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?!
➤ Where to buy?
➤ Lease remaining
➤ Opinions of elders
➤ Loan/ cash upfront
➤ Accrued interest and resale levy (seems like govt trying to prevent flipping)
➤ Can choose locations that you want
➤ More flexibility for choices
➤ More spacious units
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Portfolio updates:
I have switched to using stockscafe to monitor my portfolio:
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Time is too precious to waste. Go for resale if you can afford it.
ReplyDeleteHi Yeo,
DeleteYes, 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.
buy resale, dont take first timer grant, you can apply for bto or ec after mop.
ReplyDeleteIf we don't take first timer grant, we retain it for future use?
DeleteJust 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^ yes. currently going around to view. 5 years MOP is a little tough and expensive. considering a 25 yo flat..
DeleteHey 30yearoldinvestor, I have the same dilemma as you. Failed to get a ticket at Kovan BTO, and wondering where should I get in future
DeleteHi FinanciallyFree!
DeleteI think consider the various factors and what works for you! I got a resale as I also failed 2 tries in Balloting (half year to a year gone due to covid delay BTO launches). I also therefore went to resale:
1. Purpose of unit (Some buy to stay long, some to "flip". This affects the likely lease you want left if you end up buying a resale.Personally I chose a 5 year MOP to keep options open, also - to keep renovations to a minimum.
2. Time factor/ uncertainty facing BTOs: Realistically speaking, many projects are under delay and facing a completion of 2027 onwards (collection of keys are typically 1 year later. Also, after you factor in delays to renovations, it is an uncertain timeline. Also, many contractors are going bust for BTOs.
Resale might seem a bit expensive but the pro side is that:
- saves you time (if cannot wait, e.g. age of couple, future plans like kids)
- you can choose the location, weigh up pros and cons of the resale units (no commitment until OTP agreed by both buyer seller)
- can choose a newer unit e.g. 5 year MOP to keep future options open
Other considerations will be renovation timeline and costs - the older units to be considered have less lease to start with and generally higher overhaul costs.
Are you still looking for BTO instead? I know some friends who don't mind bunk with parents but I'm not young anymore and I prefer to come into my own.
KC
Dilemma of adulting. Hope you found an ideal unit! I'm also pondering over this. One thought that really strikes a chord in me is that a flat isn't really an investment, especially as we we are now at a more mature phase as a country economically.
ReplyDeleteSo ideally, the house purchased will be viewed as a permanent place of residence, instead of viewing it with potential for flipping. Saves the hassle of overthinking too much as well.
Yes, I have recently got my resale! A HDB is a liability and a depreciating asset class if it is an "asset"... but we have to have a roof over our heads. I went for a 5 year MOP flat. Don't think I will be here in 95 years time hahaha.
DeleteYes. I'm adopting a wait and see after this phase..need to start somewhere.
@KC Congrats! did you take up the Family Grant for resale flats in the end?
ReplyDelete@Simon: Apologies for my delayed response!
DeleteI took the:
1. Family Grant ($50k), (14k combined salary ceiling)
2. Proximity Grant ($20k). (To live near parents/ child (within 4km)
Did not qualify for the Enhanced housing grant.
Sources:
1. https://www.hdb.gov.sg/residential/buying-a-flat/resale/financing/cpf-housing-grants/firsttimer-applicants
2. https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/resale/financing/cpf-housing-grants/living-with-near-parents-or-child
@KC That's $70K in grants for resale flats, not too bad right?
DeleteHi Simon,
DeleteIndeed, the $70k grant is technically "free" and its quite a sum of cash to young couples. The "grant" amount gets returned to our own CPF as well if we do sell the flat in future. The only Caveat it is given in CPF (not cash) that it will incur accrued interest as well. And there is the chance to incur resale levy.
All is good if one doesn't look to sell to profiteer (otherwise face those perceived penalties). Well, I guess I need a roof over my head and have to start somewhere.
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