I refer to the Forum letter "Be mindful of factors that can affect ability to service mortgage loans" (Nov 22).

Singapore is different from other jurisdictions like Hong Kong, where home ownership is largely beyond the reach of the population due to high property prices and a shortage of supply.

Singaporeans are blessed with policies that make public housing affordable with government subsidies, and HDB's careful planning of housing programmes to meet demand.

If one plans to acquire a flat for occupation, buying is the preferred option to renting simply because the loan repayment is a capital cost and the rental payment is a sunk cost.

As an illustration, let's assume someone can afford a flat with a housing loan of around $300,000 after the down payment. At a loan interest of 2.5 per cent per annum over a repayment period of 15 years, he needs to pay a monthly repayment of about $2,000 and after 15 years, the flat is his.

If he chooses to rent a flat for the same monthly payment of $2,000, he will own nothing at the end of 15 years as the rental payments will have no future value and would have gone entirely to the landlord.

In fact, in bad times such as a recession or structural employment changes, both buyer and renter will encounter the same threat of job loss.

Arguably, the renter may be more nimble with no capital commitment. And the buyer can opt to downsize.

However, in good times, the buyer would reap capital gains, shielding himself from any rising rental which the renter would be exposed to.

Renting, however, is not a dirty word. If one does not plan to put down roots in Singapore or cannot afford to own an HDB flat, then renting is the option to go for if it best suits one's financial situation and objectives.

Ong Kim Bock