Renting can be a sensible financial decision, even for a household that can afford to buy. But a home is also where someone may spend retirement. A comparison that works during the mortgage years needs to hold up in the years that follow, and against the possibility of having to move when moving is no longer easy.
Leslie Yee’s Business Times commentary of 6 October 2026, “Renting could beat buying private property if home loan rates rise”, makes a useful case for considering the opportunity cost of home ownership. Money committed to a property could instead build an investment portfolio.
That argument deserves attention. It also raises a broader question: which arrangement provides both financial sustainability and a suitable home for the rest of a person’s life?
What the article gets right
The article illustrates a S$2.5 million condominium purchase funded with S$625,000 of equity and a S$1.875 million loan over 25 years. It compares ownership with renting and investing the equity. Its rental assumption begins at S$42,000 a year, increasing by 3% annually.
Higher mortgage rates make buying more expensive. A renter can retain capital, diversify investments and avoid tying so much wealth to one property. The article also acknowledges that transaction costs, property tax and maintenance would affect the ownership outcome.
It would therefore be unfair to dismiss its argument as simply overlooking the costs of buying. A more useful review would examine its rent assumption, extend the horizon, and consider the housing security that a financial calculation does not fully capture.
The rent assumption matters as much as the interest rate
S$42,000 a year works out to S$3,500 a month. Against a S$2.5 million purchase price, that represents an annual rent-to-price ratio of just 1.68%.
If a household can rent a genuinely comparable home at that price, renting starts with a substantial cash-flow advantage.
However, this is an assumed relationship, not evidence that any particular S$2.5 million condominium can be rented for S$3,500. A useful comparison should match location, size, condition, facilities and accessibility.
Renting a smaller or older property while comparing it with buying a larger or newer home can still be a sensible lifestyle choice. But part of the savings comes from choosing less expensive housing.
For comparison, a hypothetical rent of S$6,000 a month against the same purchase price produces a ratio of 2.88%. As the scenarios below show, changing this one input can substantially change the outcome.
A sale does not necessarily mean immediate eviction
The concern about an owner selling is valid, but needs careful wording.
A landlord selling a tenanted property does not automatically mean the tenant must leave immediately. The private residential tenancy typically provides for a sale subject to the existing tenancy. Actual rights depend on the signed agreement and its particular terms.
The longer-term uncertainty is whether the tenant can remain after the agreed tenancy ends. A new owner may want to occupy the property, the landlord may decline renewal, or the proposed rent may become unaffordable.
This matters especially in retirement. Moving may involve packing, temporary accommodation, replacement furniture and the cost of adapting another home. More significantly, it can mean leaving familiar neighbours, nearby family, regular medical services and a neighbourhood that supports daily independence.
A household that can afford the next rental may still find the move physically and emotionally difficult.
Ownership offers greater control over remaining in a chosen home and adapting it as needs change. That security has value even when it does not maximise projected investment wealth. It is not absolute: affordability problems, redevelopment and an unsuitable ageing home can still require an owner to move.
The mortgage ends, but the need for housing continues
The article uses a 25-year mortgage. For the separate illustrations below, we use a 30-year mortgage to examine what happens in years 40 and 50.
Thirty years is not a universal maximum. MAS states that bank housing loans are capped at 35 years for non-HDB properties and 30 years for HDB flats, with lower loan-to-value limits applying when specified tenure or age thresholds are exceeded. A buyer’s actual borrowing capacity remains subject to the applicable rules and credit assessment.
For someone buying at 35, a 30-year loan would finish at 65. A 40-year comparison reaches age 75; a 50-year comparison reaches age 85. These are relevant retirement horizons.
Assuming no new borrowing, the mortgage instalment disappears once the loan is repaid. Rent continues for as long as the household rents.
However, mortgage-free does not mean cost-free. Property tax, condominium charges, insurance, repairs and refurbishment remain. Similarly, a renter who invests consistently may reach retirement with a substantial portfolio.
The fair comparison must recognise both.
What housing cash flow looks like over 50 years
Consider a S$2.5 million home financed with a 75% loan at an assumed constant 3% interest rate over 30 years. The monthly repayment is approximately S$7,905.
Assume ownership expenses start at S$1,000 a month and increase by 2% annually. This is an illustrative combined allowance for property tax, maintenance, insurance and repairs, not a quotation for a particular property.
For the rental alternative, start at S$3,500 a month and increase rent by 3% annually.
| Housing cash outflow | Year 1 | Year 30 | Year 40 | Year 50 |
|---|---|---|---|---|
| Monthly rent | S$3,500 | S$8,248 | S$11,085 | S$14,897 |
| Monthly mortgage payment | S$7,905 | S$7,905 | S$0 | S$0 |
| Monthly ownership expenses | S$1,000 | S$1,776 | S$2,165 | S$2,639 |
| Total monthly owner outflow | S$8,905 | S$9,681 | S$2,165 | S$2,639 |
Nominal amounts, rounded. Year 1 is the starting year; annual increases occur from year 2. The mortgage ends after the final payment in year 30.
Under these assumptions, cumulative rent reaches approximately S$2.00 million over 30 years, S$3.17 million over 40 years and S$4.74 million over 50 years.
Those totals demonstrate the continuing housing obligation. They do not establish that renting is financially inferior. They exclude the renter’s investment gains and are not discounted to present value.
Similarly, mortgage repayments cannot all be treated as an expense equivalent to rent. The principal portion reduces debt and builds equity.
Three financial scenarios over 30 to 50 years
To compare accumulated wealth, we need to account for what each household does with its available money.
The following model uses the same S$2.5 million purchase, 30-year mortgage and ownership expenses above. It also assumes:
- A 25% down payment of S$625,000 and buyer’s stamp duty of S$94,600. The renter invests the equivalent of S$719,600 upfront.
- No ABSD, assuming a buyer profile to which it does not apply. BSD is calculated using the current residential tiers.
- Property value growth of 2% annually and an assumed 2% selling cost at each comparison endpoint.
- Rent growth of 3% annually in all three scenarios.
- The same annual housing-and-investment budget for both households, set to the higher of their two housing costs each year. The household spending less on housing invests the entire difference at year-end.
- Investment returns are stated as nominal total returns, net of fees and taxes, with distributions reinvested. The same return applies to either household’s investments.
This last budgeting rule is important. It credits the renter’s early savings and the owner’s later savings, including after the mortgage ends.
It assumes both households can fund the required annual budget throughout the period. This is an accumulation comparison, not a retirement drawdown or affordability forecast. Legal fees, major renovations, extraordinary repair bills, rental deposits, tenancy duties and moving expenses are excluded. CPF is not modelled; all initial capital is assumed freely investable.
| Scenario | Year 30 buyer/renter | Year 40 buyer/renter | Year 50 buyer/renter |
|---|---|---|---|
| A: S$3,500 initial rent; 6% investment return | S$4.44m / S$8.17m | S$6.62m / S$14.63m | S$10.42m / S$26.20m |
| B: S$3,500 initial rent; 3.5% investment return | S$4.44m / S$4.53m | S$6.49m / S$6.38m | S$9.61m / S$9.00m |
| C: S$6,000 initial rent; 4% investment return | S$4.90m / S$3.10m | S$8.19m / S$4.58m | S$13.56m / S$6.78m |
Illustrative nominal wealth, rounded. Buyer wealth comprises property value after assumed selling costs plus accumulated investments; renter wealth comprises accumulated investments. At every displayed endpoint, the housing loan has been fully repaid. Property equity is not spendable cash unless monetised.
Scenario A shows why renting can still win after 50 years. Low initial rent and strong, sustained investment returns let the renter’s early capital compound. The disappearance of the buyer’s mortgage does not automatically overcome that head start. A smooth 6% return over half a century is an assumption, not a promise.
Scenario B shows why stopping at year 30 can change the conclusion. The renter is slightly ahead at year 30, but the buyer moves ahead by year 40 as mortgage-free cash-flow savings accumulate. The relatively narrow advantage is sensitive to costs, growth and return assumptions.
Scenario C shows why comparable rent is crucial. With higher rent for the same purchase price, the renter has less to invest and eventually faces higher housing outgoings even before the mortgage finishes. Buying leads at each displayed horizon.
These scenarios are deliberately illustrative. They show the conditions that drive the result rather than identify a universal winner.
Retirement introduces risks that smooth projections conceal
A renter does not receive a guaranteed investment return each year. Markets can fall just as rent is due, and selling investments during a downturn can impair the portfolio’s ability to recover. Dividends can also fall.
A mortgage-free owner faces fewer regular housing payments, but may hold much of their wealth in an illiquid asset. Paying for medical care or other living expenses may still require savings, income or downsizing.
A proper retirement plan should therefore test what happens when employment income stops, investment returns are poor early in retirement, rent rises unexpectedly, or major repairs become necessary. A large projected balance at age 85 does not prove that either household can fund every year along the way.
A property-specific issue also matters: 50 years of ownership materially changes a home’s age and remaining lease. A property with 70 years left today would have only 20 years left at that endpoint. A smooth 2% appreciation assumption may not suit such a property. Freehold tenure avoids lease expiry, but does not prevent building deterioration or major upkeep costs.
When renting makes sense
| Household situation | Why renting can be sensible | What must be checked |
|---|---|---|
| A professional expects to relocate within a few years | Flexibility and avoiding purchase-and-sale friction can outweigh the benefits of ownership | Lease exit terms and the cost of moving |
| A disciplined investor can rent an equivalent home cheaply | Low housing costs leave more capital available for investment | Genuine comparability, realistic net returns and consistent investing |
| A family is uncertain about its eventual location or space needs | Renting provides time to test a neighbourhood and avoid a premature purchase | Repeated moves and a plan for eventual stability |
| A retiree has ample liquid assets and actively wants flexibility | Renting can support downsizing or living near different family members | Sustainable withdrawals, renewal uncertainty and practical help with moves |
Renting is less compelling as an investment strategy if the household spends the down payment and monthly savings instead of investing them. The projection portfolio must actually be built.
When purchasing makes sense
| Household situation | Why purchasing can be sensible | What must be checked |
|---|---|---|
| A family expects to remain in the same area for decades | Stability and a long holding period support the ownership case | Affordability, suitability and property-specific risks |
| A household can clear its mortgage before retirement | Removing the mortgage reduces later housing cash-flow needs | Adequate liquid retirement assets alongside the home |
| An older person values continuity near family and care | Control over the home reduces dependence on lease renewals | Accessibility, remaining lease and ongoing maintenance |
| Equivalent rental housing is relatively expensive | The financial benefit of renting and investing the difference becomes smaller | Actual achieved rents and complete ownership costs |
The best purchase case is usually an affordable home that remains suitable over time. An oversized mortgage that leaves little retirement liquidity can undermine the security ownership is supposed to provide.
The decision is about both wealth and the ability to remain at home
The Business Times argument is a useful reminder that ownership has an opportunity cost. Renting and investing can produce a better financial outcome under plausible conditions.
But the decision should extend beyond the mortgage period. It should recognise the owner’s lower housing outflow after repayment and the renter’s continuing need to secure accommodation. It should also account for the practical consequences of an unwanted move at 75 or 85.
Renting makes sense when flexibility, favourable rent and a credible investment plan outweigh the cost and uncertainty of future renewals. Purchasing makes sense when an affordable, suitable home provides lasting stability while leaving sufficient money for life beyond housing.
The best choice is the one a household can sustain financially and live with comfortably through retirement.
Disclaimer: This article is for general information and discussion only and does not constitute financial, investment, legal or property advice. All scenarios are illustrative, based on stated assumptions, and are not forecasts or guarantees. Actual outcomes will vary with mortgage rates, investment returns, property values, rental changes, remaining lease, taxes, maintenance and individual circumstances. The projections do not model retirement withdrawals, CPF usage or every transaction and relocation cost. Tenancy rights, including arrangements following a property sale, depend on the signed agreement and applicable law. Readers should assess their affordability, retirement needs and housing preferences and seek appropriate professional advice before making decisions.
Article contributed by Jerry Wong.
Jerry Wong is a realtor at Propnex Realty, bringing a rich background in interior and lighting design to his work. He loves exploring diverse spaces and observing the transformative power of real estate. Beyond his professional role, Jerry finds his greatest fulfillment in connecting people with the right properties, gaining immense satisfaction from helping clients achieve their dreams.
