The HDB resale market has been on a relentless rise, with Q2 2022 marking the ninth consecutive quarterly increase of 2.8%, for a total of 5.2% increase for the first half of this year, according to the public housing data released by HDB.
Many HDB homeowners may be tempted to take this opportunity to cash out of their current flats. In fact, some HDB first time flat owners might even be able to double their initial purchase price (inclusive of grants).
As Singaporeans, we are eligible to purchase two HDB Build-To-Order (BTO) flats. With the government releasing up to 23,000 BTO flats in 2022 and 2023 to meet the strong housing demand, more HDB flat owners may wish to take advantage of their second-timer chance.
Here are four scenarios that could be a good time to consider applying for your second HDB BTO flat.
Read Also: Second-Timer HDB Buyers: What Are The Grants and Subsidies Available For Your Second HDB Flat?
What Are Your Chances For BTO Flats As Second-Timers
Before we look at when you could consider buying a second BTO flat, let us first understand what your chances are of getting one in this current environment.
The public flat supply set aside for each household type differs between non-mature and mature estates and the completion period for the BTO project.
The BTO allocation quota has recently been adjusted from the August 2022 BTO launch on 30 August to give first-timer families and singles a greater certainty in securing a BTO flat in non-mature estates.
For non-mature estates, second timer families now only have a 15% allocation of 3-room flats and a 5% allocation for 4-room and bigger flats.
For mature estates, second timer families are still given a 5% allocation of available flats. Additionally, for BTO projects with shorter waiting time, second timer families are only given a 5% allocation of the 4-room and bigger flats.
| Before August 2022 | After August 2022 BTO Launch | |
| Non-Mature Estate | ||
| 3-room | 30% allocation | 15% |
| 4-room & bigger | 15% allocation | 5% |
| Mature Estate | ||
| 3-room | 5% | 5% |
| 4-room & bigger | 5% | 5% |
Given the strong housing demand from first timer families, the chances of securing a BTO flat as a second timer family are currently low.
Read Also: 4 Misconceptions Singaporeans Have About HDB Resale Levy
First Scenario: Using Profit From First Property To Reduce Second Property Loan
The first scenario to consider applying for your second BTO property is to cash out of your first BTO flat and use the proceeds to lower your loan commitment on the second BTO property.
The value of the first flat may have increased significantly over the years since your purchase. However, because of the shorter lease term, the value may depreciate slightly if you stay much longer. Therefore, you may want to sell your first BTO flat, and use the proceeds to finance the loan for your second BTO purchase. The gain from the first flat may help to offset a considerable amount of the loan for the second BTO flat, thereby lowering your loan commitments.
For example, a new BTO flat in the same estate for the same flat type may cost you less overall, even after factoring your resale levy payable. By offsetting the gains from your first BTO flat, not only will your loan amount be smaller, but you will get another flat on a fresh 99-year lease with better upside potential.
Otherwise, you could also choose to move to non-mature estates like Tengah, Bukit Panjang, or Woodlands, which may have BTO flats at more affordable price ranges. Additionally, as a second timer family, you would have a higher chance of getting a flat in a non-mature town as the allocation rates are higher compared to mature towns.
Read Also: What You Need To Know Before Taking The Second HDB Concessionary Loan
Second Scenario: Upgrading To Bigger Flat Type
The second scenario might be applicable to homeowners who may need to upgrade to a bigger flat type due to the expansion of their family size.
This form of upgrading is common amongst HDB owners, as young couples may initially choose a smaller flat type that fits their needs and budget. However, as they start to have more children, the current home size (or flat type) might be too small to accommodate their growing family size.
Another reason for the expanding family size could also be due to elderly parents living with their adult children. For such families, there is an option of 3-generation (3Gen) flats that allow multigenerational living with two ensuite master bedrooms.
Read Also: Complete Guide To Buying A 3Gen HDB Flat In Singapore
Third Scenario: Moving To A Location Of Choice
The third scenario to consider for getting your second BTO flat is when there’s a desirable BTO launch that meets your needs.
Some flat owners may have bought their first BTO flat from the sale of balance flats (SBF) exercises or through open booking. Their first flat may not be in their location of choice, but due to a pressing need for immediate housing, they may have purchased it anyway.
Additionally, some homeowners may not have considered certain factors like schools, proximity to their parents’ place, or other desired amenities when they first applied for their BTO flats.
Knowing what they know now, they may have a better understanding and a stronger preference for a particular location. For these groups of homeowners, they could use their second chance to apply for another BTO flat at a location of their choice whenever such a flat comes up as part of the new BTO launches.
Fourth Scenario: Cashing Out Due To Right-Sizing
The fourth scenario to consider for getting your second BTO flat is when you wish to down-size.
In contrast to the families that upgrade, you may want to consider right-sizing if your adult children have moved out of the house or if the family size has shrunk. As you may no longer need that much space, you may consider moving to a small BTO flat that is more suitable for your needs.
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