Because of the success of Singapore’s public housing policy, which started in the 1960s, 80% of their Singapore’s inhabitants live in HDB apartments now. Private housing is mainly for higher income earners. Those considering purchasing a residential property within this island country have to take into account various factors, we’ll take a better look at each in turn in this article.
Reason for purchase
First of all, buying a property for investment or owner-occupation makes a difference.
Naturally, if it is for investment, the chief factor in consideration is going to be the capital gain. On the flip side, buying for owner-occupation makes capital profit a secondary concern. In cases like this, more important elements are the current or future size of their family. If you need advice on different sale trade techniques sees these tips on the web.
Type of housing
The next consideration is the housing type. With the many forms available, buyers are often spoiled for selection. The below two tables compare the private and public housing sections.
Table 1: Available Housing Types in Singapore
- HDB (99-year rental)
Studio Apartment (30-year rental)
Design and Build (DBSS)
Executive Flat (No longer constructed)
Executive Maisonette (No more constructed)
HUDC (No longer constructed)
- Private Housing (60-*, 99-, 999- year lease; freehold)
Strata Titled Cluster Housing
Inter terraces (Type 1 and 2)
Good Class Bungalows
Sentosa Landed Housing (the sole landed properties in Singapore for which foreigners can purchase with express approval)
* A property at Jalan Jurong Kechil is your very first 60-year rental plot to be sold (on 15 November 2012); thus a 60-year private land will be offered in a few years’ time.
** Executive Condominium becomes personal after 10 years.
The globallyrecognizedd benchmark for housing affordability is a DSR of 30 per cent. As an instance, based on a family with a monthly income of S$3,000 purchasing a S$300,000 3-room HDB apartment, without a housing grants, the household can take a loan of up 80 per cent of the cost (assuming that they don’t have any outstanding mortgage loan), or S$240,000.
When deciding between a HDB and personal property, aside from the affordability, buyers may also want to check out the investment potential of their houses.
HDB flats’ investment potential
In the Government’s standpoint, HDB flats are intended for living purposes and not for speculation. Hence HDB apartments are exposed to a Minimum Occupation Period (MOP) of 5 decades whether for a resale or direct buy from HDB. This curbs house flipping of HDB apartments.
Yet after MOP, owners of larger HDB flats can make a profit by downgrading to a smaller unit. People who are tempted to sell for a gain during a thriving property market may not be better off since they will need to pay a top cost for another flat. Moreover, if their current flat was purchased using a home grant, they might have to incur a resale levy when they buy a second subsidised HDB flat.