Conventional Wisdom

For decades, conventional wisdom is that you should buy a house as soon as you can because it is a great investment, among other reasons. However, the millennials often ask whether such conventional wisdom is still applicable in this modern society where the human’s lifestyle and living behaviour has changed significantly over the years.

To Buy or Rent?
Before one can decide whether it is better to buy or to keep renting one, it is pivotal to understand the pros and cons of houseownership and renting.

Benefit of Owning a House

• Once you have paid off your housing loan, you will not need to worry about paying to live anywhere



• You will have a permanent place of residence without worrying the need to keep moving and the hassle that comes with it



• Generally, investment in real estate has proven to be lucrative if you have enough time to reap the rewards of capital appreciation



• You may improve, renovate and decorate your house in whatever manner and style you fancy without any hesitation and/or restriction from the landlord

Potential disadvantages in Owning a House

• A very big commitment including the substantial upfront cash needed to pay for the deposit, legal fee and stamp duties which may be used to invest somewhere else



• Commitment to pay monthly housing loan instalments



• When the bank’s interest rate rises, your housing loan repayments will go up too



• You may need a longer time to turn such investment into liquidity (cash)



• The value of your house may fall due to unfavourable market conditions



• Less flexibility in moving somewhere else when needed. For example, in situation where you have been relocated to work somewhere else (unless you can afford to purchase another house in the new place)

Benefits in Renting

• The money saved from the big upfront cash needed to buy a house can be used for other investments like starting your own business



• Great flexibility in moving when such needs arise or when you prefer to move to a particular neighbourhood



• Minimal upfront costs (will only have to ensure you have sufficient money to pay for the rental and utilities deposits, legal fee and stamp duties for the preparation of the tenancy agreement)



• No unexpected rise in monthly rental as the rental is negotiated and agreed upon before the commencement of the tenancy

Potential disadvantages in Renting

• You have to keep paying to live there



• Your monthly rental payment will not turn into any form of house-ownership that enable you to reap the fruits of an investment in the property



• No permanent place of residence



• The landlord may give you a “notice to quit” accordingly under the tenancy agreement

A Question For You To Answer
Ultimately, the question can be answered after taking into consideration your lifestyle, financial capability, investment philosophy, the nature of your career, future plans and family plans, among other things.

There is no right or wrong answer to the question. Different people will answer the question differently and certainly, only you yourself know will know whether it is best to buy or to rent.