Advice
10 min read
Hi there! Thank you for sharing the useful articles. It has been enlightening and eye opening reading all the different property stories.
I do have a question. I recently sold my BTO house and will have about 250k in cash coming in end March. My husband and I are in a spot. Our initial plan was to buy an HDB house in Pasir Ris under my husband’s name solely and then in a few years time, get a condo under my name. However, due to the old age of the house there and the prices of houses in the estate being high, we are now considering getting a condo instead. Between us, we are able to get about $1.1 million loan. plus the cash and whatever we have in the cpf, we can get a condo at $1.5 million.
At this price, new launches will get us only a 2 bedder and maybe with a study. With 2 kids and a helper, this size is a bit tough. we do have a temporary place to stay while this is being built.
The following are some options we are considering but we are just undecided.
1. Should we consider getting a resale condo instead of a new launch?
2. If we get a new launch, where should we look at? which property out there is ‘worth it’ …
3. Should we flip it upon getting our keys? By then, our budget should be higher to get a bigger property.. or stay in the 2 bedder for a few years?
Some considerations for us is we do not have a car so amenities must be near. our first son is going to primary school in 2 years time so school is another consideration for us. But then, these are things that can be worked around. what should be our priority in this instance where the property we would like to get is for investment purposes.
Our ultimate aim is to build our cash savings for retirement/future and also to leave something substantial for our 2 kids in terms of property. They are still young now so we do have a long runway to slowly build that up.
Hi there,
Thanks for writing in.
Allow me to introduce myself briefly, I’m Noh. The majority of my clients consist of first-time buyers and sellers, encompassing both HDB and private properties, as well as upgraders. Therefore, I’m well-acquainted with the dilemma you’re currently facing.
It certainly helps that you have a clear goal of purchasing for investment purposes, and the fact that you have an alternative accommodation certainly helps for the options that you are considering.
Since your initial plan was to buy an HDB under the owner-occupier scheme and later invest in a private property post-MOP, let’s first look at the performance of HDBs versus private properties.
Performance of HDB vs Private property
| Year | HDB Resale Price Index (RPI) | % Change | Non-landed Private Property Price Index (PPI) | % Change |
| 2013-Q4 | 145.8 | – | 147.6 | – |
| 2014-Q4 | 137 | -6.04% | 142.5 | -3.46% |
| 2015-Q4 | 134.8 | -1.61% | 137.4 | -3.58% |
| 2016-Q4 | 134.6 | -0.15% | 133.8 | -2.62% |
| 2017-Q4 | 132.6 | -1.49% | 135.6 | 1.35% |
| 2018-Q4 | 131.4 | -0.90% | 146.8 | 8.26% |
| 2019-Q4 | 131.5 | 0.08% | 149.6 | 1.91% |
| 2020-Q4 | 138.1 | 5.02% | 153.3 | 2.47% |
| 2021-Q4 | 155.7 | 12.74% | 168.4 | 9.85% |
| 2022-Q4 | 171.9 | 10.40% | 182.1 | 8.14% |
| 2023-Q4 | 180.4 | 4.94% | 194.2 | 6.64% |
| Average | – | 2.30% | – | 2.90% |
When comparing the average growth rates of HDBs and non-landed private properties over the past decade, it’s evident that the latter has experienced slightly higher growth. Examining the year-on-year percentage change, we observe that while prices of non-landed private properties began to rebound in 2017, HDB prices continued to decline and remained relatively stagnant until the onset of the pandemic.
That said, we can also observe from the data that during the market downturns, HDBs saw lower losses in terms of percentage change. A chunk of its growth in the last decade occurred during and after the pandemic period.
| Year | Avg HDB PSF (Resale) | Avg non-landed private property PSF (All sales) | % difference |
| 2013 | $469 | $1,263 | 169.30% |
| 2014 | $441 | $1,288 | 192.06% |
| 2015 | $423 | $1,188 | 180.85% |
| 2016 | $424 | $1,230 | 190.09% |
| 2017 | $425 | $1,301 | 206.12% |
| 2018 | $419 | $1,441 | 243.91% |
| 2019 | $416 | $1,557 | 274.28% |
| 2020 | $431 | $1,520 | 252.67% |
| 2021 | $488 | $1,597 | 227.25% |
| 2022 | $532 | $1,702 | 219.92% |
| 2023 | $564 | $1,849 | 227.84% |
Looking at the gap between the average transacted price per square foot (PSF) of HDBs and non-landed private properties, it’s becoming increasingly challenging for HDB owners to transition to a private property unless they possess a significant amount of funds.
Given that your primary goal is investment, opting for an HDB may not be the most favourable choice considering these factors. While HDB prices have been on the rise, there’s a concern regarding the sustainability of this growth.
Should you buy a new launch or resale unit?
We previously did an analysis on the profitability of new launch and resale properties sold over a 5 year period from 2018 – 2022 which could be a helpful read.
| Transaction type | Avg gains | Avg losses |
| New Sale to Resale | 12.30% | -8.05% |
| New Sale to Sub Sale | 14.98% | -5.38% |
| Resale to Resale | 14.90% | -6.35% |
| Sub Sale to Resale | 9.13% | -3.64% |
The analysis showed that new sale to sub-sale and resale to resale transactions have a comparable potential for generating profits. However, there were also instances of losses incurred, with new sale to resale transactions experiencing the highest losses. While this provides a general overview, the ultimate determining factor remains the specific unit chosen for purchase.
The issue for most is when they start to conflate investment and own stay characteristics into one property, and because of that dilution – achieve neither.
Now, let’s explore some of the advantages and disadvantages of both new launch and resale units.
New launch
| Pros | Cons |
| Able to compare prices across stacks and select the best unit – also likely to be buying in at a comparable price range as other owners in the development | Element of luck involved when it comes to balloting – may not be able to select your preferred units if queue number is not favourable |
| Brand new lease and property | No control over when and where the next launch will be |
| Progressive payment scheme – loan is disbursed progressively so less interest is incurred | Waiting time for development to be constructed – Unable to move in or rent out immediately, may incur rental costs if alternative accommodation is unavailable |
| Property tax and maintenance fees are not payable until TOP | Unable to see the actual unit until it’s completed |
Resale
| Pros | Cons |
| Able to select properties in your preferred location | Competition with other buyers – may risk overpaying if emotional elements come into play |
| Possible to see the actual unit | May require more renovation costs if the unit is old |
| Able to move in or rent out immediately | Full loan is disbursed upon completion of the transaction – higher monthly repayment from the get go |
Based on a budget of $1.5M, you will most likely have to look at properties Outside Central Region (OCR) given where prices stand today. Let’s take a look at what are some of the available projects on the market that match your requirements.
Since you mentioned Pasir Ris, these are some of the younger resale developments in District 19 that are within walking distance of an MRT station and amenities:
| Project | Tenure | TOP year | Unit type | Size (sqft) | Asking price |
| Treasure at Tampines | 99-years | 2023 | 3b | 915 | $1,510,000 |
| D’Nest | 99-years | 2017 | 3b | 936 | $1,368,888 |
| The Tampines Trilliant | 99-years | 2015 | 3b | 1,001 | $1,520,000 |
As for new launches, these are some of the available units that are within walking distance of an MRT station:
| Project | District | Tenure | Expected TOP | Unit type | Size (sqft) | Asking price |
| The LakeGarden Residences | 22 | 99-years | 2027 | 2b1b + powder room | 678 | $1,411,900 |
| The Arden | 23 | 99-years | 2027 | 2b1b | 657 | $1,250,000 |
| Hillock Green | 26 | 99-years | 2028 | 2b1b | 624 | $1,486,000 |
Let’s compare the potential costs incurred for both a resale and a new launch. Since your holding period is unknown, I will assume that you’ll hold the property for 3 years seeing as you are open to selling the property upon TOP or after the SSD period is up. For calculation purposes, it would be an estimated purchase price of $1.5M with a $1.1M loan for both properties.
| Description | Amount |
| Purchase price | $1,500,000 |
| BSD | $44,600 |
| Maximum loan | $1,100,000 |
| CPF + cash required for down payment | $400,000 |
Buying a resale unit (And staying in it)
| Description | Amount |
| BSD | $44,600 |
| Interest expense (Assuming a 30-year tenure at 4% interest) | $128,542 |
| Property tax | $5,940 |
| Maintenance fees (Assuming $350/month) | $12,600 |
| Total costs | $191,682 |
Let’s also consider a scenario where you rent out the unit since you do have an alternative accommodation. I will assume a rental yield of 3%.
| Description | Amount |
| BSD | $44,600 |
| Interest expense (Assuming a 30-year tenure at 4% interest) | $128,542 |
| Property tax | $19,800 |
| Maintenance fees (Assuming $350/month) | $12,600 |
| Rental income | $135,000 |
| Agency fee (Payable once every 2 years) | $8,100 |
| Total costs | $78,642 |
Buying a new launch
| Stage | % of purchase price | Disbursement amount | Monthly estimated payment | Monthly estimated interest | Monthly estimated principal | Duration | Total interest cost |
| Completion of foundation | 3% | $49,950 | $72 | $167 | $239 | 6-9 months (from launch) | $1,503 |
| Completion of reinforced concrete | 10% | $150,000 | $288 | $667 | $955 | 6-9 months | $6,003 |
| Completion of brick wall | 5% | $75,000 | $396 | $917 | $1,313 | 3-6 months | $5,502 |
| Completion of ceiling/roofing | 5% | $75,000 | $504 | $1,167 | $1,671 | 3-6 months | $7,002 |
| Completion of electrical wiring/plumbing | 5% | $75,000 | $612 | $1,417 | $2,029 | 3-6 months | $8,502 |
| Completion of roads/car parks/drainage | 5% | $75,000 | $720 | $1,667 | $2,387 | 3-6 months | $10,002 |
| Issuance of TOP | 25% | $375,000 | $1,261 | $2,917 | $4,178 | Usually a year before CSC | $35,004 |
| Certificate of Statutory Completion (CSC) | 15% | $225,000 | $1,585 | $3,667 | $5,252 |
Assuming the longest duration at each stage, the 3 year mark will be at the completion of electrical wiring/plumbing.
| Description | Amount |
| BSD | $44,600 |
| Interest expense (Assuming a 30-year tenure at 4% interest) | $28,512 |
| Total costs | $73,112 |
If the assumption here is that both the resale and new launch properties appreciate at a similar rate, then considering the incurred expenses, opting for a new launch property might be more financially advantageous due to its lower costs. However, if you manage to acquire a property with favourable rental yields, the expenses associated with a resale unit could potentially be even lower. This assumes you are willing to entertain the option of renting out the property while residing in the alternative accommodation. Of the two, I’d lean more towards getting a resale property considering the cash flow that comes with being able to rent it out.
Which area should you look at if you were to buy a new launch?
Determining whether a new launch property is “worth it” is complex, as it hinges on various factors, and the value of a property can be subjective. For example, a buyer with deep roots in a particular location may attach greater emotional significance to that area and be willing to pay a premium for a unit there compared to an investor solely seeking returns. Additionally, the timing of purchasing a new launch property is critical, as not all units within the same development may offer equally favourable investment opportunities.
One example of this is Twin Vew.
Twin Vew was launched in mid-2018, while Whistler Grand, which is located just across the street was launched at the end of 2018.
Considering the significant disparity in the estimated breakeven price (although this is a rough estimate), there was notably high demand for Twin Vew probably due to the timing of the launch. As such, unit prices were increased progressively over the launch weekend.
These were the 484 sqft 1-bedroom units sold on the launch weekend:
| Date | PSF | Price | Level |
| 5 May 2018 | $1,726 | $836,000 | #35 |
| 5 May 2018 | $1,445 | $700,000 | #04 |
| 5 May 2018 | $1,674 | $811,000 | #30 |
| 5 May 2018 | $1,695 | $821,000 | #32 |
| 4 May 2018 | $1,557 | $754,000 | #21 |
| 4 May 2018 | $1,342 | $650,000 | #02 |
| 4 May 2018 | $1,567 | $759,000 | #22 |
| 4 May 2018 | $1,396 | $676,000 | #07 |
| 4 May 2018 | $1,693 | $820,000 | #33 |
| 4 May 2018 | $1,437 | $696,000 | #11 |
| 4 May 2018 | $1,468 | $711,000 | #14 |
| 4 May 2018 | $1,447 | $701,000 | #12 |
| 4 May 2018 | $1,536 | $744,000 | #19 |
| 4 May 2018 | $1,577 | $764,000 | #23 |
| 4 May 2018 | $1,672 | $810,000 | #31 |
| 4 May 2018 | $1,703 | $825,000 | #34 |
| 4 May 2018 | $1,385 | $671,000 | #06 |
| 4 May 2018 | $1,619 | $784,000 | #27 |
| 4 May 2018 | $1,416 | $686,000 | #09 |
| 4 May 2018 | $1,375 | $666,000 | #05 |
| 4 May 2018 | $1,629 | $789,000 | #28 |
| 4 May 2018 | $1,406 | $681,000 | #08 |
| 4 May 2018 | $1,639 | $794,000 | #29 |
| 4 May 2018 | $1,427 | $691,000 | #10 |
| 4 May 2018 | $1,588 | $769,000 | #24 |
| 4 May 2018 | $1,505 | $729,000 | #16 |
| 4 May 2018 | $1,598 | $774,000 | #25 |
| 4 May 2018 | $1,546 | $749,000 | #20 |
| 4 May 2018 | $1,608 | $779,000 | #26 |
| 4 May 2018 | $1,515 | $734,000 | #17 |
| 4 May 2018 | $1,458 | $706,000 | #13 |
| 4 May 2018 | $1,526 | $739,000 | #18 |
| 3 May 2018 | $1,327 | $642,880 | #03 |
| 3 May 2018 | $1,465 | $709,520 | #15 |
In just a few days, prices rose substantially. Let’s examine the highlighted cells. On the first day of the launch, a unit on the third floor sold for $642,880. Two days later, a unit on the fourth floor sold for $700,000, marking a $57,120 increase for just a one floor difference. Comparatively, another unit sold on the fifteenth floor on the launch day for $709,520, which was only $9,520 more than the fourth-floor unit, despite an eleven-floor difference.
Now, here’s the twist. Instead of launching at the same or higher price point, the developer of Whistler Grand opted for a more conservative pricing approach.
These were the 441 sq ft 1-bedroom units sold within a month from the launch weekend:
| Date | PSF | Price | Level |
| 17 Dec 2018 | $1,575 | $695,200 | #20 |
| 15 Dec 2018 | $1,457 | $643,200 | #14 |
| 14 Dec 2018 | $1,418 | $625,600 | #08 |
| 12 Dec 2018 | $1,410 | $622,400 | #03 |
| 11 Dec 2018 | $1,405 | $620,000 | #02 |
| 8 Dec 2018 | $1,418 | $625,600 | #04 |
| 8 Dec 2018 | $1,432 | $632,000 | #06 |
| 3 Dec 2018 | $1,390 | $613,600 | #04 |
| 30 Nov 2018 | $1,452 | $640,800 | #09 |
| 30 Nov 2018 | $1,403 | $619,200 | #06 |
| 9 Nov 2018 | $1,488 | $656,800 | #14 |
| 6 Nov 2018 | $1,410 | $622,400 | #07 |
| 2 Nov 2018 | $1,430 | $631,200 | #10 |
| 2 Nov 2018 | $1,425 | $628,800 | #09 |
| 2 Nov 2018 | $1,398 | $616,800 | #05 |
| 2 Nov 2018 | $1,445 | $637,600 | #12 |
| 2 Nov 2018 | $1,425 | $628,800 | #05 |
| 2 Nov 2018 | $1,541 | $680,000 | #15 |
| 2 Nov 2018 | $1,466 | $647,200 | #11 |
| 2 Nov 2018 | $1,459 | $644,000 | #10 |
| 2 Nov 2018 | $1,481 | $653,600 | #13 |
| 2 Nov 2018 | $1,447 | $638,400 | #08 |
| 2 Nov 2018 | $1,561 | $688,800 | #18 |
| 2 Nov 2018 | $1,474 | $650,400 | #12 |
| 2 Nov 2018 | $1,548 | $683,200 | #16 |
| 2 Nov 2018 | $1,439 | $635,200 | #07 |
| 2 Nov 2018 | $1,452 | $640,800 | #13 |
| 2 Nov 2018 | $1,437 | $634,400 | #11 |
| 1 Nov 2018 | $1,383 | $610,400 | #03 |
All the 441 sq ft 1-bedroom units sold within a month from the launch were priced under $700,000, with the majority transacting below $1,500 PSF.
While these occurrences are unpredictable, this example underscores the time-sensitive nature of purchasing a new launch, making it challenging to determine which project to consider until the moment of purchase.
Should you sell or stay in the unit after you get your keys?
This aspect is also greatly influenced by personal preference. Referring back to the analysis conducted earlier, you can see that transactions from new sale to sub sale yielded higher profits and experienced fewer losses compared to those from new sale to resale.
| Transaction type | Gains | Losses |
| New Sale to Resale | 12.30% | -8.05% |
| New Sale to Sub Sale | 14.98% | -5.38% |
However again, it’s important to note that this analysis provides a general overview, and individual developments may vary. If the project aligns with your family’s lifestyle requirements, residing in it for a period could be an option. Conversely, if the primary purpose of the property is investment and it doesn’t meet your living needs, the decision to sell will depend on your desired profit margin, which varies for each individual. There isn’t a one-size-fits-all answer to this.
What should you do?
From an investment standpoint, opting for a private property holds greater appeal compared to an HDB, given its more robust and consistent growth trajectory over the past decade. Moreover, considering the widening price gap between the two options, you may want to consider making the transition sooner rather than later. Also considering your intentions for legacy planning, passing down a private property to your children would involve fewer obstacles compared to an HDB.
Assessing the growth rates of both new launches and resale units transacted between 2018 and 2022, it’s evident that with the right choice of development, both avenues offer promising returns, leaving the decision to personal preference. While opting for a resale unit for owner occupation would entail higher upfront costs, the disparity in costs over three years between purchasing a resale unit for rental versus a new launch is minimal. However, if a resale property with rental yields exceeding 3% can be secured, the overall costs might be lower, albeit with the added responsibility of tenant management. I would recommend the latter given that there is more security.
It’s worth mentioning that if you stretch yourselves too thin to acquire a new launch property to flip it, and you happen to get stuck in a market downturn at the point of TOP, you may find yourself in a predicament if the unit is not suitable for your own stay, or if you have to sell it quick because of monthly repayment demands.
If the long-term goal is to own two properties, revisiting the initial plan of acquiring an HDB under the owner-occupier scheme and subsequently purchasing a second property post-MOP could be viable. Although I am not able to advise on the feasibility of this approach since I do not have your numbers, the prospect of accumulating more funds over the four-year period could possibly allow you to purchase a decent investment property.
For reference, the median transacted price of 4-room flats in Pasir Ris in Q4 2023 stands at $555,000.
Assuming you take this route, the costs incurred over the same 3-year period will be:
| Description | Amount |
| Purchase price | $555,000 |
| BSD | $11,250 |
| 75% loan | $416,250 |
| 25% down payment | $138,750 |
| Description | Amount |
| BSD | $11,250 |
| Interest expense (Assuming a 25-year tenure at 4% interest) | $48,184 |
| Property tax | $1,038 |
| Town council service & conservancy fees (Assuming $70/month) | $2,520 |
| Total costs | $62,992 |
Considering the more affordable nature of HDB properties, the associated costs would certainly be lower, presenting a potentially more prudent option. However, if your inclination leans towards accumulating additional assets before securing a residence for your own stay, this approach can also be pursued at a later stage. It’s worth noting, though, that as you age, your loan tenure will decrease, consequently reducing your loan amount and potentially necessitating a greater amount of CPF funds and cash.
We hope that our analysis will help you in your decision-making. If you’d like to get in touch for a more in-depth consultation, you can do so here.
