Out of the different properties available spread across Singapore, buying resale Housing and Development Board (HDB) flats is one of the hottest property moves to make. A simple overview would bring you to the fact that HDB flats are simply more affordable considering that they are high-quality properties, too. Thus, it comes as no surprise that 8 out of 10 Singaporeans are now living in an HDB flat.
And because there is a wide range of flat types and layouts which cater to various household sizes and housing budgets, more Singaporeans have HDB resale flats as their first property of choice.
If you are one of those who is seriously considering a HDB resale purchase, here are 9 things to consider:
Type of HDB
Since there are several types of HDB floor plans, make sure to choose one based on your requirements and preferences — simply put, your needs and wants. Sure, a two-bedroom space appear to be affordable now. But what if you and your fiancé plans to have children in the next few years? Doesn’t a four-bedroom unit seem more realistic and practical?
House Lease Longevity
All HDB flats have a 99-year lease. After which, they go back to the hands of the HDB. Because of this, an older resale unit is harder to sell. Therefore, you lose your capital gains since you won’t be able to resell it in the future. There are more CPF and loan restrictions for older resale HDB flats, so be sure to check the duration of the house lease before actually eyeing that unit as a prospective.
Eligibility/Qualifications
Of course, owning a house or property is not entirely just a right. Moreso, it is a privilege. Therefore these units built and developed by HDB come with certain eligibility conditions. For instance, a single citizen cannot buy a flat until he or she reaches the age of 35. Other general eligibilities include citizenship, family and marital status, and property ownership. Singapore Citizens (SC) or Singapore Permanent Residents (SPR) are allowed to buy HDB flats either from the government or through resale in the market, barring eligibility disqualifications. So buyers need to check whether they meet the requirements of the Ethnic Integration Policy and Singapore Permanent Resident Quota Policy on the date of resale application. However, foreigners are not allowed under all circumstances to purchase HDB flats. Equally important are the income eligibility requirements.
Budget
Speaking of income eligibility, purchasing an HDB resale flat will require an upfront or initial payment ranging from 20% to 30% of the HDB resale price. And since you are on the fence of buying an HDB resale flat, then chances are you aren’t vying for a private property, let alone an executive condo. You are, in short, on the financial practicality side. Therefore it would be best to have a fixed, non-negotiable budget wherein everything from taxes, renovation, furniture, and other incidental expenses had to fit within that budget. Also, buying resale HDB could be financially advantageous and less expensive since first-time buyers can qualify for various subsidies and grants. ECs and condos, on the other hand, will break your bank. And as per HDB, their Resale Price Index moved from 88 to 133 in the last 20 years, resulting in a 51% gain in the value of the HDB flat. Which means…
Good Investment
Your HDB resale could very well be a good investment for you. Think in terms of capital gains. As we all know, having your own property enables you to build up equity because property owned is an asset. Factoring in the inflation rate of more than 2.5%, your HDB resale price or value could double in twenty years time. So if you’re hesitating on purchasing a resale HDB, thinking in terms of investment and future value might swing you to the affirmative.
Timeframe and Level of Commitment
I guess the similar question for these two is the same as with your budget: how much do you have? How much time do you have or what timeframe are you looking at? Are you looking to settle down? Are you seriously ready to commit to something for the long term? If so, then the best option is to buy an HDB resale flat instead of renting. Also, BTO wait times are long. So if you want a unit ready soon, then HDB resales are the best way to go. And as for commitment level, are you willing to maintain the flat and all that goes along with it? The repair works, the structural changes that you may want or need to have. As we all know, buying a property gives us the complete freedom to change the entire look of your home; however, much effort is also expected.
Space and location
The good thing about resale flats is that you get to choose your location. Either you are vying for convenience, which will require more budget, or you are bargaining on price point, which may have fewer features and amenities but is surely within your budget. You get to decide. And once you’ve done that, you can now check on the space or floor area, which you will be pleasantly surprised with. Compared to BTO flats which are relatively small, HDBs have a larger coverage area. So it’s best to think about the space you need that will be compatible with your current and future lifestyle. Your aspirational goals will kick in high gear, so get ready.
Amenities and Facilities.
HDB flats are usually favored because of their proximity to transportation facilities and various amenities. If you want to easier access to the MRT and buses, then HDB flats should be your property of choice. Also, since it is how HDB designed it, HDB buildings have easier access to amenities such as parks and playgrounds, hawkers, supermarkets, malls, hospitals and especially schools. They want it to be an social ecosystem on its own, so everything is within reach. To be able to have a full appreciation of the amenities around you, survey the neighborhood area by walking around so you can imagine living there. Which brings me to my last point…
Careful inspection
Yep. Since you aren’t the first owner of the property and you might not know who the first residents are, it’s alright to be overly cautious. By all means necessary, be as vigilant as possible and check all important details related to the sale of the HDB property. Aside from checking the actual livable condition of the unit – such as the flooring and walls, cabinets and all the built-in features – check for the history of the unit as well. Get to know the sellers and their RFS. DO they have any problems with their loan facility? Are you possibly inheriting not just some bad juju from the place but actual, concrete problems like bad deals from loan sharks and the like? Is the unit facing the MRT too much or too near that there’s actual, audible noise that’ll be too unbearable for you? These are things that might be hidden by window-dressing type of amenities, so do your due diligence.
Just to recap, every property type has its pros and cons, benefits and flaws. The beauty of buying an HDB resale flat is that it lets you enjoy the financial advantage that most homeowners have.
Because you’ve taken that bold leap of buying a resale HDB, paying off your mortgage takes you a step closer each month towards full ownership. Unlike renters who pay rent, which is like dishing out money that you’ll never see again, paying for the HDB resale that you bought gives you opportunities for significant capital gain.
It’s brilliant actually because doing so proves that you’ve taken the step towards achieving the science of real estate. You have carefully considered all options which brought you to the choice of buying a resale HDB. And with that, you’ll reap the benefits, knowing that it’s the right choice of property for your needs, circumstances, and future plans.
