As a first-time buyer, you can choose to apply for a new Built-To-Order (BTO) flat if you are prepared to wait a minimum 2.5 years. If not, you can consider a resale flat. [NOTE: Singapore Permanent Residents (SPR) are not eligible to purchase new HDB flats if their family unit does not include a Singapore Citizen]. Hence, if they wish to invest in HDB flats, they are only eligible to purchase HDB resale flats. They will also not be entitled to any government housing grants and must meet certain eligibility conditions.
For HDB resale flats, first-time buyers can receive up to $120,000 Enhanced CPF Housing Grant (EHG) if their household income is not more than $1,500. The actual amount received is tiered based on the level of monthly household income indicated in the table below.
| First-Timer Families / Joint Singles Scheme | Single Singapore Citizen Scheme | ||
| Average Monthly Household Income | Grant Amount | Average Monthly Household Income | Grant Amount |
| Not more than $1,500 | $120,000 | Not more than $750 | $60,000 |
| $1,501 - $2,000 | $110,000 | $751 - $1,000 | $55,000 |
| $2,001 - $2,500 | $105,000 | $1,001 - $1,250 | $52,500 |
| $2,501 - $3,000 | $95,000 | $1,251 - $1,500 | $47,500 |
| $3,001 - $3,500 | $90,000 | $1,501 - $1,750 | $45,000 |
| $3,501 - $4,000 | $80,000 | $1,751 - $2,000 | $40,000 |
| $4,001 - $4,500 | $70,000 | $2,001 - $2,250 | $35,000 |
| $4,501 - $5,000 | $65,000 | $2,251 - $2,500 | $32,500 |
| $5,001 - $5,500 | $55,000 | $2,501 - $2,750 | $27,500 |
| $5,501 - $6,000 | $50,000 | $2,751 - $3,000 | $25,000 |
| $6,001 - $6,500 | $40,000 | $3,001 - $3,250 | $20,000 |
| $6,501 - $7,000 | $30,000 | $3,251 - $3,500 | $15,000 |
| $7,001 - $7,500 | $25,000 | $3,501 - $3,750 | $12,500 |
| $7,501 - $8,000 | $20,000 | $3,751 - $4,000 | $10,000 |
| $8,001 - $8,500 | $10,000 | $4,001 - $4,250 | $5,000 |
| $8,501 - $9,000 | $5,000 | $4,251 - $4,500 | $2,500 |
| More than $9,000 | NA | More than $4,500 | NA |
For those unwilling to wait for a BTO flat, investing in a resale HDB flat can be a good alternative. Although more expensive than new BTO flats, first-timers can receive up to a maximum of $230,000 in housing grants to offset the higher prices.
To view the listing of HDB resale flats, buyers can register to gain access to the HDB Flat Portal. More information about the service can be found in the HDB Resale Listing Guide.
The maximum of $230,000 housing grants include a $80,000 Family Grant, a $120,000 Enhanced CPF Housing Grant (EHG) and a $30,000 Proximity Grant (please refer to the infographic below.). These grants will help to narrow the price difference between a new BTO and an HDB resale flat. In addition, if you are fortunate enough to find a well-maintained resale flat, you may spend less on renovation when compared to a new BTO flat.
HDB Housing Grants
Such housing grants are helpful for people unwilling to wait for new BTO flats, those in need of housing urgently, and those who wish to live near their parents. In other words, investing in resale flats provides the flexibility of choosing which part of Singapore to live in.
As for BTO flats, the majority are in non-matured estates. Although there are BTO flats offered in matured estates, they face very high demand and are subjected to balloting. An example was the Holland Vista BTO launch in June 2024. It drew 2,100 applicants for 228 4-room flats despite having the longest waiting time among seven other BTO launches - four years and nine months. This translated into a first-timer application rate of 6.2.
Important Note: From October 2024 onwards, all BTO launches will be classified as Standard, Plus, and Prime HDB flats, replacing the "mature" and "non-mature" estate categorisations. This is to better reflect their locational attributes such as access to amenities and transport services as Singapore's housing landscape evolves.
If you are a first-timer applicant and refuse to choose a BTO unit when invited, your first-timer status will be suspended for a year in future HDB Sales Exercise. The indefinite wait to secure your choice unit can be very frustrating. Will you be prpepared to bid your time and wait indefinitely for your choice BTO flat?
Is Investing In A Resale HDB Flat A Better Option Than BTO?
Investing in a resale HDB flat can be a better option if you are unwilling to wait indefinitely to secure your "choice" BTO flat. One of the main reasons is that property prices tend to rise over time. The longer you wait, the more you will likely have to pay (refer to the HDB resale price index below).
There are exceptions, of course, such as the adverse impact of global financial or economic crises, or changes in government policies. The effect of lease decay is another factor that needs to be considered, which will be elaborated on later in this article.
HDB Quarterly Resale Price Index
If you aspire to own a private property in the future, why not take advantage of the government housing grants to start your property investment journey? After pocketing the grants, you can decide whether to sell away your HDB flat after MOP or rent it out to finance a private property.
If you wish to rent out your entire HDB flat, it can only allowed after MOP. Before MOP, only rooms can be rented out. But, for Plus and Prime HDB flats, which will only come on stream in the resale market many years later, only rooms can be rented out even after MOP.
Also, during the MOP, you are not allowed to purchase private property locally or abroad during this period. So, this may be a good time for you to slowly accumulate your savings for future property investment while establishing your career.
Investing in a resale HDB flat also has the added advantage of buying one in an area with good capital appreciation potential. For example, a flat near an MRT station, shopping mall or good schools. Of course, such a unit will cost slightly more. But you can command a higher rent, or if you decide to upgrade to a private property in the future, you should be able to sell it off more easily and at a better price too.
An advice for anyone who aspires to invest in a private property in the future but wishes to retain their HDB flat for investment is to start with a smaller 3 or 4-room HDB flat so that you will not be over-burdened with a big mortgage while in the process of building up your career (more on this below).
According to HDB (see below), the average median price of a 3-room flat across Singapore is $387,943 (as of 2nd Quarter 2024).
| Median HDB Resale Flat Prices (as of 2nd Quarter 2024) | ||||
| Towns | 3-Room | 4-Room | 5-Room | Executive |
| Ang Mo Kio | $402,000 | $612,900 | $780,000 | - |
| Bedok | $390,000 | $535,000 | $745,000 | - |
| Bishan | - | $728,000 | $960,000 | - |
| Bukit Batok | $390,000 | $595,000 | $735,000 | - |
| Bukit Merah | $440,500 | $885,000 | - | - |
| Bukit Panjang | $410,000 | $538,000 | $650,000 | - |
| Bukit Timah | - | - | - | - |
| Central | $520,000 | - | - | - |
| Choa Chu Kang | $390,000 | $515,000 | $605,000 | $773,000 |
| Clementi | $390,000 | $642,500 | - | - |
| Geylang | $359,400 | $877,000 | - | - |
| Hougang | $430,000 | $585,000 | $701,100 | $900,000 |
| Juong East | $383,000 | $495,000 | $632,000 | - |
| Jurong West | $372,500 | $488,000 | $600,000 | $740,500 |
| Kallang / Whampoa | $410,000 | $860,500 | $884,000 | - |
| Marine Parade | - | - | - | - |
| Pasir Ris | - | $590,000 | $695,000 | $870,000 |
| Punggol | $495,000 | $622,000 | $712,500 | - |
| Queenstown | $415,500 | $928,000 | - | |
| Sembawang | $470,000 | $567,500 | $608,000 | $695,000 |
| Sengkang | $488,900 | $600,000 | $650,000 | $750,000 |
| Serangoon | $418,000 | $600,000 | $750,000 | - |
| Tampines | $450,000 | $612,000 | $728,000 | $900,000 |
| Toa Payoh | $385,000 | $832,500 | $945,000 | - |
| Woodlands | $425,000 | $525,000 | $630,000 | $855,000 |
| Yishun | $408,000 | $530,000 | $660,000 | $835,000 |
| Average Median Prices | $387,943 | $573,474 | $635,295 | $813,167 |
If you and your spouse are first-time buyers, you can receive government housing grants of up to $230,000, depending on your monthly household income. This will lower your financial outlay substantially. The rationale of buying a smaller flat, instead of a 5-room, is to pay off your mortgage in the shortest time possible if you are thinking of investing in a private property after fulfilling your Minimum Occupation Period (MOP).
The last thing you want is a long loan repayment period as it will adversely impact the loan quantum a financial institution can offer when you purchase a second property (more about loan financing below). If you decide to hold on to your HDB flat and buy a private property, it will be considered your second property. Hence, Additional Buyer's Stamp Duty (ABSD) applies.
Of course, if you sell your HDB flat after fulfilling the MOP to invest in a private property, you will not be subjected to Additional Buyer’s Stamp Duty (ABSD). Property financing and investment involve various scenarios, and the following example represents just one of many possibilities. If you require assistance on financial assessment, please Contact Us.
Example: Financial Calculation For The Purchase of A HDB Resale Flat
Let’s assume you and your spouse are buying a 3-room HDB resale flat at a median price of $387,943 and have a monthly household income of $5,000. As first-timer buyers, you will be entitled to the following housing grants:
- 80,000 Family Housing Grant
- $65,000 Enhanced Housing Grant (EHG)
- $30,000 Proximity Grant (living with parents) or $20,000 (living within 4km of parents)
Let’s also assume that you will be living with your parents. Hence, your total housing grants will be $175,000.
Therefore, the cost of your 3-room HDB flat after receiving the housing grants is as follows:
- Purchase Price of a 3-Room HDB Resale Flat: $387,943
- Total Housing Grants received: $175,000
- Purchase Price of a 3-Room HDB Resale Flat after grants: $212,943
To work out the financial commitment and minimum loan repayment period for the purchase of the HDB resale flat, let's assume the following:
- Citizenship: Singaporeans
- Buyer’s Age: Below 35 years
- Monthly Household Income: $5,000
- Employee CPF Contribution: $1,000 (20% x $5,000)
- Employee Take Home Pay after CPF Contribution: $4,000 ($5,000 - $1,000)
- Negligible CPF savings available
From the above information, we can work out the shortest housing loan repayment period and monthly instalment based on the following:
- HDB Concessionary Loan Rate: 2.60%
- Mortgage Servicing Ratio (MSR): $1,500 (30% of $5,000) - see below for an explanation
- Total Employee + Employer CPF Contributions in Ordinary Account: $1,150 (23% of $5,000)
- Total Monthly Loan Repayment: $2,650 ($1,500 MSR + $1,150 CPF)
- Loan Repayment Period: ~7.5 years (90 months)
The shortest loan repayment period of approximately 7.5 years is derived from the maximum allowable under the Mortgage Servicing Ratio (MSR) plus your monthly CPF Ordinary Account (OA) contributions.
The MSR is currently set at 30% of your monthly household income, meaning a maximum of 30% household income can only be used to repay your housing loan. This works out to be $1,500 (30% x $5,000).
For your monthly CPF OA contributions (Employee + Employer), they are currently set at 23% if you are 35 years of age or younger (see table below). Hence, the total CPF OA contributions that can be used for your housing loan is $1,150.
Therefore, with a maximum of $2,650 ($1,500 + $1,150) monthly loan repayment, the housing loan will be fully paid in 7.5 years (90 months).
Of course, you can pre-pay your loan early if you receive an unexpected windfall during your loan repayment period (Note: For an HDB loan, there is no pre-payment penalty. But for a bank loan, you can expect to pay a penalty of about 1.5% of the un-disbursed loan amount). Before deciding how to finance your property, find out how to choose a home loan.
| CPF Contribution Rates Singaporeans & PRs (From 3rd year) Earning >$750 a Month (From 1 Jan 2024) | Allocation Rates (% of Total Wages) | |||||
| Age (Years) | Employer's Contribution | Employee's Contribution | Total | Ordinary Account | Special Account | Medisave Account |
| ≤ 35 | 17 | 20 | 37 | 23 | 6 | 8 |
| > 35 - 45 | 21 | 7 | 9 | |||
| > 45 - 50 | 19 | 8 | 10 | |||
| > 50 - 55 | 15 | 11.5 | 10.5 | |||
| > 55 - 60 | 15 *(+0.5) | 16 *(+1) | 31 *(+1.5) | 12 | 8.5 | 10.5 |
| > 60 - 65 | 11.5 *(+0.5) | 10.5 *(+1) | 22 *(+1.5) | 3.5 | 8 | 10.5 |
| > 65 - 70 | 9 *(+0.5) | 7.5 *(+0.5) | 16.5 *(+1) | 1 | 5 | 10.5 |
| > 70 | 7.5 | 5 | 12.5 | 1 | 1 | 10.5 |
| * increments from 2023 | ||||||
The above is just an example of determining the affordability of buying your first HDB resale flat. Of course, this is just one of many scenarios depending on the property price, income level, personal savings, available CPF funds, and parental financial support (if any).
Another factor you need to consider is whether the balance of your $2,500 monthly disposable income (after deducting your monthly CPF contributions and loan instalment) is sufficient for your living and lifestyle expenses. These will include recurring costs such as property tax, conservancy charges, utilities and perhaps, your holiday expenses.
DISCLAIMER: The example provided is a basic illustration. In addition to the housing loan, there are several other cost considerations, such as stamp duties, conveyancing fees, property agent commissions, and renovation costs. Therefore, it is advisable to consult a licensed property agent for an assessment of your affordability and advice on property investment.
Options After Repaying Housing Loan
After you have repaid your housing loan and fulfilled your MOP, you may consider the following property investment options:
- Sell your HDB flat and upgrade to a private property or executive condominium (EC).
- Buy a new launch or resale private property.
- Rent out your HDB flat to finance your new private property (more on this below).
An experienced property consultant will be able to advise you on the following and more:
- Properties with good capital appreciation potential.
- Property rental yields.
- Property hotspots and upcoming developments.
- Exit strategy to maximise your investment returns.
For an in-depth guide on property investment, please refer to our article on the 7 key factors in Singapore property investment.
Finance New Property with HDB Rental Income
If you have completed your MOP and intend to invest in a private property, you need to work out your finances carefully.
If you buy a private property while still servicing your HDB loan, you can only get a Loan-To-Value (LTV) of 45% instead of 75% for a loan tenure up to 30 years or age 65, whichever comes first (see illustration below).
LTV Ratio
In other words, banks will only grant you 45% of the purchase price or value of your property, whichever is lower. For the remaining 55%, 25% must be in cash downpayment and 30% in a combination of cash and CPF Ordinary Account (OA) monies.
Since you are still servicing your HDB flat, purchasing the private property will be considered your second property. Hence, Additional Buyer’s Stamp Duties (ABSD) applies. For most, this will greatly impact their affordability. To avoid this, strive to pay off your existing HDB loan in the shortest time possible so that you can secure a higher loan amount to finance your private property. A shorter loan tenure will also help to reduce your interest expense.
If you can pay off your first housing loan, you can get up to 75% bank financing instead of 45%. This will help you to avoid the huge capital/cash outlay when purchasing a second property.
The following example shows what your capital/cash outlay is if you buy a secod property worth $1 million property BEFORE paying off your first housing loan:
The following example shows what your capital/cash outlay is if you buy a private property for $1 million dollars (second property) AFTER paying off your first housing loan:
How HDB Applicants Can Avoid Paying ABSD
If you wish to avoid paying ABSD when investing in a private property while retaining your HDB flat, one way is to have one of the applicants registered as an "Essential Occupier".
However, the financing can only be borne by the purchaser or registered owner. This means that he/she must have sufficient means to purchase and finance the HDB flat alone.
The essential occupier's CPF funds cannot be used to fund the purchase of the HDB flat and this includes paying the initial downpayment and monthly mortgages.
Doing so will free up the essential occupier's name. When their HDB flat has cleared its MOP, the essential occupier can purchase a private property without incurring ABSD. However, they must ensure they have sufficient means to finance both properties.
To explore your property investment options, please WhatsApp me.
Restriction on the Use of CPF Funds
On 9 May 2019, the Ministry of National Development (MND) and the Ministry of Manpower (MOM) jointly announced a change in rules on CPF usage and housing loans.
Under the new rules, how much CPF monies can be used for a property purchase will depend on whether its remaining lease can cover the youngest buyer to the age of 95. Additionally, CPF savings and HDB loans will not be granted to fund the purchase of HDB flats, Executive Condominiums (EC) and private residential properties with a remaining lease of 20 years or less.
If the remaining lease of the property at the time of purchase is at least 20 years and can cover the youngest buyer until the age of 95, CPF funds can be used to pay for the property up to the Valuation Limit (VL). If these conditions are not met, CPF usage will be pro-rated.
In addition, when investing in a second property, there are further restrictions on CPF funds usage. A minimum Basic Retirement Sum (BRS) must be set aside before any excess CPF Ordinary Account (OA) monies can be used. The amount to be set aside for the BRS is shown below:
| If you turn 55 in | Your BRS is | Your FRS* is |
| 2024 | $102,900 | $205,800 |
| 2025 | $106,500 | $213,000 |
| 2026 | $110,200 | $220,400 |
| 2027 | $114,100 | $228,200 |
| *The FRS is set at 2 times of the BRS. | ||
Total Debt Servicing Ratio (TDSR)
Another restriction you may face is the Total Debt Servicing Ratio (TDSR). It has been put in place by the Monetary Authority of Singapore (MAS) to prevent an over-leveraging of finances. All financial institutions (FIs) such as banks will need to apply TDSR when disbursing housing loans. TDSR sets the limit of your income that can go into servicing all outstanding loans, which currently stands at 55%.
How Does TDSR Work?
TDSR takes into account all your loan obligations (eg. housing loans, study loans, credit card debts, car loans, personal loans, etc). What this means is that your total loan repayments cannot exceed 55% of your income, limiting the amount of debt you can take on. The policy is to ensure financial prudence.
To illustrate, if your monthly income is $1,000, your TDSR (55%) will be $550. This means your total loan repayments (housing, car, credit card, etc) cannot exceed $550 monthly.
Those whose income is commission-based, such as salespersons, insurance agents, etc., will be subjected to a 30% haircut. For example, if your monthly income is $1,000, only $700 will be considered for the calculation of TDSR.
With all the restrictions, it is not easy to afford a second property, especially for young couples just starting their careers. The amount of cash and CPF required to buy your second property is quite significant, making it largely unaffordable for most, unless they come from a rich family.
So, What are your options for investing in private residential properties? What strategies can you employ to grow your property investment portfolio? If you require help to assess your financial position, receive the latest market information, or explore your best course of action, please feel free to contact us.
Meanwhile, for those who can afford to invest in a second property and use their HDB flats to generate rental income, below are some important factors to take note of.
Investing In HDB Flats - Rental Yields
If you decide to retain your HDB flat to generate rentals and use the proceeds to finance your private property, let's examine how this can be best achieved.
The following table provides a sample of median gross rental yields for 3, 4 and 5-room flats at the four corners of Singapore.
| Location | Median Resale Prices (as of 2nd Quarter 2024 | Median Monthly Rental | Median Gross Rental Yield Per Annum (%) | ||||||
| 3-Room | 4-Room | 5-Room | 3-Room | 4-Room | 5-Room | 3-Room | 4-Room | 5-oom | |
| Ang Mo Kio | $402,000 | $612,900 | $780,000 | $2,800 | $3,400 | $3,600 | 8.36 | 6.65 | 5.54 |
| Bukit Batok | $390,000 | $595,000 | $735,000 | $2,480 | $2,500 | $3,200 | 7.63 | 5.04 | 5.23 |
| Jurong East | $383,000 | $495,000 | $632,000 | $2,700 | $3,300 | $3,600 | 8.46 | 8.0 | 6.83 |
| Kallang / Whampoa | $410,000 | $860,500 | $884,000 | $2,830 | $3,800 | $4,100 | 8.24 | 5.29 | 5.57 |
| Tampines | $450,000 | $612,000 | $728,000 | $2,800 | $3,300 | $3,600 | 7.47 | 6.46 | 5.92 |
| Woodlands | $425,000 | $525,000 | $630,000 | $2,400 | $3,000 | $3,300 | 6.76 | 6.86 | 6.29 |
As can be seen, smaller flats mostly achieved higher gross rental yields. However, note that your net rental yield will be slightly lower after factoring in expenses such as property taxes, maintenance costs, conservancy charges, household repairs, etc.
Nevertheless, they are still attractive compared to private residential properties, which command rental yields mostly around 2.5% to 3%. This shows that HDB flats can be a good investment option.
Hence, for those looking to rent out their HDB flats to finance their second property, but face financial constraints, buying a smaller HDB flat is worth considering. Besides getting a higher rental yield, more funds can be set aside for investing in your second property.
Moreover, as shown in our example above, paying off your first mortgage will enable you to get more bank financing, helping you to reduce your capital/cash outlay. This will go towards cushioning the financial burden of ABSD to some extent.
If you require any assistance with property financing or investment matters, please Contact Us for an obligation-free consultation.
Depreciating Values of Ageing HDB Flats
There have been concerns about the steep depreciation in the values of ageing HDB flats once their leases cross the 40-year mark. To allay this concern, Prime Minister Lee Hsien Loong, said in his 2018 National Rally Speech that when HDB flats reach 70 years old, owners can vote to let the government buy back their flats early. He calls this the Voluntary Early Redevelopment Scheme (VERS). This is quite similar to the Selective En-bloc Redevelopment Scheme (SERS).
PM Lee also said the Housing Board would carry out a second Home Improvement Scheme (HIP), which is heavily subsidised, when flats reach 60 to 70 years old. The first HIP takes place around the 30-year mark. These schemes will help to alleviate property decay, rejuvenate the community, and uphold property values.
Also, since 9 May 2019, the government has announced changes in the use of CPF funds that could lift demand for older HDB flats. For HDB flats with a remaining lease of at least 20 years and can cover the youngest buyer till age 95, CPF funds can be used to pay for the property up to the Valuation Limit (VL).
Nevertheless, the fear of capital depreciation cannot be totally ignored. This is especially so when the Ministry of National Development (MND) has not released any details on VERS so far. In addition, when HDB flats get older (or leases get shorter), the rate of capital depreciation will quicken due to wear and tear.
The Bala Curve
Without getting into the technical details, the Bala Curve seeks to compare values across different tenure and land valuations. It also computes the differential premium for change of use or increase in intensity, and land premium for upgrading of lease tenure.
In short, it seeks to determine the value of properties according to the length of its (remaining) leases. The Bala Curve is also known as the SLA Leasehold Table, meaning the government uses it to assess land values.
There are a few key characteristics of the Bala Curve to take note of, which will help us make important decisions about our property investment. Looking at the curve, there are three key intervals: 60-year, 30-year and 15-year mark. These intervals are important because of their different rate of decline in values.
For example, between 99-year and 60-year, the fall in the value of a property is 0.1-0.4 basis point (bp) for each year of the lease. Between 60-year and 30-year, the decline in value is 0.5-1.0 bp; from 30-year to 15, the decline accelerated to 1.0-1.8 bp; and once it hit the 15-year mark, the decline accelerated even further to 1.8-3.8 bp. Simply put, the older the property gets, the more rapid the decline in its value.
Hence, to maximise your property investment or to limit the depreciation of your property value, you should do it before the 60-year lease mark. As the government uses the Bala Curve to assess land value, it is critical to be aware of the effects of lease decay!
Investing In HDB Flats - Still Viable?
Investing in an HDB flat remains a viable option due to its affordability, potential for appreciation, attractive rental yields, and government initiatives to enhance living conditions. Additionally, housing grants provide a good starting point for your property investment journey.
However, whether you are investing in an HDB flat or private property, an exit strategy is vital to mitigate the risk of lease decay while maximising ROI.
When investing in HDB flats, buyers must be aware of several drawbacks, as detailed below:
HDB Flat Financing: Buyers must be aware of the Singapore government's financing framework to maintain the affordability of HDB flats for the masses. One of these is the Mortgage Servicing Ratio (MSR). Set at 30%, it will limit the percentage of household income that can be used to finance the purchase of HDB flats. However, private properties are not subjected to MSR; instead, they are subjected to the Total Debt Servicing Ratio (TDSR). As the TDSR limit is higher at 55%, more household income can be utilised for property financing.
Hence, the MSR will effectively limit the affordability of HDB flats as fewer funds can be used for monthly loan instalments. This is part of the government's strategies to provide affordable housing to the masses, stressing it would "provide quality and affordable public housing for generations of Singaporeans" and "We are proud to continue doing so".
Don't Bet on VERS: Former MND Minister Lawrence Wong (now PM of Singapore), said in March 2017 that most HDB flat leases would be run down and the land would return to the government. He also cautioned against assuming all old HDB flats would be eligible for the Selective En Bloc Redevelopment Scheme (SERS). In other words, do not put too much hope on VERS or SERS to boost your property value.
Buying Restriction on Plus and Prime HDB Flats: Under the new HDB flat classifications, resale Plus and Prime flat buyers will be subjected to a monthly household income ceiling of $14,000. This will effectively limit the pool of available buyers, limiting their capital appreciation potential.
Negative Impact on Future Property Financing: With a longer 10-year MOP for Plus and Prime BTO flats and if you apply for a BTO flat at 25 years old, you will only be able to resell after turning 39 years old (assuming four years for BTO completion and 10 years MOP). This will leave you with a maximum loan of 21 years tenure if you decide to invest in a private property. With the shorter loan period, you will have to set aside more of your income for your monthly mortgage.
After considering all the factors mentioned above, investing in private properties provides greater flexibility in asset management while offering better long-term growth prospects. As seen from the chart below, private properties have outperformed HDB flats over the last 10-year and 20-year periods.
Last 10-Year Period
- Private Property Price Index: +37.7%
- HDB Price Index: +32.8%
Last 20-Year Period
- Private Property Price Index: +156.3%
- HDB Price Index: +146.9%
Resale Price Indices - Private Properties Versus HDB Flats
