Should You Buy Private Condo as Your First Home (3 Factors for Consideration)?

Majority of Singaporeans will likely buy a BTO or resale HDB flat as their first home. Should you choose to buy private condo as first home? Below are 3 factors for consideration.


     Table of Content

  • Factor 1: HDB is more regulated but affordable
  • Factor 2: Condo is expensive but has more financing flexibility
  • Factor 3: Condo have better capital appreciation & en bloc potential


    ๐Ÿ“ŒFactor 1: HDB is more Regulated but Affordable

  • HDB is the preferred first home for younger couples because it is affordable and comes with government grants.
  • However, HDB has many regulations
  • singles below the age 35 cannot buy a HDB flat.
  • A Singaporean with a foreign spouse cannot buy a BTO flat if they own an overseas property.
  • Permanent Residents (PR) can only buy a resale flat after 3 years of obtaining residency.
  • To sell your HDB flat, you must fulfill the 5 years Minimum Occupation Period (MOP).
  • The buying and selling restrictions for HDB are plenty.
  • For private condo, you can buy as a married couple, single or with friends.
  • Technically, you can buy today and sell tomorrow (Seller Stamp Duty Applies)
  • The biggest challenge for private property owners happens when they switch to HDB.
  • After selling, they need to wait 30 months before they can apply for a BTO flat.
  • This group of buyers will likely opt for resale HDB flat as the waiting period is shorter (15months*)

Updates: On 30 Sept 22, the Government introduced a 15-month wait-out period for private home owners before they can purchase a HDB resale flat. This wait-out period will not apply to seniors aged 55 and above who are buying a four-room or smaller resale flat

buy private condo as first home

    ๐Ÿ“ŒFactor 2: Condo is Expensive but has more Financing Flexibility

  • Condos are generally more expensive but has more financing options.
  • Monthly Servicing Ratio (MSR) & Total Debt Servicing Ratio (TDSR) are home loan limits imposed by the government.
  • MSR (for HDB) is capped at 30% of your gross monthly income.
  • Qualified buyers will be able to take a bigger loan with TDSR (for private properties) at 55% of gross monthly income (assuming no other personal loans)
  • However, a bigger loan will also mean more pressure servicing mortgage.
  • You must be mentally prepared to service this loan for the next 20-30 years.
  • Younger buyers can use pledging or show cash methods to take bigger loans for private properties if they have support from their family members.
  • Another benefit of owning a condo is that you can cash out by taking equity loans without selling.
  • HDB owners will need to sell their flats if they need cash.
buy private condo as first home

    ๐Ÿ“ŒFactor 3: Capital Appreciation & En bloc Potential

  • HDB is a successful public housing program for Singaporeans. 
  • It is not meant for speculation and must be kept affordable.
  • This translates to slower capital appreciation.
  • Singapore is a top investment destination for foreign investors.
  • Foreigners are allowed to buy private condos
  • This makes the buyersโ€™ pool bigger and allows more room for capital appreciation.
  • Older HDB flats face lease decay issues and 96% of HDB flats will be returned to government when their lease expires.
  • Condos that are of freehold status or 999-years lease will not have such worries.
  • A price increase is observed when condos reach 31 to 40 years old.
  • This phenomenon could be attributed to the stronger en bloc potential of older condominiums.
buy private condo as first home

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Should I buy a BTO or a condominium for my first property? The answer varies from buyer to buyer. Factors to consider include your income and your priorities. Schedule an interest-free consultation with the experts from Property Den!

Dennis Lim

Dennis has more than a decade of experience investing in real estate. Like many fellow Singaporeans, he grew up in a HDB flat with dreams to live in a condominium. Through careful financial planning & hardwork, this became a reality when he was 30. He now owns 3 private properties in Singapore and has helped hundreds of Singaporeans to achieve their goal of upgrading their homes in land-scarce Singapore.

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