Let’s face it, many Singaporeans choose to buy condos over HDB flats because of perceived prestige and in pursuit of the hallowed five Cs. But unfortunately, condos come at a price. Already, many Singaporean households overstretch themselves when purchasing a home. Singaporeans have some of the highest debt levels in Asia relative to household income, as well as the highest level of property debt.
However, even if you aren’t in the position to buy, sell and rent multiple properties and actually intend to live in the place you purchase, here are three reasons you might want to consider buying a condo despite the higher price.
You want to own freehold property
While freehold properties are few and far between these days, if you can afford it there are some reasons to opt for a freehold home instead of one on a 99 year lease. Since all HDB flats are on a 99 year lease, the only way to buy freehold property is to go private.
Note that if you just want a good return on your investment, there is no need to go the whole hog and buy freehold. Studies have shown that properties on a 99 year lease tend to earn better gross rental yields, meaning the amount of rent you earn is a higher percentage of the price you paid for the property.
But there are other reasons for wanting to own freehold property, such as the desire to hand it down to future generations in your family. If you are relatively young and plan to live in the condo for a long time (ie. most of your life), you’ll also find that your property value could appreciate more in the long run.
You actually use the facilities
I lived in a rented condo for a period of time and used the fancy swimming pool a grand total of… two times. I never actually used the gym and barbecue pits.
If you think the facilities are one of the draws of a condo, base your purchasing decision on whether you actually use these facilities now, rather than whether you intend to use them later. For instance, if you’ve got an existing gym membership, being able to use a condo gym for free will allow you to work out at home.
Note that while condo facilities might seem free, you’ll be paying for them in the form of MCST fees. Still, if you’re an avid swimmer, work out often in the gym or regularly enjoy a good game of tennis, living in a condo with such facilities can not only save you a bit of money but also buy you lots of convenience—there’s nothing like taking the lift up to your own unit for a hot shower after a few laps in the pool.
You want to avoid HDB’s restrictions
While HDB property is a more cost-effective purchase from the point of view of someone who actually wants to live there, HDB ownership is fraught with restrictions, and if you’re not the kind of person the government thinks you should be to qualify then tough luck.
If you’re under 35 and not married, you can forget about buying HDB property till you’re old enough or find someone to tie the knot with (hopefully not for the sake of the property though!).
The same goes for couples whose earnings exceed the income ceiling of $12,000 for 4 room or bigger flats or $6,000 to $12,000 for 3 room flats.
Other restrictions abound, such as running the risk of having your flat confiscated by the HDB if you rent out rooms to people on Airbnb and only being allowed to own annoying small yappy dogs.
While many people are going to baulk at the idea of buying a condo unit as their first home, there are couples who do dream about it. Making sure that you finance your home purchase in a smart way is of utmost importance especially because there are other peripheral costs to consider when buying a condo as well.
Doing your homework and making sure you get the right home loan package will save you lots of money in the long run, and it’s as easy as just heading over to MoneySmart’s Home Loan Wizard to find out the best rates in Singapore.
Would you rather buy an HDB flat or a condo to live in? Tell us in the comments!