Buying a home is one of the most important decisions in life. It involves a lot of factors, such as budget, location, size, design, and future plans. In Singapore, there are two main types of public housing options: new HDB flats and resale HDB flats. Each has its own advantages and disadvantages, depending on the needs and preferences of the buyer. In this article, we will compare the pros and cons of buying a new HDB flat versus a resale flat, and help you make an informed choice.
What are New HDB Flats and Resale HDB Flats?
New HDB flats are flats that are built and sold by the Housing and Development Board (HDB), the government agency responsible for public housing in Singapore. They are usually launched through two schemes: Build-To-Order (BTO) and Sale of Balance Flats (SBF). BTO flats are flats that are built according to the demand and preferences of the applicants, while SBF flats are unsold flats from previous BTO launches or surplus flats from other sources. New HDB flats are typically cheaper than resale flats, but they have a longer waiting time and a more limited selection of locations.
Resale HDB flats are flats that are bought from existing owners in the open market. They are usually older and more spacious than new HDB flats, and they offer a wider range of locations and amenities. Resale HDB flats are more expensive than new HDB flats, but they have a shorter waiting time and a more flexible eligibility criteria.
Pros and Cons of Buying a New HDB Flat
Pros
- Lower price: New HDB flats are generally cheaper than resale flats, as they are subsidized by the government. The average price of a new four-room flat in a non-mature estate was $345,000 in 2020, while the average price of a resale four-room flat in a non-mature estate was $418,000 in the same year.
- Good appreciation: New HDB flats are more likely to appreciate in value over time after fulfilling the minimum occupation period (MOP). This has been true for as long as HDB existed. Resale buyers tend to prefer newer HDB as they have a longer remaining lease and are usually better renovated with cleaner environment.
- Newer and more modern: New HDB flats are newer and more modern than resale flats, as they are built with the latest design and technology. They are also more energy-efficient and environmentally-friendly, as they have features such as solar panels, smart lighting, and water-saving devices.
- Longer lease: New HDB flats have a longer lease than resale flats, as they are sold with a 99-year lease from the date of completion. Resale flats have a shorter lease, as they are sold with the remaining lease from the date of purchase. A longer lease means a higher value and a longer period of ownership.
Cons
- Longer waiting time: New HDB flats have a longer waiting time than resale flats, as they are built only after the application and balloting process. The average waiting time for a BTO flat is about three to four years, while the average waiting time for a SBF flat is about two to three years. Resale flats have a shorter waiting time, as they are ready for occupation upon purchase. The average waiting time for a resale flat is about three to six months.
- Limited location choice: New HDB flats have a limited location choice than resale flats, as they are launched only in selected estates and sites. The location of new HDB flats depends on the availability of land and the demand and supply of housing. Resale flats have a wider location choice, as they are available in almost every estate and site in Singapore.
- Smaller size: New HDB flats are smaller than resale flats, as they are built with a more compact and efficient layout. The average size of a new four-room flat is about 90 square meters, while the average size of a resale four-room flat is about 100 square meters. Resale flats are more spacious, as they are built with a more generous and varied layout.
- More restrictions: New HDB flat buyers are subject to more restrictions than resale flat buyers, such as the income ceiling, the ethnic quota, the Minimum Occupation Period (MOP), and the resale levy. These restrictions limit the eligibility and options of the buyer, and may affect their future plans and decisions.
Pros and Cons of Buying a Resale HDB Flat
Pros
- Shorter waiting time: Resale HDB flats have a shorter waiting time than new HDB flats, as they are ready for occupation upon purchase. The average waiting time for a resale flat is about three to six months, depending on the negotiation and completion process. New HDB flats have a longer waiting time, as they are built only after the application and balloting process.
- Wider location choice: Resale HDB flats have a wider location choice than new HDB flats, as they are available in almost every estate and site in Singapore. Resale flats offer more variety and convenience, as they are closer to amenities such as schools, shops, transport, and workplaces. New HDB flats have a limited location choice, as they are launched only in selected estates and sites.
- Larger size: Resale HDB flats are larger than new HDB flats, as they are built with a more generous and varied layout. The average size of an older resale four-room flat is about 100 square meters, while the average size of a new four-room flat is about 90 square meters. Resale flats are more comfortable and suitable for larger families or those who need more space.
- More flexibility: Resale HDB flat buyers have more flexibility than new HDB flat buyers, as they have fewer restrictions and more options. Resale flat buyers can choose any flat that meets their budget and preferences, regardless of the income ceiling, the ethnic quota, the MOP, and the resale levy. They can also renovate and customize their flat according to their taste and needs.
Cons
- Higher price: Resale HDB flats are more expensive than new HDB flats, as they are sold at market rates. The average price of a resale four-room flat in a non-mature estate was $418,000 in 2020, while the average price of a new four-room flat in a non-mature estate was $345,000 in the same year.
- Slower appreciation: Resale HDB may not necessarily appreciate in value over time after fulfilling the minimum occupation period (MOP), as they are very dependent on demand and supply price fluctuation and comes with shorter remaining leases. The waiting time to breakeven or make a profit could be long.
- Older and less modern: Resale HDB flats are older and less modern than new HDB flats, as they are built with the previous design and technology. They are also less energy-efficient and environmentally-friendly, as they may lack features such as solar panels, smart lighting, and water-saving devices.
- Shorter lease: Resale HDB flats have a shorter lease than new HDB flats, as they are sold with the remaining lease from the date of purchase. The average remaining lease of a resale four-room flat in a non-mature estate was 82 years in 2020, while the average remaining lease of a new four-room flat in a non-mature estate was 99 years in the same year. A shorter lease means a lower value and a shorter period of ownership.
Conclusion
Buying a new HDB flat or a resale flat is a personal decision that depends on the needs and preferences of the buyer. There is no definitive answer to which option is better, as each has its own pros and cons. The buyer should consider the following factors before making a choice:- Budget: How much can the buyer afford to pay for the flat, and how much grants can the buyer receive?
- Location: Where does the buyer want to live, and how convenient is the location for the buyer’s lifestyle and needs?
- Size: How much space does the buyer need, and how comfortable is the flat for the buyer’s family and belongings?
- Waiting time: How soon does the buyer need to move in, and how long can the buyer wait for the flat to be ready?
- Lease: How long does the buyer plan to stay in the flat, and how much value does the flat have in the future?
I’m Jerry Han Sin from Propnex, bringing over 15 years of valuable experience as a seasoned agent. Whether you’re considering selling or renting your property, I’m here to assist you every step of the way. My expertise spans both residential and commercial properties, ensuring comprehensive support for all your real estate needs. Backed by a dedicated team, we stand ready to provide the assistance you require for a seamless and successful transaction. Your property journey is important to us, and I’m committed to making it a smooth and rewarding experience for you.
I hope you enjoyed reading my article. Please note that this is a creative and informative piece of writing, and not a professional or authoritative advice. If you have any questions or feedback, please let me know. 😊