For leasing, however, the cash outlay is much lower than the 10 per cent or 30 per cent down payment needed to buy.

Victor Yuen, residential manager of Knight Frank, says there are a number of advantages in renting a flat in Hong Kong. Renting offers more flexibility to move from one location to another at a relatively low cost.

'Besides, it is cheaper to rent compared with buying, especially when interest rates are increasing,' he says.

It is also easier to upgrade or downgrade according to the tenant's changing circumstances.

Flexibility or security?

Flexibility comes at a cost. Leasing affords no returns. Tenants face periodic lease renewals, usually after two years, and rental adjustments according to prevailing market conditions.

Property bought for occupation or investment has the potential to appreciate in capital value.

Jane Garnett, director of residential services with CB Richard Ellis, says most landlords allow tenants a break clause after 14 months so that they can have the flexibility to move.

Leasing is not a permanent decision and involves virtually no risk, apart from opportunity costs. A tenant will not lose money if the property market falls, she says.

Do you want to control your residence?

A tenant has no real control over the premises. When leasing, a tenant usually has no right to refurbish or customise the residence according to his or her preference. Moving periodically can also be hassle.

Buying a residence prevents all this. It also represents a significant investment.

For the most part, as an owner, you can change anything you do not like about the property, such as the kitchen, bathrooms and layout, according to Ms Garnett.

In Hong Kong, homeowners are entitled to a tax concession on top of the benefits of ownership. Interest paid on the mortgage is considered an expense that is tax deductable.

Diverse housing selection

There are a large number of residential properties available for lease and sale in Hong Kong, from major housing estates with shopping and restaurant facilities, to stand alone buildings, tenement blocks, garden houses and village dwellings.

Hong Kong Island, with less supply, is generally more competitive than Kowloon and the New Territories.

Large housing estates or properties near transport networks such as the MTR are preferred. At the luxury end, buyers or tenants generally prefer locations such as Island South, Mid-Levels and The Peak.

The economy's continuous upward momentum has spurred residential buying and leasing activities. Prices and rents are likely to rise in the near term and home seekers need to weigh their options carefully.

Who should buy? Who should rent?

Mr Yuen of Knight Frank says there are a number of factors a person must take into consideration - not least, job security.

Expatriates who travel a lot should consider renting. A person thinking of other investment alternatives should rent. Fresh graduates or job starters may also need to rent, as well as people who expect property prices to drop due to growing supply.

Homebuyers are usually financially better off. They buy because they generally expect property prices to increase further, Mr Yuen says. Expatriates or civil servants who enjoy housing allowances and/or mortgage subsidies are also in a good position to buy.

Anton Eilers, regional residential director of Colliers International, says newcomers to Hong Kong should initially lease and then consider buying after acquiring better knowledge of the property market.

Ms Garnett, who shares this view, says: 'Generally, we advise newcomers to rent for a period rather than buy straight away, so they can have a better idea of locations and properties.' Leasing is also a better option if you are uncertain about job security or if your family circumstances may change in the short term. For those planning to be in Hong Kong for a while, at least five years, Ms Garnett says buying should be an option, especially if you want control over your living environment and residence.

Review your financial ability

Financial position is another consideration. If you have money that you wish to invest in the mid term to long term (five years or longer), buying is clearly one of the options.

In general, leasing affords flexibility, while buying provides an investment opportunity. But do not overstretch financially.