What are 5 things to look at before getting your 1st private property?

first-private-property-singapore-propertyguru

Many people in Singapore aspire to buy a private property, as such assets are considered as status symbols here and only a few can afford to purchase such properties.

Aside from upgrading from HDB flats, another reason for buying private properties is that these have greater capital appreciation than public housing. They are also less restrictions when it comes selling or renting private properties.

To help you achieve your dream of owning a private property, we listed five important factors you need to take into account before committing to invest in such a property.

1. Are you qualified to purchase a private property?

Singapore citizens who have bought a build-to-order (BTO) flat or a Design, Build and Sell Scheme (DBSS) unit from the Housing and Development Board (HDB), as well as resale HDB flats from the open market or a new Executive Condominium (EC) are required to comply with a Minimum Occupation Period (MOP) before they are allowed to buy a private property.

During the MOP period, you are not permitted to:

  • Rent out the entire property
  • Sell it through the open market
  • Purchase any private property, either in Singapore or overseas

The MOP commences from the date when you get the keys to the flat. It excludes any period when you did not live in the property, like when the whole property is rented out or when there has been a violation of the MOP. However, please note that you risk paying fines of up to S$50,000 or getting the HDB flat mandatorily acquired by the authorities if you breach the MOP rules.

Please note that, the MOP duration is typically five years, but it depends on the purchase mode, unit type and the date when you applied to purchase the flat. For particulars, please check the table below.

Purchase ModeMOP Duration
Flat bought directly from HDB (includes BTO)  5 yrs
Design, Build and Sell Scheme (DBSS) flat bought from a developer  5 yrs
Executive Condominium (EC)  bought from a developer  5 yrs

Flat purchased under the Selective  

En bloc Redevelopment Scheme (SERS)     

Either of the ff:
5 yrs from date of occupation
7 yrs from date of flat selection, including wait time and occupation period
Flat bought under SERS with Portable SERS Rehousing Benefits  5 yrs
Resale flat bought from open market w/ CPF Housing Grant  5 yrs
Resale flat bought from open market w/o CPF Housing Grant1-room flatNo MOP
2-room or larger flatApplication date on or after 30 August 20105 yrs
Application date from 5 March to 29 August 20103 yrs
Before 5 March 20101 yr if you didn't obtain HDB loan
2.5 yrs if you obtained HDB loan

Note: When buying ECs for the first time, buyers need to comply with 5-yr MOP. After that, it can be sold to Singapore Citizens and Permanent Residents (PRs). After 10 years in all, it can be sold to foreigners. Buyers of resale EC don’t have to comply with MOP.

Source: HDB

As for permanent residents (PRs), even if they have fulfilled the MOP, they and their essential family members who live in an HDB flat, must sell that flat within six months of purchasing a completed or off-plan private residential property in Singapore.

On the other hand, the above rules don’t apply to owners of private property or a Housing and Urban Development Company (HUDC) flat

2. What are the financial matters to consider before buying private property?

If you want to buy a private property in Singapore, such as a private condo, please note that you can only loan up 75 percent (loan-to-value) of the selling price when taking out a residential mortgage from a financial institution. That means if you want to purchase a private property costing S$1 million, you need to pay S$250,000 through cash or a combination of CPF savings and cold cash.

Assuming a tenure of 30 years and interest rate of 1.9 percent, a S$750,000 housing loan works out to monthly repayment of about S$ 2,735. As financial gurus advise home buyers not to spend more than 30 percent of their income in servicing their housing loan, you should have a monthly income of at least S$9,117. The 75 percent LTV is also only applicable if you have no outstanding housing loan. It also falls to 55 percent, 45 percent or 25 percent based on loan tenure and age of the borrower.

Moreover, if you buy a property in Singapore you will need to pay a Buyer's Stamp Duty for documents that officially transfer ownership of the property from the seller to the buyer. Unless you’re a Singapore citizen buying your first property, you must also pay an Additional Buyer’s Stamp Duty (ABSD), which was increased on 6 July 2018. For more details, please see tables below.

Buyer's Stamp Duty since 20 February 2018.

First S$180,000
1%
1%
Next S$180,000
2%
2%
Next S$640,000
3%
3%
Remaining Amount
4%

Source: Inland Revenue Authority of Singapore

New and Former ABSD Rates

On/after 12 Jan 2013 to 5 Jul 2018
On/after 6 Jul 2018
Singapore Citizens buying 1st residential property
 
 
Singapore Citizens buying 2nd residential property
7%
12%
Singapore Citizens buying 3rd and subsequent home
10%
15%
Permanent residents buying 1st residential property
5%
5%
Permanent residents buying 2nd and subsequent residential property
10%
15%
Foreigners buying any residential property
15%
20%
Entities buying any residential property
15%
25%

Source: Inland Revenue Authority of Singapore

3. Where should I purchase a private property?

Please keep in mind prices of private property in Singapore vary by region. Those commanding the highest prices are usually located in the Core Central Region (CCR). This comprises Sentosa, the Downtown Core, Bukit Timah, Marina East, Marina South, Museum Area, Newton, Orchard, Outram, River Valley, Singapore River, Straits View and Tanglin.

The next priciest are those situated in the Rest of Central Region (RCR), which includes

Marine Parade, Toa Payoh, Bukit Merah, Kallang, Queenstown, Novena, Bishan and Geylang.

The most affordable private properties are located in the Outside Central Region (OCR), which covers districts outside of the two aforementioned regions.

Private properties in CCR and RCR are more expensive than those in OCR due to their greater connectivity and proximity to a large number of amenities, such as MRT stations, shopping malls, prestigious schools, and employment hubs, as well as entertainment options and attractions.

In comparison, private properties in non-mature areas like OCR are typically more affordable, but you’ll face higher transportation cost and you’ll spend more time travelling to important places in Singapore.

Important: You can browse PropertyGuru’s condo directory and search private property by region or district.

4. Focus on what truly matters to you or your family

As mentioned above, private properties situated in areas with greater connectivity and amenities are generally more expensive than those in non-mature locations. But basically, it boils down to what you really require.

Should it be located close to a particular MRT station like the upcoming Parc Esta condo, which is just a two-minute walk from the Eunos MRT Station.

Should it be situated near a prestigious primary school such as Mayfair Gardens, which is within 1km to the Methodist Girls' School, one of the top primary schools in Singapore.

Important: When looking for a home to buy or rent in PropertyGuru, you can search properties located near MRT stations or schools. Just input the name of the school or MRT station and choose whether they’re 1km or 2km from that amenity.

5. Consider the area’s prospects and government’s future plans

If you are purchasing a private property, especially for investment purposes, consider the government’s future plans for the area such as infrastructure, schools, hospitals, recreational hubs and employment centres. This is because such plans can boost property prices and rent down the road.

For instance, the authorities plan to transform the Jurong Lake District (JLD) into the largest commercial and regional centre outside Singapore’s central business district (CBD). This ambitious vision is anticipated to create 20,000 houses and more than 100,000 jobs there.

Another property hotspot is Paya Lebar Central, which is poised to become one of several commercial hubs outside of Singapore’s CBD. Under URA’s Master Plan 2014, the authorities intend to transform it into a pedestrian-friendly business centre with plazas, pedestrian malls and overhead bridges as well as covered and underground walkways. There are also plans to set-up riverside paths along Geylang River for sight-seeing.

Likewise, the government has big plans to build world-class tourist attractions at the Greater Southern Waterfront.

So, make it a habit to read the latest market news on PropertyGuru. We curate the most important daily news about Singapore’s property market, including government announcement of their plans. You can also check our AreaInsider, where we listed some areas with promising outlook.

Aside from this article, you may also want to browse our resale HDB flats or private condos for sale or rent. If you want to know about future property hotspots in Singapore that will benefit from ambitious government plans, check our AreaInsider.

If you need someone to assist you for a property deal, kindly engage a licensed property agent or query them instead via AskGuru.

 

To get more guides like this, check out PropertyGuru.

Read Next