Money Talks: Why a BTO flat is the top choice for young home buyers
Multiple failed attempts to secure a Build-To-Order (BTO) flat and at least a 4-year wait are reasons cited by some home buyers for turning to the resale market. But with resale flat prices at record levels, should home buyers reconsider their options? Property agent Jooann Tay weighs the options on this episode of This or That, a limited series on the Money Talks podcast.
.jpg?itok=_HMjeVw7 "Money Talks: Why a BTO flat is the top choice for young home buyers")
SINGAPORE: Almost every other week, property agent Jooann Tay, 34, meets clients who have failed in their bid to secure a Built-to-Order (BTO) flat. After many unsuccessful attempts, these couples have now turned to the HDB resale market. “They have given up on that (BTO) dream,” says Ms Tay.
Ms Tay noted that other home buyers who urgently need a ready flat are typically those who are in their 30s, married and have children, “which explains why they need a space on their own”.
HDB flats are home to 80 per cent of Singapore’s population. Amid a rise in the number of million-dollar resale flats in recent years, the issues of affordability and accessibility have come to the forefront of discussion.
A construction delay brought about by the COVID-19 pandemic, coupled with a change in lifestyle, are other factors driving buyers with urgent housing needs to the resale market.
“We used to have three generations living in one household. Now it’s one household going out to buy two, three homes”, Ms Tay told host Andrea Heng, on the recent podcast episode "This or That: BTO or resale flat".
Listen:
Here are some key takeaways from the conversation:
AGE MATTERS
Tay: BTO is really about affordability. If you’re just starting out, if you’re in your early 20s, you have the runway to wait (for construction to be completed).
UNDERSTAND YOUR LONG-TERM HOUSING NEEDS
Tay: Start off with a BTO and you have your first "pot of gold" because you bought it at a discount (from the market). Upon hitting the MOP (minimum occupation period; HDB flats can only be sold after living in it for 5 years), you will usually get some proceeds that can help you in your next purchase.
FACTOR IN OTHER COSTS FOR A RESALE FLAT IN TODAY'S MARKET
Tay: The cost of (the home) does not just come from the flat itself. You have to account for renovation. There’s also the cash-over-valuation (a cash premium over the flat’s valuation paid by buyers). Recently we had someone paying S$100,000 COV.
PAYING PEAK PRICE FOR A RESALE FLAT TODAY MAY AFFECT YOUR FUTURE HOUSING OPTIONS
Tay: It is likely that once supply has caught up with the market, the price of your (resale) flat may start to come down. If you decide to then move on to another property, you might end up with a negative sale.
IF RESALE IS THE WAY FOR YOU, CHOOSE SOMETHING WITH A LONGER REMAINING LEASE
Tay: Consider something that has just reached the MOP … Something that might have a bit of growth later might be the best way to protect whatever wealth you have left (in the lease).
New episodes of the Money Talks podcast drop every Tuesday. You can listen on the CNA website or app, meListen, Google, Spotify or Apple Podcasts.
