Lessons I learned from buying a house in Singapore

Are you a first-time home buyer? Or an HDB upgrader? Either way, it’s likely your first time exploring the private home market. Selling your house is the easy part, buying your next choice unit is the hard part. HDB or Condo? New or Resale Houses? So many choices. So much confusion for those who are new to the market. Hence, I like to share the lessons I learned from buying a house in Singapore. We went house hunting in 2022.

Of course, I am no expert and do not have as much experience or access to statistics as a property agent. So I roped in Pamela, a property agent with Propnex to give you more insights and advice in this post. I will quote her if a particular piece of advice is from her. And if you need professional advice too, skip to the last section about property agents.

Jump to the relevant section:

Should I buy HDB or Condominium?

Know your Buying Objective

Before your property search, know the objective of your house purchase. This will narrow down your choices to the pool of either private or public housing. Property agents usually recommend private housing for investment. That’s because public housing is meant to be affordable and so the potential for price appreciation would not and should not be as great as private.

Good property investment can mean either a significant price appreciation or a good rental yield. Real estate is just one of the classes of investment. You can also diversify into equities, etc. Use my referral codes to get more out of your investment in equities and also insurance. 😉

So is your house purchase for your own stay, investment or both your own stay and investment?

The last group will have the toughest time finding a unit that ticks off all the boxes. That’s because a house suited for the owner’s lifestyle needs and wants might not be good for investment, and vice versa. But that doesn’t mean impossible, just got to hunt a bit harder.

Know your HDB Grant

With the buying objective in mind, you should have a clearer idea of whether to go for an HDB or a condominium (“condo”). But first, find out how much housing grant is available to you as Families or Singles (with parents, non-resident spouse or other first-timer single(s)). Factor this into your calculations and it will help you further in your decision-making. Most first-timers, especially young couples, will usually want to enjoy these grants.

Do note there is a recent change in income assessment and grant disbursement as reported on channelnewsasia.com on 9 May 2023.

Know the different available choices

Pamela suggested buyers choose in this order:

  1. Resale HDB, especially for young couples who are first-time buyers.
  2. New launch condos but rent in the meantime.
  3. The last choice for her would be the resale condos, especially when interest rates are high.

Read on to find out her reasons for suggesting this order.

Do note this is a general suggestion, as there are many other factors that come into play and affect the best decision for you. Factors such as HDB grants, loan amount, undervalued units, etc.

About Resale HDB – New vs Old

Why resale HDB?

If you are a young couple, a first-timer (with grants), or someone who wants a big space for own stay and not investment, Pamela suggests considering a resale HDB first. Few reasons such as utilising grants, building up capital to upgrade, and getting a value-for-money space.

For example, young couples usually want to move into their own home as soon as possible. Hence, Pamela would suggest getting a resale HDB instead of a resale condo. Moreover, resale HDB would be a good choice for first-time home buyers, considering the grants they can enjoy.

Type of resale HDB: new vs old

When selecting a resale HDB unit, one should be mindful of the remaining lease. Generally, it is recommended for young couples to get an HDB that is relatively new, such as those that have just reached their minimum occupation period (“MOP”). That is because they are likely to stay in the house for quite a long while.

Hence, consider your exit strategy when looking at the remaining lease. Are you going to stay for a long period of time and not sell? Even if you do plan to not sell in the short term, circumstances can change and you might want to sell your house sooner than you think. When that happens, will the next buyer prefer an older or newer house in future? Bear in mind the house will get older than the old flat you are going to buy.

Pamela mentioned that the supply of HDB flats will increase in the next two years. It’s also likely that this supply will exceed demand, causing prices of HDB flats to stagnant and perhaps dip a little.

With the increased supply in the HDB market, buyers will have plenty of choices. Buyers will usually prefer a newer flat (a nice renovation is a plus) to units with older leases. Currently, even very old HDB flats get snapped up because of the limited supply on the market.

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About Condominiums – New Launch vs Resale

We went to view houses for possible purchase and rent during 2022. We were quite fascinated by the sheer number of condo developments out there, Singapore indeed has many well-to-do folks around. However, quite a number of condo units we viewed looked like HDB flats on the inside even though they look quite good on the outside (i.e. the development). Of course, some older condos look like they need much maintenance on the outside.

Type of Condos: new vs old

As mentioned previously, you should look into private housing if your next house is meant to be an investment. Similar to HDB, you got a choice between the new and the old, aka new launch and resale condos.

Pamela suggests going for a new launch project instead of a resale condo at the moment when the mortgage interest rates are high.

Of course, not all new launch projects are good, and not all units of a good launch project are good. If there’s no good one currently or in the upcoming projects, or you can’t get a choice unit, you also don’t want to wait too long for the next one, because private housing prices are likely to go up while you wait. Nobody can time the market, but that’s the general trend. You might incur opportunity costs from waiting for a good new launch project to appear.

Why a new launch condo?

Typically the PSF of a resale condo is lower than a new launch condo. Hence, a resale might be more enticing for the buyers. However, Pamela recommends a new launch condo over a resale condo for those who have alternative housing, such as their parent’s place, or are willing to rent.

With a crazy rental market in Singapore these days, it seems like a poor choice to buy a new launch and rent. The rental fee feels like “wasted” money when it can be channelled into the mortgage. However, interest rates are high too!

Since it’s progressive payments for new launch condos, buyers can ride out the high-interest rates in the next couple of years. According to Pamela, sometimes paying for interest can end up being more than the sky-high rental prices for units of similar sizes. One good thing, rental seems to be easing in 2nd half of 2023! Based on her experience, the future sales proceeds from the new launch purchase can sufficiently cover past rental payments and still have a sizeable profit if you choose a unit that can hold its value. But do your own sums to see what works for you!

Moreover, mortgage and interests start from the day buyers take over their house, not forgetting renovation costs. So delayed mortgage payments give time for young buyers to build up their capital.

Here’s a published opinion on why “New uncompleted private homes may be better buys than resale units amid high interest rates“.

But do note that although first mover has its advantages, it is not always the case. Here are some statistics you can read through at stackedhomes.com/editorial/buying-a-new-launch-condo-early-vs-late-heres-how-it-compares.

Choosing the Condo

Whether it’s a new launch or a resale condo, Pamela considers these factors before deciding if a condo project is good:

  1. Location, location, location! Well-sought-after locations hold better resale value in future.
  2. Land size and project size. A project with more units will see more rental and sales transactions. This will greatly help in determining prices when you wish to sell or rent your property in the future. For freehold properties to be considered good project, they must have a huge land area and low density.
  3. Proximity to amenities. Most people love convenience!

And is it worth it to pay a premium for a freehold over a leasehold unit? That depends on your holding period and objective. One of the reasons people choose freehold is to pass the house on to the next generation.

Having said all this, it’s best to speak to a property agent who will tailor his or her recommendations based on your budget and objective.

About Property Agents

Meeting a Property Agent

Before you meet with a property agent, do your research. Reading this article is a good first step. There’s another good reading resource at stackedhomes.com. I also find good insights from TT Lum’s youtube. You can also “verify” the property agent/salesperson on the public register: https://www.cea.gov.sg/aceas/public-register/sales/1. There’s also a list of suspended and revoked salespersons.

After meeting with an agent, pause before you commit to buying or selling. Do further due diligence and calculations to make an informed decision. You might even want to seek another person or agent for a “second” opinion.

Different Property Agents

One thing I realise after transacting in real estate, different agents have different

  • Opinions. They each have an idea of what’s good.
  • Strengths. Some are suited for new buyers because they are detailed oriented, hand-holding you through the intricate details of property transactions – especially if you are selling and buying at the same time. Others are better for experienced and deep-pocketed buyers who have less need for walking through the process and prefer insights and directions on property picks.

Engage an agent you can trust and be comfortable with. Find someone who suits your needs. I have since learned, property transactions can get personal and emotional for many people.

About Pamela

Pamela helped me a lot in my recent property transaction. If not for her, we would have lost out on a good deal because of admin matters. She was patient in explaining the details and hand-held us through the process, as we were first-timers in selling and purchasing concurrently.

She didn’t earn any commission from us and was solely helping us out of goodwill. She was not even my friend but my friend’s relative who saw how much we needed clarification and assurance.

So if you need any help in your property transaction, you can call/WhatsApp Pamela at +65 9478 4324.

Final note

Do note that the views and opinions expressed in this article are solely Pamela’s and my personal opinions. Please read the disclaimer at the end of this post.

Lastly, I can’t emphasise this enough: do your due diligence (other than hearing from your agent).

Do you have any other questions? Or good tips you heard/read? Share them in the comments section below. 🙂 Read the disclaimer and disclosure at the end of the post before you go. 😉

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