Buying or Renting—Does It Matter?

(Picture source: いらすとや）

Yesterday morning, I got the faucet for my bathroom sink replaced with a new one after more than 20 years of usage, because it was getting a bit leaky lately. I reported this issue to my landlord, who kindly arranged the replacement with a plumber. The plumber spent around two hours in my apartment and finally got the new faucet installed.

I’ve been renting this apartment for 22 and a half years. In fact, this is the first apartment I’ve rented since migrating to Singapore from Tokyo in 2002. Overall, I’ve been quite happy with this place, so I’ve never moved. As long as my workplace is nearby and the rent stays affordable, I will continue to rent it for the foreseeable future.

There is a constant discussion about whether buying or renting an apartment is a better option for a person’s financial well-being. It’s a fascinating subject for me, so I’ve watched a bunch of YouTube videos on this topic. The tentative conclusion I’ve reached is that both options have their own pros and cons, and in the final analysis, they will work out to be equally worthy from an investor’s perspective.

It only makes sense—in highly developed capitalistic societies like the U.S., Japan, and Singapore, with market mechanisms fully at work, prices for buying and renting properties are constantly adjusted in such a way that arbitrage deals, i.e., trades that take advantage of price discrepancy between equally worthy investments, are few and far between in today’s property market.

By the same token, for those who are keen on buying, there is little point in trying to “time the market,” because the value of a property is decided by estimating the sum-total of all future benefits to be gained from this property that are discounted back to the present value, taking into consideration such factors as inflation and depreciation. If a certain property is showing a cheap price, there most likely are right reasons behind it, so think twice before rushing headlong into buying it.

By the way, my landlord gave me an interesting tip about buying a public housing unit known as an HDB flat in Singapore. He recommended that I buy a unit that has at least three rooms with a floor area of around 1,000 square feet, because they tend to attract well-to-do, highly-educated residents who have relatively decent public manners. While this piece of advice might sound a bit politically incorrect, I think my landlord has a point there, because once again, cheap valuation of a property is a reflection of a variety of issues that are not immediately visible to the investor.

Regardless of whether you’re buying or renting, knowing your preferences well is critical in making the decision about finalizing a deal. For example, I’m someone who tends to attach more importance to the value of time compared to other people, so spending more than half an hour commuting to and from work is out of the question for me. Naturally, I’m willing to pay a premium on a normal rate to live in a place with easy access to train and bus stations. Just because something is expensive doesn’t mean it’s a bad investment decision, as long as it suits your particular needs well.

Property investment has been a hot subject for me for years, as it concerns the critical matter of putting a roof over my head. Whether I’m buying or renting, I’d like to be clear-headed about what I really want and be able to make a fully informed decision in the end.