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HDB Flats for Singles: BTO vs Resale Flat Cost Breakdown

·11-min read

Perhaps one widely known fact among singles in Singapore is that, under most circumstances, singles are only eligible to buy an HDB flat when they are age 35 and above. Of course, an alternative housing plan is private housing, which can be purchased at any age, but for most, Build-to-Order (BTO) or resale flats are usually most accessible financially.

 

HDB Flats for Singles

But what HDB flats can singles purchase?

BTO vs Resale

BTO flats are newly built flats that are subsidised by the Government and are ideal for those who prefer brand-new flats at an affordable price. However, while each BTO project will offer different types of units, singles are only eligible to ballot for 2-room BTO units in non-mature estates. Meanwhile, the situation is vastly different when it comes to resale flats. Singles are allowed to choose from units with any number of rooms, including larger 5-room flats and Executive Flats.

2-Room vs 3-Room HDB Flats

Pragmatically speaking, 2-room and 3-room units are most practical for singles living alone. Not only are they more affordable compared to their 4-room and above counterparts, the upkeep and maintenance of a smaller apartment is also easier. Bearing in mind that single buyers will need to shoulder the costs alone, if the total square metres is not the biggest deal breaker, which type of unit makes more financial sense?

Let’s first get acquainted with the 2- and 3-room options that are currently available.

 

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1. 2-Room BTO Flat in Non-Mature Estates

When it comes to BTO, it’s important to know who your “competitors” for a unit might be, so you can better weigh the odds of successfully balloting on your first try.

Almost Half Are for Senior Applicants

BTO exercises are largely popular among young couples and families, but there is not so much competition there for 2-room flats. That said, 2-room flats are also open to seniors who may wish to apply for a unit to be nearer to their married children. About 40% of 2-room Flexi flats in a BTO project are set aside for seniors, and they will be able to purchase the new flat on a shorter lease.

Not Every BTO Launch has 2-Room Flats

To top it off, not every BTO project offers 2-room flats in their unit mix. For instance, in the recent August 2021 BTO launch, only two out of the six projects offered 2-room flats in non-mature estates that singles are eligible to ballot for (Hougang and Jurong East). It was the same in May 2021 (Woodlands and Tengah).

2-Room BTO vs Resale Prices

But say you found a suitable BTO project you like. What then? How much cheaper are they compared to resale flats? Here’s a look at the recent 2-room BTO flat prices, compared to other similar options on the resale market. The resale prices were taken from the past six months’ transactions recorded on HDB’s resale portal (as of 25 Nov 2021).

Estate

BTO Price

Resale Price (May to Nov 2021)

Hougang

Hougang Citrine and Kovan Wellspring, from $108,000 (Aug 2021 BTO)

$252,000 to $268,000

Jurong East

Toh Guan Grove, from $121,000 (Aug 2021 BTO)

$243,000 to $285,000

Woodlands

Woodgrove Ascent, from $98,000 (May 2021 BTO)

$263,000 to $298,000

Note: We excluded Garden Bloom and Parc Woods in Tengah and West Hill at Bukit Batok due to insufficient resale data. We also excluded Harmony Village in Bukit Batok as the 2-room flats are community care apartments / assisted living flats catered to seniors only.

From an affordability point of view, BTOs are clearly the economical option. The BTO prices stated above are excluding any grants, and even then, resale flat prices are double or twice that. This means that these make potentially great investments too, if you intend to eventually sell off your home.

The main downside to getting a BTO is the long waiting time. The best-case scenario is if you get the flat on your first try, and you only need to wait for three to four years for the flats to be completed. If you need to ballot multiple times, it could be longer. Given the application rates of 10.1X and 17X for singles in the recent 2-room flats in Jurong East and Hougang respectively, the latter is more likely.

If you have your heart set on a brand new 2-room HDB flat, be prepared for the wait. If you urgently need a home and may need to rent in the interim, do also factor that into your costs. Renting for three or more years will cost you a significant sum, and it may just be more affordable (and not to mention, less hassle) to buy a resale flat.

Related article: HDB Single Scheme and Joint Singles Scheme: Guide to Buying HDB Flat As a Single in Singapore

 

2. 2-Room or 3-Room HDB Resale Flats

Say, waiting years for a new home is out of the question. Then your next consideration would be either 2-room or 3-room HDB resale flats.

Unsurprisingly, since they offer more space, flats with more rooms are usually cost more. 2-room BTO flats will always be the most affordable, followed by 2-room resale flats and finally 3-room resale flats.

Here’s a comparison of resale flat prices across the estates. For 3-room flats, we’ve used the median resale prices published by HDB (Q3 2021). Since the same data is unavailable for 2-room flats, we took the range of prices from the resale transactions in the past six months (May to November 2021). The data is accurate as of 25 November 2021.

2-Room vs 3-Room Resale Flat Prices 

Towns

2-Room (May to 25 Nov 2021)

3-Room (Q3 2021)

Ang Mo Kio

$225,000 to $250,000

$330,000

Bedok

$215,000 to $313,000

$318,000

Bishan

-

-

Bukit Batok

-

$319,000

Bukit Merah

$225,000 to $246,800

$350,000

Bukit Panjang

$240,000 to $310,000

$331,000

Bukit Timah

-

-

Central

$267,000 to $318,000

$420,000

Choa Chu Kang

$245,000 to $280,000

$380,000

Clementi

$325,000 to $348,000

$349,000

Geylang

$140,000 to $230,000

$292,500

Hougang

$252,000 to $268,000

$330,000

Jurong East

$243,000 to $285,000

$327,800

Jurong West

$220,000 to $292,000

$292,000

Kallang/Whampoa

$203,000 to $288,000

$335,000

Marine Parade

-

$385,000

Pasir Ris

$290,000 to $338,000

-

Punggol

$215,000 to $315,000

$395,000

Queenstown

$230,000 to $408,000

$350,000

Sembawang

$240,000 to $292,500

-

Sengkang

$250,000 to $320,000

$385,500

Serangoon

$220,000 to $275,000

$333,000

Tampines

$265,000 to $315,000

$368,000

Toa Payoh

$205,000 to $265,000

$290,000

Woodlands

$263,000 to $298,000

$310,000

Yishun

$210,000 to $270,000

$328,000

Note: The empty fields mean that there were insufficient transactions, and no data was published.

Let us first say this – this is not an apple-to-apple comparison because, well, 2-room and 3-room flats are different altogether. However, from the above, we can spot some trends.

Generally, the price difference between 2-room and 3-room resale flats seem to depend on the estate. For simplicity’s sake, let’s look at the highest transactions for 2-room flats to compare. For some, the prices are about the same (Bedok, Bukit Panjang, Clementi, Jurong West, Woodlands). For others, the prices are about 25% cheaper or less. And then in some rare cases, 2-room flats could even be more expensive than 3-room flats (Queenstown).

Additionally, while the absolute price is a key deciding factor in purchasing a flat, there are also other variables to consider, such as the remaining lease on a flat.

For example, in older estates, you may find much cheaper resale flats that have lower prices due to a short remaining lease. A good example of this is Bukit Merah, where the $200,000+ transactions were for 2-room flats with only about 50 years left of the lease. Usually, those with 90 years and more cost $350,000 and up. The $357,000 median price for 3-room flats there may have also been lowered due to older flats.

That said, for some less popular estates, the lease may not make such a big difference. For example, in Jurong West, we saw that old 2-room flats (around 50+ years left) transacted at comparable prices with the newer flats ($200,000 to $250,000).

If you really want to know which gives you more value for the price, you may want to calculate the price per sqm. According to HDB, 2-room flats are either 36 or 45 sqm, and 3-room flats are 60 to 65 sqm. This means that 2-room flats are about 31% to 45% smaller than 3-room flats, suggesting that generally, 3-room flats may be more value-for-money.

If you’re thinking of investment potential, you may want to steer clear of the older flats as their value may depreciate with the decaying lease. Typically, the newer the flat, the higher the price. 3-room flats may also be more popular as they are spacious enough for not just singles, but couples and small families too, widening your net of buyers. You may also want to consider city fringe or central area locations where buyers may be more open to compromising on space for the convenient location.

 

CPF Housing Grants for 2-Room BTO vs HDB Resale Flats

There are several grants available to single occupants when it comes to purchasing HDB flats, but the grants you can tap into will depend on the type of flat you purchase. For instance, while only the Enhanced CPF Housing Grant is applicable to BTO, singles looking to purchase resale flats are eligible for an additional Singles Grant and Proximity Housing Grant.

CPF Housing Grants for Singles

BTO Flat

Resale Flat

Conditions

EHG

Up to $40,000

Up to $40,000

$4,500 income ceiling

Singles Grant

-

Up to $25,000

$7,000 income ceiling

Proximity Housing Grant

-

Up to $15,000

Must live with parents or within 4km to parent's place

Let’s look at how that plays out in this sample scenario.

For the following comparison, we assume the buyer has a monthly income of $3,500, qualifies for the maximum 90% Loan-to-Value ratio on HDB loans, and also receives grants at maximum value or according to the income tier.

Mortgage and interest rates are calculated using the PropertyGuru Mortgage Calculator and the HDB Payment Plan Calculator.

2-Room BTO

2-Room Resale

3-Room Resale

Selling price

$100,000

$200,000

$300,000

Downpayment (10%)

$10,000

$20,000

$30,000

Total CPF Grants

$12,500 (EHG only)

$52,500 (EHG, Singles Grant and Proximity Housing Grant)

$52,500 (EHG, Singles Grant and Proximity Housing Grant)

HDB Loan Amount, less grants

$90,000 - $12,500 =

$77,500

$180,000 - $52,500 = $127,500

$270,000 - $52,500 = $217,500

Mortgage (2.6% p.a., 25 years)

$77,500 (principal) +

$27,987 (interest)

= $105,478

$127,500 (principal) +

$46,029 (interest)

= $173,529

$217,500 (principal) +

$78,520 (interest)

= $296,021

Total paid

$115,478

$193,529

$326,021

Note: In this example, we did the calculations for an HDB loan for the full 25 years for simplicity, assuming no change in the interest rate. However, the actual cost may differ depending on how you manage your home loan in the long run. For example, refinancing to a bank loan with lower interest rates several years down the road is a popular way to save on interest costs.

As seen, the 2-room resale flat seems to find a good balance between having a low selling price while being eligible for more grants. 3-Room flats are also eligible for the same grants as 2-room resales, but due to the significantly higher price tag, the final cost is almost double of what a 2-room BTO would cost.

 

Do 2-room HDB Flats Make the Most Financial Sense?

It will appear that both BTO and resale 2-room flats make for financially accessible purchases based on the above comparisons, but in truth, there is no one correct answer as different circumstances help us decide what is worth investing in and what isn’t.

Singles whose longer-term plans involve getting married and living together with a spouse may find the smaller 2-room flats too cosy, or may prefer a 3-room flat for more storage space. A mid-career executive planning to move out yet remain close to their parents may find a $200,000 2-room resale flat with all the applicable grants affordable, but might find $300,000 for a 3-room resale flat unwieldy and shy away from it altogether. Yet another single may prefer 2-room flats to 3-rooms in general, simply because the upkeep and maintenance could be easier.

Worthy investments thus depend on your preferences, as well as financial situation. Whatever you choose, purchasing a property within your financial means is always a more prudent choice. Check out our Affordability Calculator for a good estimate. For personalised recommendations and expert mortgage advice, reach out to Property Finance home loan advisors.


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