Why You Should Buy A HDB Resales As Your First Property?
Getting married is one of the major milestones in life. During that process, you have thousand and zillion things to worry and get ready about. Such as
- Preparation of wedding lunch / dinner
- Going for photo shoot
- List of guest to be invited
- Discussion with both parents on wedding detail
- Where to go for honeymoon
- Budget for all expenses
- and more.. and more… and more…
By the way, have you missed out on the most important thing? Where are you going to stay? What option you have? You have either HDB or EC to choose from.
Being a Singapore Citizen, be it both of you or either one. I will strongly recommend you to purchase an HDB flat for the start.
As we are all aware, HDB flats are public housing for all Singapore Citizens. These flats are generally more affordable. In addition, there are CPF housing grants made available for first-time purchasers, in turn making it more attractive.
What are the choices you have under the HDB flat of selection
- Buying directly from HDB, a BTO (Build To Order) flat. which is NEW
- Buying from the resales market which age of flat is minimum 5 years
Let’s compare between BTO and Resale
Age of flat
A BTO flat as it is new, the age of flat is very much an infant, whereby we have a long runway of the lease.
As for resale, you potentially be getting a flat that is older than 5 years old.
BTO, normally are in the newer estate. In those estates, the amenities and accessibility are not that well established. Not that they don’t have it, just is yet to be completed
I recalled my uncle moved into Tampines when it was newly developed, it has the bare minimum amenities, but look at what it is today!
As for resale, you can pick anywhere within Singapore. In fact, you decide where you want your flat to be. You can prioritize base on the following:-
Investment to the property
For BTO flat, you are potentially looking at a lower gross purchase price as compare to resales.
One of the key reason is, HDB do take into account the different location and attributes when setting the selling price of the new flat.
As for resales, seller’s call for the price they want. But that does not mean, they will get it. The flat will still be going at the fair market value, as there is a valuation process involved during the whole purchase process.
CPF Housing Grants
Since the above topic is about the gross price of both BTO and resales flat. Let share with you, what are the grant available with both the option.
To ensure affordability, CPF has come out with various grant for both the BTO and resale market
For BTO, you can apply for Enhanced Housing Grant, which amount to a maximum of S$ 80,000 depending on your household income
As for resale, in addition to the Enhanced Housing Grant, you will be eligible for Family Grant, Proximity Housing Grant. All amounting to a maximum of S$ 160,000 depending on your household income
For BTO, the location is kind of limited. It is mainly located in new estates. The new estate is normally not very well developed and accessibility is yet to be as convenient. These will be matured over time
From time to time, HDB does offer blocks of flat in a mature estate. To be able to get it through balloting, it is really like striking TOTO. As they are normally oversubscribed
As for resale flat, you can potentially get a unit in the location you wanted. There is a very high possibility that there will be someone selling their flat in almost all estates.
The choice location gives you the flexibility to stay near your parents. You will able to “tag” onto the convenience. For example, your newborn child can be well taken care of by your parents as grandparents are usually most happy to do so.
Buying a BTO flat. The procedure is, wait for the release of news from HDB, go for balloting (which is many times. This is an iteration process, not knowing when you will get it). After which, pay and wait.
By the time you see your block of flat above ground, it is easily 2 to 3 years later. When you get the key to you flat. It is potentially 5 years if not longer from the day you have successfully ballot your unit.
As for the purchase of resale flat, even if you are very fussy over the flat that you wanted. I am quite sure you will be able to find something within a year. This made the plan must more predictable.
For BTO flats, it comes bear which you will need to put in air con, kitchen cabinet, wardrobe to make it a home.
As for resale, chances are quiet high that you can find something that require minimum renovation.
Therefore, the investment to the renovation for BTO potentially higher as the unit comes bear as compared to resale.
Size of flat
In many situations, the size of flat was being overlooked. This flat size may not be critical during the initial stay, but will turn out to be a limitation over time.
Flats in the resales market tends to be bigger than BTO flats. The difference in sizes of the same model of flat depends on the age of the flat. Example of 4 Room flat have the following sizes
|Type of Flat||Size of Flat||Lease Commencement|
|4A in Tampines||107 sq meter||1995|
|4A in Sengkang||96 sq meter||2010|
|4A in Sengkang||92 sq meter||2015|
Future market value
As I shared earlier, BTO are normally in the newer estate and to have an estate totally established over 5 years. This is impossible.
Once you flat reached 5 years, which is the MOP duration. You might be considering selling and upgrading. Your flat can be fetching a higher price than when you buy as the flat is relatively new. This is truth is you are comparing both flats within the same estate. Example, your flat is in Sengkang and you are comparing again those earlier flat in the same estate.
But, if you are buying from the resales market in the mature estate. the numbers can be very different. You might also be fetching a price higher than what you have purchased. In additional, those CPF grants that you have benefited.
More importantly, the interested buyer can be more. The same as, when you first started sourcing for your first flat. This give you a upper hand in selling your property in shorter time.
As in all marketing, any product that is over exposed in the market will directly / indirectly impact the value.
That means, the selling process can be much easier and you are able to have your flat upgraded and better control of your cash flow.
With the above sharing. you will understand, both BTO and resale have their respective Pros and Cons.
To show a simpler breakdown, the benefit of BTO will be
- Age of Flat – Brand new
- Lower investment of Property
As for resale flat, the number of benefits, be it tangible or intangible is much higher than what BTO is providing. Some of the key benefits are
- Size of flat
- Future market value
In real estate, we have this saying, which is,
You can do what you want within the flat you own, but you can’t move the MRT to your doorstep. Neither you can move your flat to be on the side of a mall.
For many newly wed couple like yourself, the current HDB flat you are buying, may be temporary . In long run, you might be considering upgrading after staying for 5 years. What is your value of your HDB comes post MOP? What option I have after my MOP? How can I move forward after MOP?
Lewis became part of the family of Orange Tee and Tie in 2020. He has been in the real estate since 2005, with him joining, he has brought along with him, was a long history of experience in both HDB and Private property.
His personal belief is, to share the truth and facts with everyone. With that, he has good credibility with all his client
As the world is moving into digital, there are still some “human touch” that must not be missed. Now, let’s ring me at +65 90107188 if you have any queries relating to real estate. I do understand you might be busy. Tap onto the following to WhatsApp me and i will respond to you