The 5C’s of Housing that All Singaporeans Should Know

7 min read

Growing up, we’ve all heard about the five Cs. Singaporeans are obsessed with getting cash, car, credit card, condominium and country club membership. But are we familiar with the five Cs of Housing?

1. Capital

Buying a house requires money. And depending on the type of house you choose, that amount varies.

If you are leaning towards getting a BTO, remember that while there are a number of grants and loans available, you will have to fork out a minimum 10 per cent down payment with an HDB loan, and 25% down payment for a bank loan. This means that if the BTO costs $350,000 you have to come up with $35,000 upfront (for HDB loan), and $87,500 for a bank loan.

Note that the required down payment will increase if you don’t meet the Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR). The TDSR limits your monthly loan repayments to 60 per cent of your monthly income, and MSR limits your home loan (excluding other loans) to 30 per cent of your monthly income.

Not meeting either means having a longer loan tenure, or having to make a bigger down payment.

If you want to be prudent, the price of the property that you are eyeing should be around five times your annual income, and never more than seven times your annual income.

2. Capital Appreciation

Capital appreciation is important investors and home owners.
Some believe houses in mature estates appreciate more; others believe the direct opposite is true.

Capital appreciation refers to the rising value of your property over time.

If you’re planning to upgrade from a resale flat to a condominium, or counting on your home as a retirement fund, capital appreciation is important. But the question is, how much can a property appreciate?

This is a speculative question with no guarantees. For example, some might say houses in mature estates appreciate faster because all the amenities are already in place. Others might say non-mature estates are better, as you buy for cheaper (and there’s room for the value to rise as the area becomes more built up, as was the case with Jurong Gateway).

You might want to consider checking the URA Master Plan, to help you estimate the potential capital appreciation of a property. Because the resale of your property will probably take place many years down the road, it’s important to look at what the neighbourhood will be like at the time; not just as it is now.

However, do note that while the URA Master Plan provides valuable information, it is not a guarantee. Plans can change, and even the URA’s efforts to develop an area don’t always go as intended.

3. Cooling Measures

The main cooling measure to note is the Additional Buyer’s Stamp Duty (ABSD).

Government implements cooling measures
It is hard to predict what rule and regulations the government will implement next.

ABSD does not affect Singaporeans buying their first property but it does affect Permanent Residents (PRs) and some foreigners.

As of 6 July 2018

  • PRs are subjected to ABSD rate of 5% when they buy their first property (no change from the former ABSD rate)
  • Foreigners buying any residential property will be subjected to ABSD rate of 20% (it was formerly 15%).
  • Foreigners who are Nationals and Permanent Residents of Iceland, Liechtenstein, Norway or Switzerland Nationals of the United States of America are eligible for ABSD Remission under Free Trade Agreements. They will pay the same ABSD rate as Singaporeans who are buying their first and subsequent property.

A key takeaway here is that government interventions have an immediate impact on the housing sector. It’s hard to predict what rule and regulations will be implemented next.

4. Capacity

Yes, size does matter.

Shoebox units (500 square feet or under) seem to be the popular thing now but do buyers actually know what they’re getting themselves into? Buying a private property first might be problematic – if you want to settle down later, the shoebox is too small. And yet, you will have to sell your shoebox before being eligible to own an HDB flat.

The reverse is also problematic. You might decide on a landed property, and find your children moving out when they get married. Now, you’re left all alone with your spouse, and there are five vacant rooms.

Don’t assume your capacity needs will remain the same throughout your lifetime.

The size of the house matters if you want to rent it out
HDB regulations limit the number of occupants that can live in an apartment – owners take note!

Capacity also matters if you are planning on rental income.

According to the HDB regulations, owners are not allowed to rent out the bedrooms in anything less than a three-room flat. They can only rent out the unit as a whole, and the maximum number of tenants allowed in such flats is four.

The same does not apply for owners of three-room, four-room and five-room flats. Three-room flat owners can rent out one of their bedrooms, and have a maximum of six occupants allowed in each flat.

Four and five-room flat owners can rent out two of their bedrooms, and have a maximum of six occupants allowed in each flat.

5. Community

If you find yourself constantly hanging around areas far from home, this could be a sign of a community mismatch.

Sometimes, you might have gone out of your way to conduct extensive research prior to buying that house. But after three years, you realise that you have few friends there, the area bores you, or it’s inconvenient. So what happened?

It’s important you recognise your needs are constantly changing. What you kept a lookout for at the beginning might not be relevant years later. For example, you may have moved into an area just because your child’s school is nearby. But once your child is off the university, you may find that you loathe the quiet or dullness of area.

Remember to adopt a futuristic mindset whenever you’re looking to buy a property. Consider not just your short term needs, but whether you’ll be happy to live there 10 or 15 years from now.

There are senior-friendly communities in Singapore

You are entitled to receiving a Proximity Housing Grant (PHG) of $20,000 if you live near your parents! For most people, living in an environment that is suitable for their family is their main priority.

It’s worth considering getting a house in senior-friendly communities such as Admiralty, Whampoa and Bedok if you have elderly family members.

In these areas, there is an added focus on senior citizen’s healthcare needs which makes it convenient for the elderly to visit the doctor or get access to community support.

Alternatively, if your family has young children, you might want to look out for neighbourhoods with an abundance of childcare centres, schools and tuition centres.

You might also want to consider getting a flat near your parents home if you have young children. Practical reasons include receiving a Proximity Housing Grant (PHG) of $20,000 and saving money on childcare expenses by having them look after your children while you’re at work.

In some cases, the community outweighs the more obvious value of the property. For instance, although Geylang is just ten minutes away from the Central Business District (CBD), many families are unwilling to settle there due to the proximity of the Red Light district, and the sort who frequent it.

Do you know other Cs of Housing? Voice your thoughts in our comments section or on our Facebook community page.


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Looking to sell your property?

Whether your HDB apartment is reaching the end of its Minimum Occupation Period (MOP) or your condo has crossed its Seller Stamp Duty (SSD) window, it is always good to know how much you can potentially gain if you were to list and sell your property. Not only that, you’ll also need to know whether your gains would allow you to right-size to the dream home in the neighbourhood you and your family have been eyeing.

One easy way is to send us a request for a credible and trusted property consultant to reach out to you.

Alternatively, you can jump onto’s Property Value Tool to get an estimate for free.

If you’re looking for your dream home, be it as a first-time or seasoned homebuyer or seller – say, to upgrade or right-size – you will find it on Singapore’s fastest-growing property portal

Meanwhile, if you have an interesting property-related story to share with us, drop us a message here — and we’ll review it and get back to you.

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