It can be a case where you had opted for a BTO through the ballot and after years of cumbersome wait, you finally move into your new home. Maybe you are newlyweds, it is obvious that attachment develops with your first home. There comes a time after 4 years of your HDB’s minimum occupation, you might think of upgrading your living standards in the form of moving to better housing.

Generally, people think of renting out their homes for the sake of keeping the property to which they’re attached. But what comes as a fact is that, people often think of selling the property in the light of making profits. Condominiums in Bukit Batok, for example, would be a decent place to start.

buying a condo vs. HDB

The Singapore Government is taking every possible measure to ensure the viability of the HBD flats. But at the same time, the government is also doing work to make sure that there is no surge or fall in the average prices of the same.

In this article, we talk about whether your property has any viable investment value or not in the current market. Considering the present resale structure of the HDB market is of great importance when it comes to evaluating your HDB selling plans, the government has taken into account various measures that depreciated the demand of reselling HDB flats.

1. Mortgage servicing ratio (MSR)
In the year 2013, the govt. launched the MSR, i.e. Mortgage servicing ratio that put a limit on their mortgage endeavours. Only 30% of the gross monthly salary was allowed for the consideration for a mortgage. You will face cumbersome challenges if you keep the selling price above the limit as others would not be able to afford your asking price for the property.

2. A wait of 3 years for PR
When it comes to permanent residents willing to buy the flats available for resale, well you can’t just simply buy. If you’re having a PR status, then you’re required to wait for a minimum of 3 years to be eligible to purchase a flat. This was done to make sure that the PRs aren’t gripping the HDB resale segment of the country.

This was also aimed to boost the affordability for the people of Singapore. This made PRs to go for private properties or condominiums, opt for renting instead of waiting for 3 long years. However, at today’s situation, most of the PRs actually waited more than 3 years to get their first HDB. Not many could afford to pay for the high entry cost for private condominiums in the market today.

3. Elimination of Cash over Valuation
Till 2014, the asking price was evaluated on the basis of Cash over Valuation (COV) index. Sellers used to set a higher COV based on the fact what their neighbours are selling. This resulted in a boom in the HDB market. The fair evaluated price was jeopardized to greater heights. In the year 2011, the average COV rested at $36k, after the elimination of the same, there was a booming fall in the COV rates and it was even $0 in some cases.

4. HDB not available for Private property owners
When it comes to generating higher income from your HDB, you often consider going to private property owners as they have a higher disposing income available. Whether you are looking for a HDB in Bukit Batok or Marine Parade, if you’ve bought a condominium for your first property, you’re not allowed to buy HDB anymore.

5. Extra Duty of Buyer’s stamp
2013 came as a sad year for those buyers who were looking forward to buying a second-hand property amidst the Singapore regulations. The government had announced that ABSD, i.e. an additional buyer’s stamp duty will be applicable on every second-hand property purchase made by any individual. In other words, in addition to the basic 3% buyer’s stamp duty, an average user will be required to pay an extra 7 percent of the property price on the second purchase.

ABSD on first property for a Singaporean citizen rests at nil, while for a permanent resident rests at 5% and for foreigners, ABSD is 15% respectively. This measure stops speculative buying as the cost of acquisition of a condominium, for example, would be higher than what it was supposed to be a year ago due to the additional stamp duty required.

6. SERS- not every flat is eligible
Property can obviously be a preferred asset for the people of Singapore. When the 99-year lease of an HDB flat runs out, the flat is required to be returned to the government. It is obvious that the prices of the flats might fall when the end of the lease comes near. This, in turn, brings inflation in the HDB price model, generally, this pulls them down. But not all old HDB flats are entitled to SERS or en bloc, so you might be risking your time and money if the government decided the HDB flats are not entitled for SERS.

As a conclusion, there are pros and cons when it comes to purchasing a condominium or a HDB flat in today’s market in Singapore. Prospective buyers would need to be smart in their calculation and analysis in order to make money from this venture.

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