Housing Options for a Young Millennial Couple in Singapore: BTO, Resale Flat, or Condo?

PropertyGuru Editorial Team
Housing Options for a Young Millennial Couple in Singapore: BTO, Resale Flat, or Condo?
For those in their late twenties/early thirties who are happily partnered up and see marriage on the cards, it’s likely that homeownership is the next step you’re moving towards.
And if you’ve been keeping an eye on the Singapore property market, you’ll know that housing prices – for HDB resale flats and private properties alike – have soared. And as an aspiring first-time homeowner, you may be stuck in a bind when considering the available housing options.

Case Study: A Young Couple Looking for their First Home

For the purpose of this article, let’s assume you and your partner have been in the workforce for a couple of years. You’re both earning $4,500 per month and want a 4-room flat.
At your age, getting a Build-to-Order (BTO) flat (i.e. the supposed ‘starter home’ which is the most affordable) might not seem very feasible. The completion times for the most recently launched BTO projects are between four to almost seven years. By the time you collect your keys, it’s likely you and your partner would both be old enough to skip the Registry of Marriages (ROM) formalities and be eligible to buy your own HDB flats.
Hence, assuming you’re ready to live together, you have three likely options:
  • Buy an HDB resale flat
  • Buy the BTO anyway, but rent a flat on the open market in the interim
  • Buy a condo
Given the current housing market in Singapore, which is the best way forward? Let’s explore all the options.

Should I Buy An HDB Resale Flat Now?

With the context shared above, buying a resale flat seems like the most obvious solution to the dilemma. Most resale flats are already in move-in ready condition since they are usually occupied by the current owners and/or tenants until the point of sale. There are also more choices in terms of location because you can find resale flats all over Singapore, compared to BTO flats which are only launched in selected estates every quarter.
The trouble with HDB resale flats is that although they are still cheaper than private properties like landed houses and condos, they are getting very expensive.

Pros and Cons of Buying an HDB Resale Flat

Pros of HDB resale flatCons of HDB resale flat
Little to no waiting timeExpensive
Move-in ready conditionPotentially fewer units in each estate
Can take up HDB loan (subject to other eligibility criteria)Have to consider age of flat if you want to max out CPF usage (otherwise it would be pro-rated)

Price of 4-Room HDB Resale Flat on the City Fringe

This is especially true if you prioritise accessibility to an MRT station, a relatively short travel time to the Central Business District (we’re talking 20 minutes by public transport), and/or being close to a variety of amenities. If you have these criteria for a home, you’re probably looking at homes on the city fringe in neighbourhoods such as Mountbatten/Dakota, Kallang/Whampoa, Potong Pasir, or Little India.
A quick search on PropertyGuru showed that the cheapest flat (at the time of writing) in these areas is $580,000. Asking prices mostly trended around $750,000, and even went up to $1,380,000, which could buy you a decently sized condo in the Outside Central Region (OCR).
At this point you might think, “Well, I could lower my expectations and look at 3-room flats”. But you’ll find that the asking prices only drop marginally – the most affordable 3-room flat on the market was priced at $508,000.
Some may offer the advice of not being too picky about where your first home is. But others may counter by saying that buying a home is likely to be the biggest purchase you will make in your life. So, we say, you’re “entitled” to be “picky” about where your first home is but do be prepared to adjust your expectations if necessary.

PropertyGuru’s Expert Take

Let’s do a cost breakdown, assuming you find a $650,000 resale flat that suits all of the above criteria. Below, it is assumed that the first-time homeowners have opted for an HDB-granted loan.
With global interest rates at a high, the HDB housing loan interest rate of 2.6% (pegged at +0.1 of the CPF Ordinary Account interest rate) is currently more competitive. However, you can always refinance your home loan to a bank loan, if you find a better mortgage package.
Cost of resale flat$650,000
Down payment (for an HDB loan)At least $130,000 (or 20%), any mix of cash / CPF as long as you keep at least $20,000 in CPF
Estimated mortgage repayments (HDB loan, 80% LTV, 2.6% p.a., 25-year tenure)$2,359 per month
If you choose an HDB housing loan to finance your property purchase, you will need to cough up a whopping 20% down payment of at least $130,000. If you and your partner have enough CPF savings to cover the down payment and earn enough to foot the monthly repayments of $2,359, this could be a feasible housing option.
However, a $650,000 resale flat on the city fringe could be quite risky financially. There would be little room for any income loss, which is surely a consideration in these challenging times.
Let’s not forget that the above calculations also exclude any other stamp duties, legal fees, and renovation and furnishing costs.

Should I BTO Now and Rent While Waiting?

Now, the next option is to save money and not “fuel” the HDB resale market further. You could consider buying a BTO flat and rent a flat in the interim. Not only are BTO flats way cheaper than resale flats (and any other property in Singapore, in fact), but also there is also investment potential. Although Singapore’s public housing was obviously not designed to be an investment vehicle, the fact is that most make a profit when they sell their flats on the open market after fulfilling the Minimum Occupation Period (MOP).
Applying for a BTO flat in certain HDB towns (e.g. Geylang) can prove to be highly competitive. Some couples compromise on location and try for a larger home in neighbourhoods like Tengah. The rationale is that if they cannot get a home in the city fringe, they can try to get a bigger space and transform it into an oasis they don’t want to leave. After all, more and more employers are allowing flexible and/or remote working arrangements.
But even if you do successfully ballot for a BTO flat, that means you would have to rent during a time when rental prices are at a record-high.

PropertyGuru’s Expert Take

In the November 2022 BTO exercise, prices for 5-room flats in Tengah started at $428,000. That’s way better value considering that it offers so much more space as compared to the average resale flat on the city fringe – it’s a good $100,000 cheaper in fact.
However, if you would like to rent a place while waiting for your BTO flat to be completed, then there is another large financial cost to consider. Renting a 4-room HDB flat would set you back about $3,500 monthly, minimally. If you want a one-bedder condo, that could cost the same or more, depending on the location.
Multiply that by the number of years of waiting, and the cost really chalks up. Assuming an average five-year wait, that’s 60 months, which is $210,000!
At the end of the day, the absolute cost seems quite similar. Of course, anything can happen in five years – housing prices may crash or spike further – so this is only as far as can be estimated now.

Should I Buy A Condo Now?

The last option is buying a condo. However, the challenge is that with $650,000, there are very few condos for sale. They are also all shoebox units that are mostly 500 sq ft or less. Even 3-room HDB flats are 69 sq m (743 sq ft) and some already feel those are too small. Plus, condos at this price point are all located quite far from the city.
Buying a condo also means that you must take a bank loan to finance your property purchase, which requires a larger down payment and offers higher interest rates.

PropertyGuru’s Expert Take

Long gone are the times when $650,000 could buy you anything more than a one-bedroom condo in the OCR. These days, even the cheapest shoe box units cost around $800,000 – anything under is a rare find. Hence, it’s unsurprising that the units found at this price range were all very small and in conventionally undesirable locations.
On financing, a bank loan does indeed require a larger down payment and incurs higher interest costs, although thereafter the monthly mortgage repayments are similar.
Cost of one-bedder condo$650,000
Down payment (with bank loan)At least $162,500 (or 25%), of which $32,500 (or 5%) must be in cash
Estimated mortgage repayments (Bank loan, 75% LTV, 3.68%* p.a., 25-year tenure)$2,488 per month
*Note: Bank loan interest rates are an estimate only, based on the lowest available rate at the time of writing (26 Jan 2023). For the latest, most competitive rates, please refer to PropertyGuru Finance.

Conclusion: What Should I Do?

As you can see, there is no single “easy way”. Each option has its trade-offs.
Financially, the best option is to continue trying for a BTO flat and just wait it out. Renting an entire unit at this time is too costly. Alternatively, you could rent but share the cost with other tenants.
But if you value privacy, hunting for an HDB resale flat might be the choice for you. Buying a condo could work, but is an unadvisable option if it stretches you too financially thin and you feel like you’re “forced” to live in a tiny condo in a neighbourhood you dislike.
For all the millennials in their late twenties/early thirties and can relate to this article, we hope that PropertyGuru’s advice came in handy (or at least gave you some things to think about). If you need help financing your home, consider reaching out to PropertyGuru Finance’s mortgage experts for honest, unbiased advice on home financing.
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