HOME ownership may be the ultimate dream for some or a given for others.

As far as aspirations go, it certainly ranks highly in Singapore, but unless you have wads of cash lying idle, the question of whether to buy a home, as opposed to renting one, should still be carefully deliberated.

There are financial consultants who declare that buying - instead of renting - is one of the smartest financial decisions a person can ever make in his lifetime.

The reason is simple. Owning a home allows one to build wealth through the rise in the value of their homes over the long haul.

On the flip side, owning a home is a long-term financial commitment and may be the biggest investment one will ever make.

If you take the plunge, you are locked into repaying massive long-term debt, and there are penalties to breaking your mortgage.

You may even lose your home one day if your financial situation changes and you can't pay up.

This is why lower-income families, particularly, have to think twice as they are prone to defaults, said Mr Leong Sze Hian, president of the Society of Financial Service Professionals.

In Singapore, unlike in the United States, mortgages are not on a "non-recourse" basis, meaning home owners are responsible for any remaining debt after foreclosure, he added.  

"In the US, they just take your home. They can't touch your assets," said Mr Leong.

In Singapore, if there is still a shortfall owing to the bank after foreclosure, it can make the borrower a bankrupt.

Renting is a far simpler process to manage financially. You cough up the rent, and the landlord takes care of most other troublesome financial matters - such as paying maintenance fees and the cost of major repairs.

Buying, on the other hand, requires you to have a ready sum of money upfront. That is because potential home owners need cash to settle costs, such as the booking fee and agent commissions.

Say yes to buying only if you have plans to stay put for a while - because it may take several years or more for your property to appreciate in value.

Those who committed to a home around the time of the previous property market peak in 1996 know this only too well.

Singapore's property market came crashing down soon after and only really started to pick up again almost nine years later from the end of 2004.

How long this holding period will last depends, of course, on when you enter the market. And given the current buoyancy of the market, the question on whether to buy or rent is oft-heard.

The problem with it is that no one really knows for sure where the market is headed and the extent of its climb or fall.

"What we know with more certainty is that when the property market has gone up for a lot for a very long time, the higher is the probability of it coming down," said Mr Leong.

The lower and longer it has gone down, the higher the probability of it going up, he said.

"If we subscribe to this theory, then, in my view, the market may still have some way to go."

That is because prices of all private residential properties are still about 12 per cent below their previous high in 1996, said Mr Leong. The HDB resale price index is still about 16 per cent below the 1996 peak.

Lately, the prices of new HDB flats have risen, helping to push up the overall market.

"However, like a double-edged sword, if even HDB flats become unaffordable and beyond the reach of most Singaporeans, the market may crash," warned Mr Leong. If people cannot even afford new HDB flats, the market will not hold unless foreign buyers continue to buy private property, he said.

Since January, private home rentals have jumped by 32.2 per cent, compared with only 14.1 per cent for the whole of last year.

"As it stands now, with rentals going up, buying looks better. But if we look at the period from 1996 to say 2005, renting may have been better," said Mr Leong.

Ms Evelyn Wu, 32, has been renting for six years now but is now considering buying her own place. "I don't want to be caught by the uncertainty of the rental market when my lease is up," said the retail manager.

"I've already busted my budget by $600 a month for my current place. It's a hooligan market."

For now, Mr Chris Firth, chief executive of wealth management firm dollarDEX, believes that buying a home remains a good idea as there is an upside in the residential property market.

"Our analysis has shown a strong correlation between residential property price movements and the previous year's stock market returns," he said.

"Since 2007 looks like a good year for stocks, 2008 should be another good year for housing."

That is barring a severe setback in China or the global stock markets, which could quickly turn sentiment sour, he said.

"On balance, it would seem to be time to buy rather than rent or sell, although buyers need to work hard at finding value," added Mr Firth. "They need to look for under-loved locations."

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