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Rent vs Buy Property in Singapore: A Worked Five-Year Comparison

Compare rent with the costs of owning, then compare what each household has left. A mortgage payment includes principal that reduces debt; rent does not. Buying also involves interest, taxes, upkeep and transaction costs. The result depends on the property, financing, holding period and what the renter actually does with the money left available.

Compare equivalent homes and the same time horizon

Use a home you would rent and a home you would buy with comparable location, space and condition. Include the entire period from the decision to the eventual move or sale. For a new launch, price accommodation during construction separately; this example uses a completed private condo occupied immediately.

Confirm borrowing capacity before modelling the loan. MoneySense’s home-loan guide explains how terms and rate changes affect repayments. Use the property affordability calculator and TDSR/MSR guide to prepare, then obtain the lender’s assessment.

Example assumptions: S$1.5 million purchase or S$4,000 rent

BSD comes from IRAS’s residential duty bands. The no-ABSD assumption follows the first-property Singapore Citizen profile; joint ownership, residency and existing property interests can change the tax. The selling fee is an assumed all-in amount, not a prescribed commission.

The five-year sale is beyond the current SSD window. For residential property bought on or after 4 July 2025, IRAS specifies a four-year SSD period, with 16%, 12%, 8% and 4% rates across the successive annual bands. An earlier sale needs the appropriate tax calculation and any lender charges. HDB and EC occupation restrictions also need a separate check; this private-condo example is not permission to sell those homes after five years.

Step 1: separate cash payments, principal and costs

The mortgage payment is approximately S$5,632.02 monthly. Over 60 payments, approximately S$153,895 reduces principal and S$184,025 pays interest. The remaining loan is approximately S$971,105. Calculations use unrounded instalments internally.

The difference is about S$100,325 in favour of renting under these assumptions. Mortgage principal is excluded from this cost table because it reduces the debt settled on sale. The downpayment is also equity, not a fee. The renter’s deposit is assumed returned in full. Utilities and other equal household spending cancel out; change the model if they differ.

Step 2: compare the money left after five years

Give both households the same S$452,600 starting funds and the same S$6,382.02 monthly housing-and-saving budget. The owner uses that monthly budget for the mortgage plus S$750 running costs. The renter pays S$4,000 and saves the remaining S$2,382.02 at each month-end.

The renter initially sets aside S$8,000 as the refundable deposit and spends S$2,000, leaving S$442,600 to save or invest. At sale, the owner receives the sale price minus the selling fee, legal expenses and outstanding mortgage.

At a 0% return, the renter instead finishes with S$593,521 in every resale-price scenario: S$442,600 starting savings + approximately S$142,921 saved over 60 months + the returned S$8,000 deposit.

The 3% column assumes a constant effective annual return after fees and taxes, monthly compounding and all monthly savings invested. It is a sensitivity case, not a promised return. At unchanged property prices, the buyer finishes about S$100,325 behind the zero-return renter or S$181,732 behind the 3% renter. At a 10% property gain, buying leads the zero-return case but remains behind the 3% case.

Do not add a separate “opportunity-cost charge” to these ending balances: the renter’s investment growth already captures that assumption. If the renter spends the savings, that is a different household budget and should be shown as such.

What changes the answer most?

• Purchase price and rent: use comparable actual listings and your negotiated terms, not a market-wide guess.
• Holding period: spread one-off costs over the intended stay, but also test an earlier move and its tax and loan charges.
• Loan rate: model the rate after any fixed period. Recalculate both monthly savings and the remaining loan.
• Resale price: show a fall as well as a gain. A larger mortgage makes changes in equity more pronounced.
• Renovation and repairs: include the home’s actual condition. Do not assume your renovation invoice is fully recovered in its selling price.
• Rental renewals: a flat rent and uninterrupted tenancy are assumptions here; include increases and moving costs when relevant.

Using CPF changes liquidity as well as the comparison

This example uses cash to keep the comparison transparent. If CPF funds the purchase or instalments, track cash and CPF balances separately on both routes. {source(REFUND,'CPF Board explains the required refund on sale')}: the refund returns to CPF and affects cash sale proceeds. It is not the same as interest paid away to a bank. Account for CPF interest and refund rules without counting the same amount twice.

Use CPF accrued interest, mortgage interest costs, selling costs, BSD/ABSD and renovation costs to replace the assumptions.

Make the final decision around a workable stay

Buying may fit a stable location, control over the home and a budget that survives an unfavourable exit. Renting may fit uncertain work, schooling or caregiving plans, particularly where buying would exhaust accessible reserves. Put a value on those practical differences instead of treating the spreadsheet as the whole decision.

For timing rather than tenure, see buy now or wait. For a different property route, use BTO versus resale or HDB versus condo. Build out ownership costs, condo costs and rental costs, then test whether buying more space before children changes the horizon.