{"id":52602,"date":"2022-06-24T10:36:03","date_gmt":"2022-06-24T02:36:03","guid":{"rendered":"https:\/\/blogstaging.99.co\/bto-or-resale-hdb-first-timer-dilemma-2\/"},"modified":"2023-08-04T17:46:07","modified_gmt":"2023-08-04T09:46:07","slug":"bto-or-resale-hdb-first-timer-dilemma-2","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/bto-or-resale-hdb-first-timer-dilemma-2\/","title":{"rendered":"BTO or resale HDB flat: First-timer dilemma"},"content":{"rendered":"
<\/div>

The classic BTO story goes like this: <\/b><\/p>\n

\"man
Classic story: Boy meets Girl. Boy proposes. Girl accepts. They apply for a BTO flat together and get married in three to five years.<\/figcaption><\/figure>\n

Why three to five years? Because that\u2019s how long it usually takes for a bunch of flats to be built and be liveable. Conventional wisdom says: get engaged, live with your parents, and when your flat is almost ready, get married and then move in together and make lots of babies. (That last part is untrue.)<\/p>\n

It\u2019s a typical Singapore love story for good reason.<\/b><\/h2>\n

Every now and then, we get young 20-somethings asking us whether they should buy BTO or resale.<\/p>\n

As much as we hate to admit it and despite the fact that resale HDB flats have their good qualities, HDB BTO<\/a> flats are the most affordable option and definitely should be considered first.<\/strong><\/p>\n

You gotta believe us, because we absolutely do not benefit when you buy a BTO flat. After all, we’re a property portal; our website only deals in private property and resale HDB flats.\u00a0<\/b><\/p>\n

But anyway, you wanted reasons? Here they are.<\/p>\n

Yes, generally resale flats are bigger. But they are also more expensive.<\/b><\/h2>\n

\"resale<\/h3>\n

BTO flats are always cheaper than resale flats, as they aren\u2019t being sold by owners looking for capital gains. On the other hand, almost every Singaporean expects to make money by selling their flat, sometimes way above the valuation. Especially now, given that resale demand is outstripping supply.<\/p>\n

During the recent May 2022 BTO launch<\/a>, a 4-room flat in Yishun has a median price<\/a> of S$373,000. In comparison, the median price of a comparable resale flat nearby<\/a> is S$520,000.<\/p>\n

And yes, while older HDB resale flats tend to be bigger and more convenient, they are also more expensive.<\/p>\n

If you want to check whether you\u2019re getting value for money, it\u2019s best to assess the property in terms of its price per square foot.<\/p>\n

That said, even taking different apartment sizes into account, BTO flats are still substantially cheaper than resale flats.<\/p>\n

Sure, both of them have grants, but BTO still wins in cost. <\/b><\/h2>\n

\"both<\/p>\n

For BTO flats, there’s the option to apply for the Enhanced CPF Housing Grant (EHG)<\/a>, which can come up to S$80,000.<\/p>\n

And for resale flats, the maximum grant amount is actually double at S$160,000 \u2013 from the Enhanced CPF Housing Grant (EHG), Family Grant<\/a> and Proximity Housing Grant (PHG)<\/a>.<\/p>\n

Whether you can get the grant, and how much of it depends on whether you meet certain eligibility criteria, such as your household income.<\/p>\n

But given the higher resale prices for the past two years, BTO flats are still generally cheaper even after taking into account the grants.<\/p>\n

Let\u2019s assume you get the maximum grant amount. Using the above prices as an example, you\u2019ll be paying S$293,000 for the BTO flat, which is still lower than the S$360,000 you\u2019d have to pay if you\u2019re buying a resale flat instead.<\/p>\n

In this case, BTO flats are still cheaper, by a landslide.<\/p>\n

If you can wait long enough, BTO flats having a good location is only a matter of time.\u00a0 <\/b><\/h2>\n

\"The<\/p>\n

Resale flats are sold on the market and can be found about anywhere on the island, granting you ample choice in terms of location.<\/p>\n

For the location of a BTO flat, you are dependent on HDB launch sites. Over the past one year, HDB has started increasing BTO flats in mature estates — some of which are even in prime locations<\/a> such as Rochor<\/a>.\u00a0 This can make the projects in the less mature estates less attractive.<\/p>\n

Still, as argued in a related article<\/a>, less mature estates, while often viewed as less appealing to their mature counterparts, do not necessarily have a worse location.<\/p>\n

Indeed, with the government set on extensively developing every inch of the island, your BTO area will sooner or later come to flourish, such as Jurong East<\/a> with the plans for it to be a second CBD.<\/p>\n

There\u2019s also less traffic and noise pollution in less mature estates (quiet enclaves). So if you can bear with initially living in an ulu<\/em> neighbourhood, you may very well be looking at some healthy property appreciation in the future.<\/p>\n

BTO flats will last you a lifetime. Resale flats might not (unless you die early)<\/em>. <\/b><\/h2>\n

\"BTO<\/b><\/h3>\n

Lease terms matter. Why? Because we are all homeowners, right? Well, kind of, or rather \u2013 kind of not. BTO flats come with a 99-year leasehold.<\/p>\n

Older HDB flats can easily have only 60 to 70 years left on their lease, and by any standard of logic that \u2013 everything else held equal \u2013 should be making them worth less than newer BTO flats with 99 years of lease.<\/p>\n

While few people may at this point yet be factoring it in, there will probably sooner or later be a point when the end-of-lease factor<\/a> is locked into our collective consciousness, and when that time comes, homes with little time left on their lease will see their value take a hit.<\/p>\n

Here\u2019s one way to think about it.<\/p>\n

Think of your HDB flats as rented apartments, and calculate how much you\u2019re paying monthly for rent.<\/strong><\/p>\n

For a 4-room resale flat with 93 years left, costing around S$500,000, that\u2019s:<\/p>\n

S$500,000 \u00f7 93 years left \u00f7 12 months = S$448 per month<\/strong><\/p>\n

For a 4-room BTO flat with 99 years left, costing S$373,000, that\u2019s<\/p>\n

S$373,000 \u00f7 99 years left \u00f7 12 months = S$314 per month<\/strong><\/p>\n

Also, it\u2019s harder to resell your resale flat 15 to 20 years down the road\u00a0 due to the decaying lease.<\/p>\n

Based on this, BTO flats win.\u00a0<\/b>
\n<\/b><\/p>\n

Be prepared to pay more for reno for a resale.<\/b><\/h2>\n

\"Resale<\/p>\n

BTO flats come in a vanilla state, unfurnished and without any decor. Good? Bad? If you see your new pad as your very own Singaporean Sistine Chapel, then a BTO flat can serve well as your blank canvas.<\/p>\n

If you do not mind other people\u2019s taste, or if it’s to your liking, then resale flats may suit you more. You do not have to do all the designing yourself (or hire a pricey interior designer). You can simply pick a resale flat with an interior you like to begin with.<\/p>\n

BUT, if you do intend to do some reno, more often than not, time and time again, resale flats will set you back more. This is because you’ll need to hack away existing renovations as well as install new things. You might need to fix the electrical wiring as well.<\/p>\n

So why buy a resale flat?\u00a0<\/b><\/h2>\n

\"Citizenship,<\/p>\n

It generally depends on three factors: citizenship, income ceiling and waiting time.<\/p>\n

Citizenship<\/b><\/h2>\n

If there\u2019s no Singaporean Citizen (SC) in your family nucleus, then you have no choice. The only form of public housing PR families can buy is a resale flat<\/a>.<\/p>\n

Income ceiling<\/b><\/h2>\n

Well, this one is pretty straightforward. If you bust the S$14,000 income ceiling, you can\u2019t buy a subsidised flat. Hey \u2013 earning a lot of money is a good problem to have.
\n<\/b><\/p>\n

Waiting time<\/b><\/h2>\n

In this aspect, resale flats win \u2013 hands down<\/em>. Especially these days when BTO flats are faced with construction delays. With resale flats, you can generally move in within two months after sealing the deal.<\/p>\n

With BTO flats, not so much. As noted previously, most BTO flats take around three years to five years to be developed.<\/p>\n

This leaves you with two options: either stay with your parents or rent a unit while waiting for your flat to be completed. The former will help you save money, while the latter will allow you to start an independent life with a new home.<\/p>\n

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HDB resale flats for sale<\/h4><\/div>\n
See all listings<\/a><\/span><\/div>\n <\/div>\n
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\n <\/div>\n
\n \"154B\n <\/div>\n
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154B Bedok South Road<\/div>\n
Singapore 462154 \u00b7 D16<\/div>\n
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\n \"bedroom\"\n 3<\/span>\n <\/div>\n
\n \"bathroom\"\n 2<\/span>\n <\/div>\n
\n 1,001 sqft<\/span>\n <\/div>\n <\/div>\n
S$ 1,050,000<\/div>\n <\/div>\n
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