Should You Buy HDB Resale Flats Or A New Home?
In price-sensitive Singapore, the price point of a house is inarguably the make-or-break factor when buying a new home. And then there are the price-independent preferences that can sway your decision just as strongly.
After the great COV plummet following the 2013 cooling measures, resale HDB flats has become attractive again. Do you go for it because it makes more economical sense than an Executive Condominium (EC) or private condo? But condos can give you privacy and facilities that make you feel like a VIP. Or should you go even more economical and try applying for a new Build-to-Order (BTO) flat? But that would have to mean staying at an ulu neighbourhood with non-existent amenities.
Decisions, decisions, decisions.
We are not sure if there is a real winner in a resale HDB or a new home altogether, because each buyer has his own demands. But what we can do is breakdown the following factors to help you make the winning decision for yourself.
Money matters and the intangibles
Let’s talk about the tangibles first. Both resale flats and new houses, be it a BTO or EC or condo, would call for reworks and renovations to some extent. The previous owner might have had a blatant lack of interior design sense, and a new home gives plenty of room to play around with. When the dust settles, your renovations bill could come up to as much as S$50,000.
Now, let’s switch over to the intangibles. Like second hand cars, a resale HDB could leave a lingering ‘used’ feeling, which could be a bugbear for those who are particularly fussy. If we had our way, we would go for a brand new house. We don’t know anyone who doesn’t like new things and new beginnings. Since you will be spending on renovations anyway, you can keep overall costs down by going for a BTO. With subsidised purchase price, new BTO flats would make significantly more financial sense hands down, even though some resale flats are being sold at zero COV.
You could also take the opposite perspective. Since you will be paying more for a resale, go all out and lock down a new EC. If it is any consolation for the bigger financial sacrifice, you can relish in both the housing grants and condo facilities.
Verdict: Go for a new home.
CPF Housing Grants
BTO buyers are eligible for both Additional Housing Grant (AHG) and Special Housing Grant (SHG), which can go up to S$80,000 depending on average monthly household income. EC buyers can get up to S$30,000 subsidy through the Family Grant. Resale flat buyers can also apply for AHG and Family Grant, but they are eligible for one more in the form of Proximity Housing Grant (S$20,000). Resale flat buyers have more grant types available and location choice is that much more flexible. If you play your cards right, you can maximise all the grants to your advantage.
Verdict: What is the use of these housing grants if you fail to ballot for a BTO or, in the case of EC, they only absorb an insignificant percentage of the purchase price? Plus, the resale price index has remained very consistent since the start of 2015, revealing how COV has not been as insane as before. Resale has the advantage here.
Location, location, location
BTO flats and ECs are usually developed at non-mature estates and traveling can be a B-word. There are several launches per quarter, but those are pretty much false choices. Among them, popular ones such as Bidadari see such high demand you can forget about pulling a successful ballot. Conversely, resale market is like an international buffet: you can choose whatever flat type you want in whichever area you like. Of course, the smart thing to do is pick a place within 2km of your parents’ home. Not only can you qualify for the Proximity Housing Grant, the familial and familiar sense of home is a stone’s throw away.
Verdict: In terms of picking a prime spot, resale flats are the definite winner.
Type of owner
Ever since the cooling measures were legislated in 2013, new PRs in Singapore can’t purchase a resale flat even if it is well within their financial means. They have to wait three years. So if you are a newly minted PR, you will have to either rent or buy a condo. Again, if it is well within your means.
The other group of home owners we want to put the spotlight on is singles. If you have already hit 35, you can only apply for 2-room flexi flats at non-mature estates. It isn’t much to work with, but it’s a start. Ultimately, resale flats would have more appeal, considering that they don’t have restrictive flat choices and income ceiling.
Verdict: PRs should explore new homes, and singles should get their negotiation skills ready.
Aesthetics and Design
New houses in Singapore are getting more creative by the day. BTOs no longer just feature a void deck and a lift that stops on every floor. The [email protected] seemed to have kicked off a pattern of condo living in a HDB and it is a matter of time to see garden spaces, connecting sky walks and loft designs become norms in our public housing. As if that is not enough, BTOs are also turning to smart tech, in line with Singapore’s vision for a smart nation. If HDBs are turning into condos, then condos are turning into hotels. Now, it is not surprising to see designer swimming pools and concierge services that make home feel like a permanent staycation.
Verdict: Resale flats designs are, admittedly, still stuck in the past. It’s time to go back to the future with new houses.
Exit strategy: How sellable is it?
Due to the minimum occupation period (MOP) of five years, BTOs can’t be sold off for at least eight to nine years after factoring in the waiting period. Resale flats and ECs are immediately available for sale once you hit the five-year mark. Condos can be sold anytime, like tomorrow.
Verdict: With the slew of cooling measures implemented, new home and resale buyers have to think twice about seeing property as an investment tool. If you really have to buy and flip, and you have the capacity to stomach the stamp duties, by all means put your money on a new condo. But new houses are generally a good buy, if we’re talking about equity accumulation. You have a fresh lease and time horizon on your side.