How much of a difference does the extra $20,000 in CPF housing grants make? We compare resale flats against BTOs across different towns. Compare home loans for your first home on GoBear.
You should know by now the bumper housing grants for resale HDB flats was the big Budget 2017 highlight after the 30% water utility hike announcement. For first-timer couple applicants, the CPF Housing Grant has been increased from $30,000 to S50,000 for four-room flats or smaller. Five-room flats are now at $40,000, up from $30,000. When pooled together with Additional Housing Grant (AHG) and Proximity Housing Grant (PHG), you could be looking at a maximum subsidy amount of $110,000.
The good thing about resale flats is the immediacy. You don’t have to wait three to four years like you would for Built-To-Order (BTO) flats, and that is only assuming your balloting did not get unceremoniously rejected. You have more control over where you and your spouse want to live in exactly. Taking advantage of the PHG is more fluid.
But over to the not so good side - you’ve guessed it - it is pricier than BTO flats. Besides the cash over valuation (COV) that the seller is hell bent on squeezing out of you, there are other fees like agent’s commission and option to purchase (OTP). And you’d have to stomach the fact your new home is not entirely new, no matter how much renovation it undergoes.
Of course, the government is making the ‘bad’ list look bad with a $20,000 reason. If you think about it, the extra savings here can fund your big renovation project.
The question we want to answer here is, how much can the increase in housing grant help in defraying the cost of a resale HDB? Would you still be better off enduring the long BTO wait? We shift our comparison gears up and do the math for four different scenarios.
Under each case, we assume the average gross monthly income between you and your spouse is $5,000, just enough to qualify for the AHG. Flat applied for is a four-room.
Looking at the price differential between a resale and a BTO flat across different towns, there is clearly a huge range. Resale flats outprice BTO ones from as little as S$26,000 to almost S$100,000. If you are worried the increase in the CPF Housing Grant is going drive up demand and as a result, overall prices, do some homework on the town you plan to move to. A big difference might suggest demand will remain strong for BTO flats, while resale prices remain relatively unaffected.
Maybe the S$20,000 bumper grant triggered the “Singaporeaness” in you to ‘just take it’, or maybe it won’t. But we know of one surefire means of savings that is not town-dependent: compare home loan packages on GoBear for the best rates!