February 23, 2022
Things to consider when buying a resale flat, EC or BTO
So you’ve decided to make your home into a retirement plan. You may be thinking of the hefty amount you can expect to get back when you sell it after a few years, or if you choose to rent it out. But which is the best investment? Should you be looking into BTOs, ECs, or resale flats?
To answer that question, we’ll first have to look at why people buy these properties in the first place. Generally speaking:
A BTO is for couples and families who want to start their lives together in a home with a loan from HDB.
A BTO is for couples and families who want to start their lives together in a home with a loan from HDB. It’s an important decision to make since the average Singaporean spends 6-8 years in their first flat, so they should take the time to find one that suits them.
There are things to consider before buying a BTO flat such as the cost of renovation, how long it will take for the flat to be completed, and whether you should apply for a two-room or three-room unit.
The other options are resale flats and ECs. For resale flats, you can choose from HDB and DBSS (Design Build Sell Scheme) units that have been previously occupied by others or those under construction but nearing completion date.
Resale flats may have more amenities nearby like supermarkets, schools and MRT stations which may not be available for BTO flats yet because these buildings are usually located further away from town areas where there are already existing developments.
An EC is for couples who want more privacy than an HDB flat can give them, but who don’t want to spend more than $1 million on a condo. They are granted a $15k discount on their downpayment as long as they meet certain criteria.
It is a common misconception that ECs are only for first-time home buyers. However, this isn’t true. In fact, second-timer families and couples are also eligible to buy an EC.
Singaporeans who meet the following criteria can purchase an Executive Condo:
1. At least 21 years old
2. Not a bankrupt
3. Not an undischarged bankrupt
Not owning any other residential properties in Singapore or overseas (including HDB flats, private property, landed property, commercial property and industrial property) at the time of application
A resale flat is for people who have already had one child, and who would like to upgrade to something bigger so they can have another child.
Here’s how I see it. If you’re single, I think it makes sense to get an EC. If you are married but have no children, I think it makes sense to get a resale flat. A resale flat is for people who have already had one child, and who would like to upgrade to something bigger so they can have another child.
For first-time home buyers, or those who are unmarried, I would advise against getting a BTO HDB flat. For starters, BTO flats have not proven themselves to be good investments for most buyers. Secondly, if you intend to live in the flat for only 5 years or so before selling it off and upgrading to a private property or condo, there is quite a high chance that your flat will suffer from negative equity.
Negative equity means that the market price of your HDB flat is less than what you paid for it when you bought it. If this happens, then you will lose money on your investment.
If you decide that you want a BTO flat anyway, choose one in an area where people will pay a premium for the location and amenities (for example: near MRT stations and shopping malls). Also select an area which has the most rental demand
You might think that BTOs are the way to go because they are cheaper, but that really depends on your end goal. Anything bought for less money will probably take longer
Conslusion:
If you can find a good deal on a resale flat, it will probably still be the best investment since you can do renovations as and when you need, to suit your lifestyle. However, if you value location over size, an EC might be better since it is much smaller than a resale flat and hence gives you more options of property types to choose from. Of course, for many young couples and first-time housebuyers, who are still establishing themselves in their careers, a BTO will do just fine as long as prices haven’t gone through the roof.
For more information:
Drop me a message at +65 9422 8000 or Wa.me/6594228000 for enquiries or real estate matters.
Or visit https://www.instagram.com/kamalkarimproperty/ for our instagram
