What Should I Buy For My First Property?
Updated: Mar 22, 2021
We have been often told that our very first property should be a BTO and indeed, this is what the older generations have always done. Nonetheless, the property landscape has been changing and more options are given to Singaporeans today. Given the varied options, you may be confused as to what to buy for your very first property. To keep it simple, here are three factors that should be at the front of your mind when selecting your first property.
1. Income and Budget
Simply put, your income determines what sort of property you can buy. If your household income is more than SGD$14, 000, you can only buy private properties. If it is between SGD$12,000 and SGD$14,000, then Executive Condominiums (ECs) are your only choices. If it is below SGD$12,000, then you have the option to purchase both ECs and HDB flats.
My advice is this: if your household income and budget allow it, go ahead and purchase private property. Public housing is not always the best choice as the resale prices always need to stay at competitive rates, whereas private housing are able to appreciate and increase according to the market, thereby potentially giving better returns when you do sell it in the future. ECs in particular become private property when you do sell it, but do take note that within the first five years, you can sell it to anyone except foreigners.
2. Future Investments
If you’re planning on making your second property investment within one to three years, purchasing private properties is the best option. If you’re only intending to buy your second property 5-8 years later, then a newly-launched EC is the better option as there is a MOP period.
3. Waiting Time (For HDB or Resale Flats)
If your choices are between BTO or HDB resale flats, you simply need to consider: how long can you afford to wait? While a BTO is brand new, there is some waiting time, which some people cannot afford. In that case, resale flats are your best option. However, if you can go for a new launch, go for that instead. Due to the age of the house, new launches will turn out to be better assets for you in the long run as they do not depreciate as quickly.
If you’re using the HDB loans, always opt to purchase the bigger HDB flat first. HDB loans are precious as they do not require any cash down-payment, but they can only be used once, so do use it wisely! If you’re purchasing a property based on bank loans, buy a smaller property instead and keep the HDB loan for next time.
Selecting your first property to purchase should be dependent on these four simple factors. BTOs no longer need to be your first and only option; in fact, if you have the income and budget, try and purchase private property as this may give you better returns in the long-run!