For young couples thinking about buying their first home, the typical Singaporean norm of applying for a BTO flat and temporarily living together with parents or in-laws may no longer work as well, especially with the long waiting period and working-from-home. Sharing our childhood bedroom with our spouse for the short term may be feasible when both of us are going to office, but it becomes near impossible when both of us need to hold separate online meetings in the same space.
On the supply-side, HDB BTO construction has been delayed due to the foreign manpower restrictions. This not only means that existing BTO projects are delayed but new project launches are also facing longer completion timelines. In the recent BTO launches, the waiting period ranged from 4 to 6 years.
Read Also: Why It Doesn’t Make Financial Sense To Give Up Your HDB BTO Flat Due To Construction Delays
For new home buyers, this presents a tricky situation: is it worth buying the more affordable BTO flat and renting while waiting or should we bite the bullet and pay for the higher prices for a resale flat that we can move into within the next few months?
How Much Does It Cost To Rent And Wait For BTO Flat?
For this comparison, we will be looking at the recent Yishun BTO Launch – YIshun Beacon – and comparing them to the resale prices in Yishun.
For all cases, we will be looking at the most common flat type: the 4-room HDB flat.
Assumptions for our comparison
For comparison simplicity, we have excluded the other costs of purchasing a property such as mortgage and mortgage interest, stamp duty, lawyer fees, renovation or other expenses. If included, these costs would likely widen the differences between the two options as resale flats tend to be more expensive and require more extensive renovations. Resale flat prices used are based on 1Q2022 median resale prices for registered resale applications from HDB’s resale statistics. Rent data is taken from HDB’s rental statistics.
Yishun Beacon
Yishun Beacon is slated to be the first of the launch to be completed with an estimated completion of 2Q2026 or 39 months waiting time. Assuming no delays and a renovation period of 3 months, the total rental period will be 42 months or 3 years and 2 months.
Price of BTO Flat: $373,000. We will take the midpoint of the indicative price range ($328,000 to $418,000) for 4-room BTO flat as the actual cost.
Rent: $88,200 for a rental period of 40 months based on the median rent of $2,100 for 4-room HDB flat in Hougang.
Total Cost of Renting While Waiting: $461,200
Resale Flats
The median resale price for 4-room HDB flat in Yishun is $450,000. As this is the median price, the actual flat prices will differ depending on the location as well as the flat condition. You can expect to pay more for flat that is near the town centre or the MRT or a flat that is recently renovated in the last few years.
As first-time HDB buyers for both BTO and resale flats are eligible for the Enhanced CPF Housing Grant (EHG), we would not be including the EHG in this comparison. However, first-time resale flat buyers are eligible for an additional Family Grant. For 4-room flats, the Family Grant amount is $50,000 if both spouses are Singapore Citizens.
We are also assuming that families and couples opting to buy resale will not occur any rental costs in the interim. Depending on the sellers, a resale transaction can take a few months to complete.
Cost of Resale Flat: $450,000
Cost of Resale Flat (with Family Grant): $400,000
Read Also: Complete Guide To HDB Housing Grants In Singapore For Different Types Of Flats
Is It Worth Renting And Waiting For A BTO Flat?
| Price of Flat | Rent | Total Cost | |
| Yishun Beacon | $373,000 | $2,100 x 42 = $88,200 | $461,200 |
| Resale in Yishun | $450,000 | n.a. | $450,000 |
While buying a resale flat may be cheaper (and even cheaper with the Family Grant), there is also the opportunity of buying an older resale flat compared to buying a new BTO flat with a fresh lease. We would be giving up the potential higher returns of selling a BTO flat in return of a cheaper and more immediate housing solution.
Previously, we had compared the prices of buying new BTO launches in Hougang compared to a resale flat in Hougang.
| Price of Flat | Rent | Total Cost | |
| Hougang Citrine | $346,000 | $2,000 x 40 = $80,000 | $426,000 |
| Kovan Wellspring | $460,000 | $2,000 x 58 = $116,000 | $576,000 |
| Resale in Hougang | $435,500 | n.a. | $435,500 |
This price difference is greater when we factor in the cost of renting. The longer wait time for Kovan Wellspring adds another 18 months of rent or $36,000 to the total cost. For a couple who chooses to rent while waiting for their Kovan Wellspring BTO flat, this will work out to a total of $576,000 in cost.Based on the Hougang BTO prices in the August 2021 launch, we can see that the cost of a BTO flat can be higher than a resale flat, due to location. Kovan Wellspring is located right next to Kovan MRT which is why it is priced at a premium compared to Hougang Citrine. As the median resale price in Hougang would also include old flats with shorter remaining leases as well flats that are less desirably located, it is not surprising that buying a BTO flat at Kovan Wellspring will be more expensive.
A quick search on PropertyGuru showed one matching result for a resale flat in the same vicinity as Kovan Wellspring, within 3 mins walk from Kovan MRT. The TOP of the unit was in 1983 and has a remaining lease of 61 years.
Source: PropertyGuru
In the case of Kovan Wellspring which is located in a very desirable location, it may be well worth the expense to rent and wait. Even before collecting the keys, the 4-room BTO flats in this launch is already sitting at huge price discount (28%) from existing resale flats in the area. Even after you factor in the cost of renting, the price discount is still 10%, even before accounting for the differences in lease and the future capital appreciation.
However, if you look at Hougang Citrine, buying a resale flat may actually be a viable option. The nearest available resale flats for sale are near or below the median resale price. The price difference between renting and waiting, and just buying a resale flat is only $9,500. If you add in the Family Grant of $50,000, buying the resale flat is cheaper than renting and waiting.
For a couple who intends to make their flat their forever home, is not after the potential capital appreciation of a BTO flat or is in urgent need of a permanent housing solution, buying a resale flat can be the more affordable option.
It Really Depends On The Location And Your Own Housing Needs
The above analysis is only meant as a guide and would differ depending on our individual circumstances. Do speak to a trusted agent or home loan broker before committing to a home purchase and loan.
In general, if you managed to score a successful ballot in a centrally located unit, even in a non-mature estate, you are likely to be better off renting and waiting for your BTO flat. However, the longer you need to rent for, the more you have to pay, which may tip the scales differently. If you are like our co-founder Dinesh, whose BTO flat has been delayed for many months but is also seeing an appreciation in the value of the surrounding flats, it would also still be worth your while to rent and wait it out instead of giving up your flat.
However, if your BTO flat doesn’t command that location premium, it may be worth considering just biting the bullet and getting the resale flat now. The additional Family Grant does soften the financial blow of buying a resale flat significantly especially in non-mature estates. It may be well worth buying the resale flat today to save yourself and your family the intangible costs of not having a permanent solution to meet your housing needs, especially during a pandemic.
Read Also: Step-by-Step Guide On Buying A Resale HDB Flat in Singapore
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