Asked on 13 Feb 2020
Resale HDB - 800k to 1.2mil+ (7yo to 20yo flats)
Condo - 1.7mil+ (new project)
Which is likely a better choice?
Purpose: shift near to my parents (queenstown) because we need their help in looking after our little ones. Also need a bigger space (3BR) because we have 2a2c now.
Background: intend to sell our 3 room resale flat (no profit from selling as flat is old). No other loan, have a fully paid up COE car if that matters. Household income 170k-180k. Both 28yo, married with 2 young kids.
Are you both intending to shift again? Or would it be a permanent domicile?
I would say whether or not you choose condo and HDB depends largely on your 5 year plan and goals.
Financially it is more prudent to go for a HDB as the cost is significantly lower.
However, one can argue that a condo can also provide emotional satisfaction which is an important factor apart from just looking at the numerical standpoint.
There’s two ways to go about financial planning for properties
You buy within your means, make a prudent financial decision and sacrifice early on. Difference in financial metrics will show later.
You earn more money to afford what you want and be happier about it.
A home is important not just for a place to stay, apart from looking at the numbers, it has to satisfy the problems you are facing. If you find there is little value to upgrading from a HDB to a condo, than it will be better to stay within the HDB field. However, if you find that the value you receive exceeds the 500k difference, it might be better to go for a condo provided that the numbers works out.
I would however, avoid looking at your condo as an asset if you decide to go that route. I would view it as a luxury which you can afford and it should be considered an expense. If you make money great, if you don’t, take it as a cost and expense of enjoying life.
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If the main purpose is to move near your parents and for the kids' future, then I may consider a resale HDB. There are two key reasons for the choice.
Firstly, it is likely that the resale HDB will be bigger. As a result, the kids will have more space for growth, e.g. own rooms, condusive study area, bigger space for gathering or when parents pop by
Secondly, the $500k savings can be channeled into the kids' education fund, family expenses or to even start growing your retirement needs.
However, the downside involved will be the probability of an extensive renovation, ideal choice of floor and unit, lack of facilities (which you may or may not use).
All in all, I will suggest for your partner and you to list down all your needs. Thereafter, create another list with all the pros and cons associated with each choice. Finally, the one with the most matches wins.
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