Home Hunting For Singles: HDB vs Executive Condo vs Private Condo
There are enough housing guides for the couples out there. Perhaps it is time we have a singles’ appreciation session for a change and analyse which home type–HDB, Executive Condominium (EC) or private condominium—is best suited for the lone wolves of Singapore. To help us with our analysis, we also picked the brains of Ryan Lee, Senior Marketing Director at ERA Realty Network.
- Government grants make it more value for money
- Can be fully paid using CPF
- Fixed interest on housing loan
- Limited to only 2-room flexi BTO flats in non-mature estates
- Must be 35 years-old and above
- Not suitable for investment purposes
Working class Singaporeans would reflexively choose HDB, even if they have to wait until they are at least 35. Mr Lee resonates with his take: “As you can get government subsidies, buying a new HDB flat is the easiest way out for singles earning S$6,000 and below.”
We reflexively support it too. Prices start as low as S$100,000 for 3-rooms and it can be even lesser after factoring in CPF Housing Grants. Unlike the fiancé scheme, you are responsible for the financial commitment alone, unless you are applying under the joint singles scheme. Nevertheless, every cent counts. The incredible savings you stand to enjoy can be channeled into interior design and furnishings, because you would want to create the ultimate bachelor/bachelorette pad, right?
By applying for a housing loan with HDB, there is no need for cash down payment. Risks are also mitigated in the event of rising interest rates in the market, since HDB’s concessionary loan is fixed at 2.6%. Moreover, after fulfilling the minimum five-year occupancy period, you can choose to sell the flat and upgrade to a private property. If you had gone into the private market, turning back to HDB is a tough road.
Inconveniences associated with non-mature locations are, IOHP, a small price to pay for a value-for-money roof over your head. 35, though? Good, inexpensive things are worth waiting for.
- Cheaper than an ‘actual’ condo
- Comes with condo facilities
- Eligible for CPF Housing Grant
- May be suitable for investment
- High income ceiling: S$14,000
- Still significantly more expensive than HDB
- Must be at least 35 years old
- Five-year minimum occupancy period
- Usually based at non-mature estates
- No HDB loan
The executive condominium, known as simply EC, is the sandwiched class of housing between HDB and private properties. It is the grey area for those who don’t fit in the extremes. Similar to HDB restrictions, you have to at least be celebrating your thirty-fifth birthday to be eligible for ECs (maybe that can be a present for yourself) and you cannot sell the house within the first five years. After which, it operates like a resale HDB. After 10 years, ECs will then be fully privatised, enabling you to sell to foreigners.
Obviously, EC would cater to those with greater purchasing power or income above S$6,000. Since 2013, prices of EC have been inflating and you can expect 2-bedroom units to cost at least S$750,000. A bank loan is your sole option; going by the minimum of 5% cash payment, you better have at least S$37,500 on hand. The icing on the cake surely has to be the CPF Housing Grant that buyers can tap into to subsidise the cost. First-time EC buyers who are Singapore citizens can receive up to S$30,000.
Is the opportunist in you gleaming in anticipation yet? Thanks to the Family Grant, you are buying at a subsidised price and can potentially sell high from the sixth year onwards. But if you are planning to purchase a home for long-term stay, we reckon singles should still stick to HDB flats if the income ceiling is not already broken.
- Don’t have to wait until 35
- No minimum occupancy period
- Able to sublet immediately for side income
- Suitable for property investment
- Easy to befriend attractive expat neighbours
- Monthly maintenance fee, on top of property tax, stamp duties and legal fees
- Huge capital outlay: Upwards of S$500,000 for a tiny 1-bedroom
- No CPF grants and subsidies
- Most expensive housing type
- Did we mention it is the most expensive?
Ah, the luxury of condo living. Exquisite architecture, keyless entry, partially furnished apartments, Jacuzzi pools at arm’s reach. Is this not the best kind of modern tropical lifestyle among all the three housing options here? Why wait till 35 when you can do it now? Provided you have the cash, of course.
“Personally, most of my single clients end up purchasing a private condo for their own stay or investment,” Mr Lee said. But is it feasible for an average middle-income Singaporean single to own a condo before 35? Or is it still better to wait until 35 for that “easy way out”?
“I think it is better to own a property as soon as possible because property prices will rise faster than your bank’s interest rate or your salary increments. Don’t forget that time equals money.”
Mr Lee cited an example of a one-bedroom at Alps Residences, the cheapest condo launch he knows about. The price starts at about S$500,000. The 20% down payment would require S$25,000 in cash and S$75,000 in CPF. Together with S$9,600 in buyer’s stamp duty and S$2,300 lawyer’s fees, your total upfront payment is about S$119,000. So the question is, are you really able to scrape together that amount before 35?
The price to pay for instant gratification, or to beat HDB rules, is hefty. And that is why the gurus love to preach about starting a forced savings habit as early as possible. But what if it is too late to do that?
We have just the solution. Whoever said you have to apply for a condo as a single? How about singles? If you have other single friends who share the same independent, free-wheeling bohemian lifestyle as you do, propose a joint purchase to ease the capital outlay. From his own experiences, Mr Lee noticed that such arrangements are usually done between two to three individuals, although there are no restrictions on private property purchases. He also cautioned that it will be difficult to ‘downgrade’ to public housing if someone in the pack suddenly decides to get married and applies for an HDB with the spouse.
Well, marriage happened to eternal bachelor George Clooney. Who’s to say it won’t happen to you? And what if the bachelor/bachelorette lifestyle gets old? That’s the good thing about condos. You can ‘flip’ anytime when the price is right, and then you can move back in with your parents.