The classic scenario for young Singaporeans making their first big financial decision goes something like this: Girl meets Boy, they decide to settle down, they start looking for a home. 

Once a young couple begins their search, however, they realise that although a Build-To-Order (BTO) apartment will take up to four years to arrive compared to an existing Resale flat, they are also much more affordable. So, biting the bullet, the couple moves in with their respective parents and start saving.

While this story is ubiquitous for a reason - it makes good financial sense - there might be other reasons to look into buying - and renovating - an existing Resale apartment.

1. Think About the Timeline

Are you really willing to wait up to four years to move in together? Can you put up with living apart with your parents? Will you end up having to rent an apartment and waste all that extra cash?

Make sure you are aware of the possible issues that could arise in this sort of situation, and be realistic about how patient you are, and your relationship with your parents and other family members too.

2. Space & Location

Image Credits: Aart Boxx Interior

Resale apartments are almost always larger and better located than BTO flats. This is obviously due to the age of the buildings, since they are found in older, more established parts of Singapore. BTO apartment locations are predetermined by the Housing Development Board (HBD), and are usually in less mature estates with fewer amenities and less established schools. And if you want to stay closer to your parents you will be more likely to do so with a Resale apartment.

In addition to being placed in better locations, the physical size of BTO apartments are also smaller, most are around 100 sqm. Due to the increase in population and corresponding reduction in land availability, newly built apartments are always going to be smaller than the older flats.

READ OUR STORY: Tips on how to make your HDB apartment feel bigger

3. Potential Return on Investment and Leases

The issue of 99-year lease agreements is something young couples, unlike their parents, need to be more aware of. It is not really practical to buy a house that has less than 40 or 50 years left in the agreement; you definitely won’t be handing the property down to your children.

Although many couples buy BTO apartments with the long-term plan of selling up after the mandatory five-year occupancy period, this practice actually makes some BTO flats more expensive than they should be due to the additional investment in upgrading that many couples engage in.

So if you are looking at selling after a set period of time, make sure you are aware of the time left on the lease - no-one wants to buy something that might not see them through the last years of their lives - and also be careful not to over-capitalise your home renovations.

4. The Budget

Obviously the cost of an apartment, whether BTO or Resale, is the largest deciding factor when it comes to buying a home. Everyone will have a specified limit to the amount of money they can spend.

Over the years many people have come to believe that Resale flats are a lot more expensive than the HDB’s BTO programme. This is especially true when you consider the larger size of Resale apartments, since it makes sense that they would cost more based on cost-per-sqm.

While it is true that technically Resale apartments are, on average, more expensive than BTO flats, with the number of grants and subsidies now available when buying a Resale apartment, you can make up quite a bit of the difference.

Once you take into account that Resale flats are larger and better located, and there is no waiting time, BTO apartments can become less attractive.

4.1 Costs Breakdown

Here are some comparisons of the price differences of BTO projects in contrast to the estimated average Resale flat listed on the HDB website over the last 12 months for the same flat type (4-room in the same HDB estate)

 

Estate	HDB BTO Price	HDB Resale Price
Sembawang	$272,000-$320,000 (90 sqm)	$357,000 (102 sqm) (80 years lease remaining)
Tampines	$394,000 - $480,000 (90 sqm)	$465,000 (105 sqm) (76 years lease remaining)
Ang Mo Kio	$451,000 - $563,000 (90 sqm)	$507,000 (94 sqm) (91 years lease remaining)

 

4.2 Available Grants

HDB Type	Type of CPF Housing Grant	Income Ceiling	Grant Amount
Built to Order (& Sale of Balance Flat)	Enhanced CPF Housing Grant (EHG)	$9,000	$5,000 - $8,0000
Resale	Enhanced CPF Housing Grant (EHG)	$9,000	$5,000 - $8,0000
	Family Grant (FG)	$14,000	$40,000-$50,000 (2 - 4 room Resale)
			$30,000-$40,000 (5-room or bigger Resale)
	Proximity Housing Grant	NIL	$20,000 - $30,000
Executive Condominium (EC)	Family Grant (FG)	$12,000	$10,000 to $30,000

Info Credits: Seedly

For BTO Flats (including Sale of Balance): EHG = $5,000 to $80,000
For Resale Flats: EHG + FG + PHG = $65,000 to $160,000
For EC: FG = $10,000 to $30,000

As you can see, your eligibility for larger government subsidies is greater when you buy a Resale flat. For more information on the criteria, please refer to the HDB website.

4.3 Renovation cost: Resale vs BTO

Image Credit: Areana Creation

When it comes to renovating your new home, many Singaporeans believe that it is cheaper to renovate a BTO apartment than it is to renovate an older, Resale flat. At a basic level, yes, it might be cheaper, but this is due to the smaller size and fewer structural issues of BTO apartments.

Renovating an older apartment, however, doesn’t have to be super expensive. There are many great renovation ideas and options that come in under SG$30,000. Or you could simply shop around until you find a great Resale apartment that has already been renovated to suit your taste and style.

To get some inspiration about what sort of renovation can be done with less than SG$30,000, check out our list of stylish affordable home renovation done by our Interior Designers.