The HDB resale market has been on a relentless rise, with Q1 2024 marking the 16th consecutive quarter-on-quarter increase since the start of 2020. The 1.8% rise in resale prices comes on the back of a 3.9% increase in resale prices in 2023.
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 BTO flats. With the government releasing up to 19,600 BTO flats in 2024 to meet the strong housing demand, and committing to build more Shorter Waiting Time (SWT) flats, existing HDB flat owners may wish to take advantage of their second-timer chance.
Here are five 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, as does the completion period for the BTO project. The mature and non-mature classification itself will become obsolete from 2H 2024 – with the Standard Flat, Plus Flat and Prime Flat classification taking over.
The BTO allocation quota was recently adjusted from the August 2022 BTO launch on 30 August to give first-timer families and singles 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 a 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 when 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. 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 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 in 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
Homeowners may need to upgrade to a bigger flat type due to the expansion of their family size or as you are able to afford more.
This form of upgrading is common among 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 the option of 3-generation (3Gen) flats that allow multigenerational living with two ensuite master bedrooms.
Even if you do not have children, being able to afford a bigger space can give you more freedom to work from home or live the lifestyle you prefer.
Read Also: Complete Guide To Buying A 3Gen HDB Flat In Singapore
Third Scenario: Moving To A Location Of Choice
You may also opt to get a second BTO flat 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.
Couples may have also settled for a BTO flat that may not have met their preferences in their first BTO, possibly a lower floor, mediocre facing or sub-optimal layout.
Knowing what they know now, they may have a better understanding of and a stronger preference for a particular location. These groups of homeowners 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.
Read Also: August 2023 BTO Sales Launch Guide: Choa Chu Kang, Kallang/Whampoa, Queenstown, And Tengah
Fourth Scenario: Cashing Out Due To Right-Sizing
In contrast to the families that upgrade, you may also 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, especially in your old age.
Fifth Scenario: Buy Before Change In Classification System For New BTO Projects Kicks In 2H2024
During his National Day rally speech in 2023, then-PM Lee Hsien Loong announced a new classification system—Standard, Plus, and Prime flats—for new BTO projects from 2H2024 to better differentiate by their locational attributes instead of the current system of mature and non-mature locations. Under the new classification system, Plus and Prime model flats will have tighter resale conditions, including a longer minimum occupation period (MOP) of 10 years.
This new classification may invariably affect demand for flats in these locations under the current (or old) scheme, which has fewer resale restrictions and a shorter 5-year MOP. This presents home upgraders with a short window of opportunity to have one last crack at snapping up a “Plus” BTO project that is near transportation nodes and amenities under the current scheme without the restrictions that will be imposed from the next BTO in October 2024.
Plan Your Next Move In Advance
Whether you’re applying for a BTO as a first-timer or second-timer, it is important to plan for your home financing to ensure prudence. Having a good, trusted broker like our friends at RedBrick can give you peace of mind, knowing that you will not only get the best rates out there but also get a walkthrough of the necessary process.
Simply fill out the contact form, and an experienced Redbrick mortgage specialist will be in touch with you for a free, non-obligatory consultation.
This article was first published on 31 August 2022 and was updated with latest information.
The post What Are The Best Times To Buy Your Second HDB BTO Flat? appeared first on DollarsAndSense.sg.
