Singapore: Buying vs Renting
Should you buy a condo, upgrade from an HDB, or keep renting? Calculate your net worth in Singapore's housing market with our data-driven 2025 calculator.
Buy vs Rent in Singapore 2025: Breaking Down the S$1.8 Million Dilemma
Singapore operates one of the most unique, heavily regulated, and successful real estate markets in the world. The decision to buy or rent isn't just about simple arithmetic; it's intricately tied to your residency status, CPF (Central Provident Fund) balances, and government cooling measures. With average private non-landed property (condos) hovering around S$1.8 Million in the OCR (Outside Central Region) and RCR (Rest of Central Region), the stakes have never been higher. Let's break down the realities of renting versus buying property in the Lion City for 2025.
The Price-to-Rent Ratio: The Arithmetic Reality
In Singapore, the Price-to-Rent ratio currently sits at approximately 28 to 30 for private condominiums. A general rule of thumb states that any ratio above 20 strongly favors renting on a fundamental basis. If you rent a S$1.8M apartment, you might pay S$5,000 to S$6,000 a month (S$60K - S$72K a year), equating to a rental yield of roughly 3.3% to 4%.
Compare this to the cost of borrowing capital. If you take an 80% LTV (Loan-to-Value) mortgage of S$1.44M at roughly 3.0% - 3.5% interest, your monthly mortgage payment alone is around S$6,500, a significant portion of which is pure interest. From a strict month-to-month cash flow perspective, renting provides immediate liquidity.
The Elephant in the Room: ABSD
The biggest barrier to purchasing property in Singapore is the Additional Buyer's Stamp Duty (ABSD). This cooling measure drastically alters the buy vs rent math depending on who you are:
- Singapore Citizens (SC): 0% ABSD on your first property. This making buying highly attractive. However, buying a second property incurs a steep 20% ABSD.
- Singapore Permanent Residents (SPR): 5% ABSD on the first property, rising to 30% for a second property. This 5% "tax" on a S$1.8M condo is an upfront, unrecoverable S$90,000 cost.
- Foreigners: A staggering 60% ABSD on any residential purchase. If you are an expat without Permanent Residency (and not from a country with FTA waivers like the USA), buying property in Singapore is almost entirely unviable from an investment perspective; renting is universally the correct choice.
HDB vs Private: The Upgrader's Dilemma
Over 80% of Singaporeans live in HDB (Housing & Development Board) flats. The traditional "Singapore dream" involves upgrading from a subsidized BTO (Build-to-Order) flat to an Executive Condominium (EC) or private condo after the 5-year Minimum Occupation Period (MOP).
However, selling an HDB to buy private comes with severe capital commitment. While renting an HDB out yields incredibly high returns (often 5-7%), many are forced to sell their HDBs to avoid the ABSD on a second private property purchase. When "rightsourcing" or upgrading, you must calculate whether the potential capital appreciation of the private condo outweighs the lost high-yield rental income of keeping the HDB (if you were to rent elsewhere).
CPF: The Double-Edged Sword
Singapore allows buyers to use their CPF Ordinary Account (OA) savings for the downpayment and monthly mortgage installments. This makes purchasing highly accessible without liquidating cash. However, there is a catch: Accrued Interest.
The CPF OA guarantees a risk-free return of 2.5%. When you withdraw funds to buy a house, you "owe" your CPF account the principal amount plus the 2.5% compounded interest it would have earned. When you sell the property, this massive sum must be refunded into your CPF before you see any cash proceeds. If property appreciation stagnates, many sellers experience "negative cash sales," walking away with zero cash in hand (though their retirement accounts are replenished).
The Final Verdict: Buy or Rent in Singapore?
Use our calculator above to project your specific numbers, but here are the general guidelines for the Singapore market:
✅ Buy in Singapore if:
- You are a Singapore Citizen or PR purchasing your first home (0% or 5% ABSD).
- You have accumulated significant CPF OA funds that would otherwise sit idle at 2.5%.
- You are buying an HDB BTO (always mathematically superior if eligible due to heavy government subsidies).
- You plan to reside in the property for at least 5 to 10 years to amortize stamp duties and transaction costs.
✅ Rent in Singapore if:
- You are an expat/foreigner subject to the crippling 60% ABSD.
- You plan to leave Singapore within the next 3-5 years (avoiding the 3-year Seller's Stamp Duty).
- You are single under 35 (ineligible for HDB) and private condo prices stretch your Debt Servicing Ratio (TDSR) past 50%.
- You are a disciplined investor who will invest the massive downpayment into global equities (S&P 500) earning 7-10% annually rather than locking it into a 3% yielding property.
Frequently Asked Questions
Is it better to buy or rent a condo in Singapore in 2025?
Mathematically, with average private condo prices at S$1.8M and rental yields hovering between 3-4%, renting is often cheaper on a month-to-month cash basis. However, buying makes sense if you plan to stay past the 3-year Seller's Stamp Duty (SSD) period and can utilize your CPF funds effectively without disrupting your retirement timeline.
How does ABSD affect the buy vs rent decision for expats?
For foreigners (excluding certain Free Trade Agreement nationals like US citizens), the Additional Buyer's Stamp Duty (ABSD) was increased to a staggering 60%. At this tax rate, buying residential property is almost mathematically impossible to justify against renting unless you are an ultra-high-net-worth individual buying purely for wealth preservation.
Should I use my CPF to pay for my Singapore property?
Using CPF Ordinary Account (OA) funds allows you to buy without liquidating cash. However, you must account for 'Accrued Interest'. When you eventually sell the property, you must refund the principal amount PLUS the 2.5% interest it would have earned if left in your CPF back into your CPF account, which eats into your cash proceeds.
*Disclaimer: This guide is for informational purposes only. The Singapore residential property market is heavily regulated and subject to sudden government cooling measures. Always consult with a licensed real estate agent and financial advisor.*