Monday, 15 February 2021

KC asks readers: BTO or Resale HDB? (Dilemma)

  Posted at  February 15, 2021 6 comments


Share your tips with KC! What did you do for your HDB purchase? Was it a BTO or resale? (context: KC is currently perplexed over HDB housing.. and inclined to buying resales. However, this seems to be a complicated process. I invite you to share with me what did you do if you bought resales or BTO HDB and if there are any information that would be good for me and others to know!)

First of all, KC would like to wish all investors and readers a Happy Chinese New Year 2021

Readers who have been following me would know that KC has been setting aside cash for wedding/ housing plans and as such have been watching the market go by without much updates to the portfolio. This is due to the mantra that I cannot invest money that I would need for bigger ticket items in near future (~ 2 years time). 

Recently, KC have tried to BTO 2 rounds of BTO exercise but failed in both. The recent Covid-19 situation is not helping the BTO projects with extended delivery dates for some projects to be 2027 or 2028. (KC would be 41 by then, that's crazy!)


Headache over housing


Buying or owning a house is probably one of the biggest ticket items for any Singaporean couple. With escalating BTO and Resale prices, owning a house seems increasingly difficult and many would have to work for life just to pay off the housing loan. Without doing the sums and proper planning, the financial strain is bound to create repercussions and consequences to the family in future. 


The HDB Flat


HDB's mission is to "...provide affordable, quality housing and a great living environment where communities thrive." It was set up in the early 1960s to address housing concerns. Fast forward to 2021, generations of Singaporeans have benefited from the system. Recent trends however, do worry KC as to whether HDB can indeed keep up with the "affordable portion" with new projects and resale flats getting more expensive for a housing that would expire by 99 years. Without going into the debate of the pricing of HDBs and resale, these are example of trends that I am looking into:


Regarding Lease Decay (HDBs will appreciate/depreciate over time till its end of 99 years): https://lifefinance.com.sg/whats-the-value-of-my-leasehold-hdb-3-dealing-with-lease-decay/ 

Our Resale flats pricing trend: https://www.99.co/blog/singapore/million-dollar-hdb-flats-are-hiding-a-worrying-resale-price-trend-heres-proof/


My main thoughts and observations on current situation (I may carry bias):

 

HDB is an expensive outlay the Singaporean cannot avoid.
➤ We can use CPF for our housing needs, but CPF is a shared pool meant for retirement and healthcare too. The more we use for housing, the less we have later on for retiring. we need to plan ahead
➤ HDBs will depreciate over time and the seemingly rising resale prices may not tell the full story of older flats that depreciate quicker (it is far more complicated to valuate them as such) 
➤ Covid-19 has delayed projects (can one afford to wait?) and also pushed up resale prices (can one afford to pay the price for not waiting?)


The solution as they say is to: "Plan within your means". (But easier said than done).


Keeping Options Open

My partner and I were filled with hope, originally planning to get a 5 room HDB flat in a non-mature estate. However, after 2 rounds of failed tries and staring at an ever increasing timeline for landing a flat with BTO - the future looks challenging. The average Singaporean would do what they do here - complain.


KC ranting mode (don't mind me): How are we expected to get married, form a family and start having kids when we can't even land a house that we like?! 

At the moment, it feels like going back to square one all the time and the timeline just gets pushed back all the time. We are still keeping options open in hopes of future BTOs, SOB (sales of balance), or resales but that hope is fading a little with each setback.

Real world, real issues

Unfortunately, one cannot always expect the government to save us from our individual issues as they have the bigger things to worry at hand. That is why there are housing grants to help couples like us for resale. And, we have to take decisions. And increasingly, it looks like the resale flat option is more realistic because there is less uncertainty over timeline of BTO delivering. 

Now, going on this route isn't quite straightforward. It does come with a fresh set of challenges:

➤ Wah, what if kena those Ah long flats, how? (previous owners owe debts)
➤ Where to buy?
➤ Lease remaining
➤ Opinions of elders
➤ Loan/ cash upfront
➤ Accrued interest and resale levy (seems like govt trying to prevent flipping)

But, resale flats does come with some pros:

➤ Don't need to wait so long
➤ Can choose locations that you want
➤ More flexibility for choices
➤ More spacious units

So, this is not supposed to be a ranting post by the way. KC is actively seeking wise fellow readers and investors who have trotted down this resale path to share your experience and knowledge here with me! 

Share with me and fellow readers!

Feel free to share with me articles, comments and your story of how you overcame your challenges. I certainly hope these nuggets of wisdom help me in my own journey as well.

K.C.
If you like this post, you might like our facebook page as well. I'm also on Investing Note. I am also partnering with Reit-tirement blog and other bloggers to share ideas at: https://www.facebook.com/groups/1397925937071525/

4. Why I refuse to spend >15-30 minutes budgeting each month

Portfolio updates:
I have switched to using stockscafe to monitor my portfolio:


Disclaimer: The views expressed, opinion and information in this article are strictly for informational purposes to encourage educational discussions only. No content on this site constitutes - or should be understood as constituting - a recommendation to enter any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a particular stock or investment approach is suitable to the financial needs of a specific individual. No representation or warranty expressed or implied is made as to, and no reliance shall be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained on this website. "30 Year Old Investor" shall not be liable whatsoever for loss or damages of any kind arising from the result of any use, reliance or distribution of the articles or its contents from information contained on this website. 

6 comments:

  1. Time is too precious to waste. Go for resale if you can afford it.

    ReplyDelete
    Replies
    1. Hi Yeo,

      Yes, indeed. Have myself seen issues of my sister staying with her in laws. In my opinion, the wait is long and unpredictable. Resale puts some control back in our hands... Hoping for a good unit to come by.

      Delete
  2. buy resale, dont take first timer grant, you can apply for bto or ec after mop.

    ReplyDelete
    Replies
    1. If we don't take first timer grant, we retain it for future use?

      Delete
  3. Just get a Resale Flat that just MOP (basically 5 year old). Minimal renovation needed and you get a newer flat and get to enjoy the grants as well. Otherwise get a max 20-25 years old Resale Flat that is bigger (110-130sqm) and enjoy the space! :)

    ReplyDelete
    Replies
    1. ^ yes. currently going around to view. 5 years MOP is a little tough and expensive. considering a 25 yo flat..

      Delete

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You don't need to pay anyone/company to have a plan of your own and work towards achieving Financial Independence. Only we alone have no conflict of interest with our own money. "30 Year Old Investor" is a personal blog about a Singaporean's savings and investing journey.


Being the average Singaporean, K.C. is also interested in good food, a little bit of politics and a good slice of humour.

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Disclaimer: The views expressed, opinion and information in this article are strictly for informational purposes to encourage educational discussions only.

No content on this site constitutes - or should be understood as constituting - a recommendation to enter any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a particular stock or investment approach is suitable to the financial needs of a specific individual. No representation or warranty expressed or implied is made as to, and no reliance shall be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained on this website.

"30 Year Old Investor" shall not be liable whatsoever for loss or damages of any kind arising from the result of any use, reliance or distribution of the articles or its contents from information contained on this website.

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