New parents opted for a S$1 million HDB over a condo — here’s why

SINGAPORE: Home buyers in Singapore often face the dilemma of having to choose between a resale Housing and Development Board (HDB) flat or a condominium. Deciding becomes even more complex when life circumstances change and new priorities come into play.

For first-time parents, the focus often shifts towards balancing the need for a more spacious home, spending within budget, and having the option to upgrade when other housing needs arise.

A Singaporean couple in their 30s, who recently became first-time parents, faced the exact same dilemma. They originally planned to move from the two-bedroom condo unit they were renting to a three-bedroom condo while remaining in the Bedok area.

However, after reviewing their finances, immediate housing needs as they were expecting a newborn, and long-term property plans with Royston, a property agent and partner property consultant at Stacked, they ultimately decided to purchase a million-dollar resale HDB flat instead.

Why they chose not to upgrade to a condo just yet

As with many home buyers, affordability was one of their biggest considerations.

The Stacked case study, based on a consultation with Royston, noted that the couple had an initial budget of around S$1 million and wanted to avoid overstretching themselves financially after welcoming their newborn.

As first-time buyers, they were eligible to borrow up to 75% of a property’s purchase price. However, given that their combined income was above S$14,000, they were not eligible for an HDB Concessionary Loan and had to rely on a private bank loan instead.

Based on their income and cash flow, their maximum loan quantum was estimated at around S$1 million.

Given the couple’s budget and their aim to avoid overstretching themselves on monthly repayments, Royston said they could opt for an older resale flat, which tends to be priced lower than units that had just reached their Minimum Occupation Period (MOP), while still having more space.

This means, if they went for a two-bedroom condo priced at around S$1.8 million, they would have paid S$5,000 monthly, instead of just about S$3,200 over a 25-year tenure for a S$1 million HDB resale flat.

The couple eventually purchased a four-room, turned three-bedroom corner unit at Bedok South Horizon, a Build-To-Order (BTO) development launched during the November 2016 BTO exercise, for S$1.01 million on May 24. Two rooms in the unit had been merged by the previous owner to accommodate a walk-in closet. /TISG

Read also: Million-dollar HDB resale flats rose to 166 units in May after April dip