Homes in Singapore aren’t exactly the most spacious, but guess what, they’re getting even smaller. HDB flats are shrinking, and if you’ve been to an entry-level condo unit, you’ll know that the living room area can be so small that you’re practically kissing that high definition TV screen.
So it’s no surprise that, for any couple hoping to have kids, space is a big consideration. In a typical three-room HDB flat, you’ve got enough room for one child, but what happens when you discover you’re having another?
Sure, you can make the kids share a room, but HDB and condo bedrooms are so damn tiny these days that the kids’ quality of life (and your sanity) will most definitely take a hit.
Here are some points to consider when figuring whether you should move to a bigger home.
It goes without saying that everyone will have a bit less personal space with an additional child around. But before you start texting your property agent, you want to take a good, hard look at your existing home and see if your family can live in reasonable comfort in your existing home with one more person.
If you don’t have enough rooms for each child to have their own bedroom, you might want to consider upgrading to a bigger home.
Yes, children can be made to share rooms, but not having their own space can be stressful and also make it harder for them to study and pursue their own interests… it’s less easy to try to program your own app or practise the guitar when you’re sharing an 8 square metre bedroom with someone else. Sharing a room can also make the likelihood of conflict between children more likely.
On the other hand, there are other ways you might be able to give the kids their own space without having to move to another room.
For instance, if your flat is one of those with a store room beside the kitchen, you might be able to convert that into another bedroom.
You can also divide one bedroom into two separate spaces, perhaps by hanging a curtain between the beds, although frankly judging by the size of the average HDB bedroom it’s going to be hard even fitting two beds in the room—the kids will probably have to sleep in bunks.
Current property market
Assuming you’ve decided that the step forward is to buy a new, bigger home, luck is actually on your side, as the property market is a buyer’s market right now. But if you have to sell your existing home, it also means you probably won’t get such a great price on it.
Private home prices have been on a pretty consistent slide, while HDB prices have been more resilient but still muted. So if you have a lot of cash on hand and it’s feasible to upgrade to a larger private unit, you’re in a good position to so.
That also means that selling an HDB flat and upgrading to a private condo can be a smart financial move right now.
Unfortunately, if you hope to hold on to your current home and rent it out until home prices rise again, you’ll be liable to pay ABSD (Additional Buyer’s Stamp Duty) of a hefty 7% of the purchase price of your new, bigger home. And obviously, if you want to upgrade your HDB flat by purchasing another HDB flat, you won’t be allowed to hold on to your first flat.
Home loans and interest rates
Home loan interest rates in Singapore are very low right now, especially if you go for a floating interest loan. And since interest rates are also pretty stable these days, that means it’s probably safe to go for a floating rate. This is obviously advantageous to you as a homebuyer.
However, just as the same bag of Calbi chips costs a very different price at Marketplace by Jason’s than at Sheng Siong, there can be quite a bit of variance between what the different banks are offering, so make sure you compare interest rates before signing up for a mortgage. You can do this for free using MoneySmart’s home loan wizard.
Space required vs cost
Ultimately, the biggest question you have to ask yourself is how much you will be paying to get how much more space.
If you can sell your current 3-room flat for $300,000 and purchase a 4-room resale flat for $500,000, that means you are essentially spending $200,000 for that extra room and extra space, all other factors remaining equal.
You also want to ask yourself if there are other benefits to upgrading to a bigger home, such as a more convenient location or better amenities.
Capital gains on your existing home
While the market right now is undeniably favourable to buyers, if you are selling your existing home to fund the purchase, you’ll have to contend with receiving a less-than-ideal price.
It would be helpful to look at how much you can realistically sell your home for, and calculate how much money you’ll be making out of it. If you bought your HDB flat through the BTO scheme, it’s likely you’ll still make a decent profit despite the lacklustre market.
Do you plan to upgrade your home if you have another child? Tell us in the comments!