The Singapore government recently announced a slew of grants and incentives for the HDB market. With these new policies, purchasing a resale HDB flat has become a more attractive proposition. We take a closer look into what this means for home buyers, and other factors or potential pitfalls you still need to consider before taking the plunge.
Location, location, location
Buyers of resale flats often do so either because of the shorter lead time, or the availability of flat choices in mature estates. BTO has always had a luck-of-the-draw factor, with the majority of units being built in new estates like Punggol or Sengkang. At the same time, many of those BTO flats are going up on the market now, as their owners have met the 5-year minimum occupation period. While the additional grants may make it more attractive to purchase these flats, you should consider if the location is right for your own circumstances. Think about your commutes to work, proximity to parents/family/friends, whether you want to be close to nature, etc.
Flat position and orientation
Not all HDBs are built equal. Some are point block designs with no long common corridor, which means more privacy and less noise. Some blocks face garbage collection points, and some are close to open-air carparks which would be very noisy in the morning. Take a good look at the surroundings when evaluating a potential purchase, and perhaps visit at different times of the day too. This will also help you gauge the severity of the morning and evening sun on your unit.
Convenience and amenities
If you’re going to be living there, you should do an in-depth exploration of what daily life would be like in that area. Availability of food and groceries, running/cycling paths, public transport connectivity (especially during morning rush hour); these are just some of the things you should evaluate before committing.
Due diligence on flat and neighbours
One of the potential downsides of buying a resale property, unlike a BTO or new development, is that it has history. It can sometimes be hard to ascertain, but look out for red flags that might indicate trouble, whether the previous owner might have been subject to harassment by loan sharks or bad neighbours. If necessary, knock on the neighbours’ doors (a box of curry puffs might help put people at ease) and have a chat with them! After all, you’ll be getting to know them a lot better if you decide to move in, so why not start now?
HDBs are all built with a 99-year lease. While PM Lee did announce plans for older estates, this is not a given and may still take some time to materialise. It’s important to be aware of the lease term remaining on the flat you’re considering, as this affects not just your loan financing but also your long-term housing decisions.
For example, if you buy a newer flat with >80 years remaining, you could still easily sell it in 10 years’ time when you want to upgrade to a bigger HDB or condominium. However, if you’re looking at a flat with, say, 60 years remaining on its lease, it may get more challenging to find a resale buyer as time goes on due to the restrictions on CPF usage for older flats.
This brings us to our next point. Most people would be looking to do some renovations before moving in, but one important consideration is how long you intend to stay there. If you’re looking to flip and upgrade after 5 years, then perhaps you should reconsider spending so much on renovation. Basic touch-ups that improve the flat’s functionality and livability won’t go to waste, because subsequent owners of the flat will appreciate it too. However, shelling out $80K for an industrial chic revamp makes sense only when you know you’ll be enjoying the house for 10-20 years or more.
Hence, when selecting a flat, you should already have an idea of how long you intend to stay there. If it’s for the long term and you plan to do extensive renovation, then it matters less if the flat is in a dreadful state. Conversely, if you’ll only be there for 5 years, look for a flat that’s in better condition so you don’t have to spend too much.
So if you’re looking for a flat that’s in good condition, what are the red flags to avoid? Things to look out for would be stains on the ceiling or walls that indicate water seepage, or deep cracks in the wall. These may also have been painted over before the unit was put up for sale, so it’s also a good idea to look out for the indications of fresh paint.
Other things to look out for are the condition of hard-to-replace structures such as window frames, doors and door frames, including the household shelter door (if applicable).
All the grants and subsidies available now are meant to entice more couples to purchase resale HDB flats. However, you should always do a careful analysis of your current and future financial situations. When doing so, it’s also wise to consider scenarios where either of you might not be drawing any income, for various reasons. It’s important to make sure that your financial situation won’t be stretched by a drastic change in circumstances. Be sure to also take into account additional cash outlays relating to the flat purchase, as well as renovation and furnishings.
Regional development plans
In recent years, the government has talked a lot about developing regional hubs in Jurong, Paya Lebar, Punggol and Woodlands. With all the additional amenities, residential properties in these areas could see greater price appreciation in the long term. If you’re looking to make a profit when you resell your flat, this should be something to take into account.
Estate upgrading plans
Before making a purchase decision, check to see if there are any upgrading plans for that particular estate. Older HDB estates often go through various upgrading schemes, which are not just limited to exterior aesthetic work like block repainting. Some upgrading works such as lift upgrading and replacement of plumbing fixtures in the flat can have a very big impact. It’s good to find out if there are any such plans for the flat you’re looking at. If nothing else, you may also want to time your renovation and move-in dates to avoid being disturbed by the upgrading works.
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