Singaporeans are familiar with the 5Cs – cash, car, credit card, condominium and country club membership. But do we know the 5Cs of housing?
Read on to find out.
Buying a house requires money. And depending on the type of house you choose, the amount varies.
Let us do a rough calculation for a Build-To-Order (BTO) HDB flat that costs S$350,000. You will have to set aside S$35,000 as down payment for the 10 per cent HDB loan and another S$87,500 as down payment for the 25 per cent bank loan.
Looking at buying bigger or more expensive properties? As a rule of thumb, the price of the property you are eyeing should be about five times your annual income, but not more than seven times.
2. CAPITAL APPRECIATION
Capital appreciation refers to the rising value of your property over time.
If you’re planning to upgrade from a resale flat to a condominium, or counting on your home as retirement fund, capital appreciation is important.
Check the URA master plan to help you estimate the potential capital appreciation of a property. It is important to look at what the neighbourhood will be like years later, when the resale of your property will likely take place, not just as it is now.
However, while the URA Master Plan provides valuable information, it is no guarantee as plans can change.
3. COOLING MEASURES
The main cooling measure to note is the Additional Buyer’s Stamp Duty (ABSD).
ABSD does not affect Singaporeans buying their first property but it does affect permanent residents (PRs) and some foreigners.
PRs are subjected to ABSD rate of 5 per cent when they buy their first property while some foreigners buying any residential property will be subjected to ABSD rate of 20 per cent.
Size matters. But don’t assume your capacity needs will remain the same throughout your lifetime.
Many first-time buyers of condominiums tend to opt for shoebox units (500 square feet and under) but only to realise that the unit is too small as their family size grows. And on the opposite end of that spectrum is an empty nest when grown-up children leave home.
Careful consideration is needed before taking the plunge. Capacity matters if you are planning on rental income.
If you find yourself constantly hanging around areas far from home, this could be a sign of a community mismatch.
It’s important for you to recognise that your needs are constantly changing. For example, you may have moved into an area because your child’s school is nearby. But after the child graduates, the area may no longer appeal to you.
When buying a property, consider not just your short term needs, but whether you’ll be happy to live there 10 or 15 years from now.
This article first appeared on 99.co.