The HDB Conundrum - BTO vs Resale for couples in late 20s

It is the time of the year again where your distant relatives will be asking about your partner and your housing plans.

"BTO?" "Resale?"

And whichever answer you come up with, you might get bombarded with the following statements:

"BTO? The waiting time long ah, how to have baby by then?"

"Resale? So expensive, why not BTO? Sure make money one!"

So, you may be wondering by now, which is the perfect housing option for a couple in their late 20s looking to settle down?

Sorry to burst your bubble, but there is no perfect option in this case.

The ideal scenario would be successfully balloting for a BTO and then having it the next year. Alas, that is not how it works in our housing market on this sunny island.

Typically, HDB releases new BTO projects once every quarter. Couples are welcomed to ballot for a flat in these projects. The famous projects (good location, good amenities nearby etc) tend to be oversubscribed and getting a queue number would be akin to winning a mini lottery.

Upon successful balloting and choosing of flat, the long wait begins. On average, a couple could wait for a good 4-6 years before the flats are ready.

Let us explore over the course of this article if the long wait for a BTO triumphs the Resale option in the market.

Pros of BTO

The biggest allure of going for a BTO is price. BTOs are typically 20-40% cheaper than resale flats, depending on the location and project types. This extra savings in cost could go a long way for a young couple looking to start their family.

Other than the cheaper cost savings, did I mention potential capital gains upon Minimum Occupancy Period (MOP) up?

Most BTOs sell up for good capital gains upon MOP period ending, assuming you are in a good location and estate. This profit could drive you and your family further ahead in the financial rat race.

The other allure of a BTO is that you will be the first occupant of the flat. While this is not a big draw for me, the argument is that being the first occupants ensures that the flat tenure will last you a lifetime (99 years), making your money worth and ensuring that all memories you create in the flat belongs to you and only you.

Cons of BTO

One of the biggest cons of going for a BTO with your partner would be the long waiting time.

The average waiting time would be 4-6 years from the moment you start balloting for it. The recent Feb 21 BTO would only be ready in 2025, which is about 4 years from now (and that is assuming Covid does not wreck any further havoc on the timeline delays).

Imagine the head start you would have gotten if you were to get a resale instead? You would probably be chilling on your comfy couch in your living room you designed with your spouse... Ah, that is a lovely possibility, isn't it?

I have the belief that the long waiting time is not healthy for a budding relationship and have seen many couples calling it quits and forfeiting their flat halfway through the wait.

Perhaps the lack of personal space inhibited the natural progression of the relationship or perhaps it allowed the couple to reconsider their choice of life partner.

Some might say that they dodged a bullet, some might say otherwise... I guess that is a discussion for another time.

Another con would be the size of the flat. New BTOs are typically smaller than the Resale option on the market.

Now that we have explored the BTO option, let's go over the Resale option.

Pros of Resale

Limited waiting time. This is by far the biggest carrot for me when it comes to deciding between BTO or Resale HDB flat.

Like many young couples in land scare Singapore, most are itching to get our own personal space and apartment. If it wasn't for the high cost of rent, I can see many couples in their 20s renting an apartment, living independently together.

The waiting time for a resale is drastically short as compared to the BTO flat. This changes the game as you and your partner are able to plan your lives ahead together with more flexibility without being torn by a 4-5 year wait to start the rest of your lives together.

Resale flats are also available all around the island. As opposed to BTOs, where selected locations are offered every 3 months, you can take your pick at anywhere in sunny Singapore to start your married life with your spouse.

Cons of Resale

One may argue that the cost of a BTO might be lower than a Resale, thus freeing up/generating some financial leeway for a young couple.

However, the argument gets blurred when you start seeing new BTO projects being priced at a high starting point ($550k - $710k etc).

Granted, the location of these projects may be a big draw, but if one were to do their homework and lookout for similar location, you will be surprised at what $650k can get you in the resale market today.

There is a chance that buying a Resale flat could get you more housing grants than buying a BTO.

Another con of a Resale flat would be the remaining lease on it. It is not a fresh 99-year lease thus affecting your property value on the flat and could also further depreciate due to lease decay.

Conclusion; TLDR

I am sorry to disappoint you, but like I mentioned earlier, there is no perfect housing option to solve this dilemma.

If you are a couple in your late 20s who have not given up hope on the BTO front yet, may I suggest to cast your eye to the Sale of Balance (SBF) Flats which HDB puts up half-yearly.

The SBF comprises of flats which have been surrendered, given up by others or not picked. Do note that most flats are not in the best location or layout thus why they might be left in the market.

However, these flats are normally available on short notice and could be ready anytime from couple of weeks to 2/3 years.

Do research your options on the property market properly before committing on a decision. For many of us, this will be the first big financial decision we make in our lives and could make or break us financially.