monthly expenses between buying and renting is not as big as everyone may expect. For example, for a 2-room condo, the current average rental rate is SGD 2, 401. If the monthly loan repayment where you purchase is SGD 2, 815, then the difference is about SGD 414.

Maintenance Fees

This is where the monthly expenses between renting and home-ownership seriously start to deepen. Depending on everything from the development’s units, condo owners will need to pay into the maintenance fund and the amount varies between individual condos. Maintenance fees, for most condo units in the OCR, range from SGD 900 to SGD 1, 400 per quarter.

The fees are usually higher for larger 4-room and 5-room units; nearly SGD 1, 400 to SGD 1, 600 per quarter. These estimations vary between condos so it’s recommended to ask first before you purchase. Renters, however, don’t pay maintenance fees of this sort, unless otherwise agreed.

Property Taxes

The property tax rate is based on the Annual Valuation (AV) of your home, according to IRAS. This, in turn, is where you figure out your property tax rate. As of 2018, the median AV of a private non-landed home was SGD 24,000. This is entirely common for 2- to 3-room condo units. As determined by Owner-Occupied tax rates, this is just SGD 640.

But keep in mind though that if you let out the property will rise up to SGD 2, 400. Four and five-room condo units manage to have an AV of roughly SGD 32,000, which comes to around SGD 960. To determine the exact AV of a given address, you will need to contact IRAS. Again, tenants, in this matter, do not pay any property tax.

Utility Bills

This is one of the pros of buying a condo as utility bills do not apply to home buyers. When you have the property rented out, the tenants will cover these bills, depending on the rental agreement. It will be tax-deductible for you if you agree to absorb the bills.

Repair Costs

Also, condo owners don’t need to worry about costly building upkeep or structural repairs. The Homeowners Association (HOA)[1] will take care of your exterior maintenance expenses. You’ll have to pay monthly HOA dues, though, for this convenience.

Rent or Buy Condo Tips

Recurring Cost for Renting

Rental Fee

According to Money Smart, when it comes to rental costs, the cheapest option is to opt for common rooms; ranging between SGD 600 and SGD 1000 depending on the rented property’s location. If you rent the entire unit, however, the rate is in the range of SGS 2,000 to SGD 3, 500 for a condominium unit depending on the location, the number of rooms, and how furnished the apartment is.

Utility Bills

Most landlords will need their renters to cover the utility bills. As such, tenants should factor these into their expenses when renting. If you live with other, unrelated tenants, you have to consider how the bill will be split. Less often, owners may agree to cover the bills or absorb the utility bills to a particular amount ( it is tax-deductible for them if they pay for the utility bills).

Repair Costs

It is impossible to predict how much you will spend on repairs. However, it is a good idea to spare around SGD 500 in your savings to cover one major incident per year. To put it simply, you will pay an initial sum (e.g. the first SGD 150) of any repair bill, before the owner covers the rest. These sums are negotiable. In any case, it is still relatively less expensive than being a home-owner and having to bear the full cost of everything.


Buying Condo vs Apartment

Will You Be Staying Long Term?

When it comes to whether to buy or rent a condo, buying becomes a better option if you want to live in the same location for at least three years. Otherwise, you will lose the money when you sell, as mentioned previously.

Getting a Permanent Residency in Singapore has some benefits. One of the advantages is the amount to pay for additional buyer’s stamp duty (ABSD) when you acquire a residential property in the country. For PRs buying their first residential property in Singapore, the ABSD is only 5 per cent compared to a foreigner paying 20 per cent ABSD.

Understanding this is vital especially for a young couple who has no plans on whether they should start a family as Singapore PRs have higher residential transactional costs than Singaporeans. Imagine buying your first home on the island only to discover you need to upgrade to a bigger space a few years later.

To conduct the upgrade, you’ll have to sell the property with a property agent commission market rate of 2 % and pay the 3% Buyer’s Stamp Duty (BSD) plus 5% ABSD all over again. Assuming that the unit is SGD 1 million, 10 per cent is SGD 100, 000, which is a considerable amount to transact the condo. As such, it may make total sense to rent in the meantime prior to ultimately buying a condo that you really need.


So for your ‘should I buy a condo or rent’ question, it depends upon the consequences. In this case, you have to decide for yourself. One thing’s for sure, there is no wrong or right answer. Some individuals believe it is better to rent as they can place their money to work elsewhere. Others, on the other hand, insist on having their own home at the end of the day. Whether it’s substantial to buy or rent, depends on your scenario.

If, for instance, you’re a foreigner who is working in Singapore for a couple of years, it might make more sense to rent. Your stay here may only be temporary, and Singapore is actually not a place to call home. But if your goal includes staying on this charming island for an extended time, buying a condo might make more financial sense.


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