First-time buyer, how to start investing in Singapore properties?

Updated: Aug 4, 2023

Owning private residential property is where most Singaporean dream.

In property investment, most people will have a mindset that you must invest in private property. Is that the only option? let's explore.

Before you start your property investment, it will be much easier if you engage an estate professional to assist you in your planning if you are looking into building your wealth in property investment.

Where should I start? Public housing or Private Housing?

Let's take a look at the differences between owning public housing and private property before you decide which is good for you.

HDB Public Housing - BTO / EC and Open Market Resale

1. For BTO flats and new ECs, both buyers must be Singapore Citizens. Check here for the eligibility to buy.

2. You are eligible for an HDB loan, there is an income ceiling for BTO flats.

3. For an HDB loan, you can loan up to 90% of the valuation.

4. You are entitled to CPF housing grants, the income ceiling applies.

5. You are not allowed to sell, buy or rent out your units before you fulfilled your minimum occupation period (MOB).

6. All buyers, ages must be at least 21 years old.

7. For a single buyer, the age must be at least 35 years old.

8. Mortgage Servicing Ratio (MSR) is at 30% of your income.

Private Property.

1. Age must be at least 21-year-old.

2. No restriction on the citizenship of the buyers.

3. Can buy in a single name or joint name.

4. Loan to value only 75% of the valuation of the property for the first property.

5. Total Debt Servicing Ratio (TDSR) is capped at 60% of your income.

6. No MOB period, you can buy another unit, and sell or rent out your unit instantly.

How to go about to build my wealth in property investment?

I can simply say that in Singapore, most of us have this mindset. When you get married, you must get yourself a property, and build your own dream home. This is how we start to get involved in property investment.

Most of us will go for Public Housing, just because is the most affordable.

I strongly believe that you would want to make sure that your property, the value appreciates when you decide to upgrade in future.

Investing in property is a long term event, proper strategic, detailed structural planning is a must.

let's look into the different options.

Buying HDB Flats

John Tan 27-year-old and Mary Tay 26-year-old.

First-time buyer...

They intended to buy a matrimony home and build their dream home, and at the same time plan for investment in property.

Financial status for John and Mary.

1. Total monthly income for both of them is S$7,000.

2. Total fund in their CPF is S$70,000.

3. Cash on hand is S$90,000.

With the financial status above, they can have 2 options

Buying HDB BTO Flat.

If John and Mary have a place to stay and can wait for the HDB BTO flats to be built, this may be one of the options they can choose.

With their financial status, they can easily book a unit from HDB without any obstruction.

If they chose this option, they will only be able to further their property investment for another 8 to 9 years after they fulfilled their MOP (construction 3 to 4 years and MOP another 5 years)

By then, they should have more savings, they can then sell their HDB flats and venture into investing in a private property.

Let see how much is your proceeds when you reach MOP for going for BTO flat.

Prices for the BTO flats at Garden Vale @ Tengah.

From the above chart, you can see that, if John and Mary bought an HDB BTO 4 room flat, they can easily achieve proceeds of S$91,000.

Buying a Resale HDB Flat

If John and Mary need a place fast, they can look into an HDB resale flat, especially one that just reaches MOP.

With their current financial status, they are more than eligible.

Since they are first-time buyers, they are eligible for CPF Housing Grant.

This makes their purchase price much lower than the actual resale transactions.

The MOP period is only 5 years from the day they collected the key, this allows them to have time to prepare for their next venture and in a much shorter period than getting HDB BTO flat.

By the time they reach the MOP, they are ready for the next venture in their property wealth planning journey.

With the CPF housing grant, they most likely will still have proceeds when they sell.

Buying a New launch private property.

Edmund is 28 years old and Emily is 27 years old

Looking to start their property investment

Financial status:

1. Edmund's monthly income of S8,000 and Emily has an income of S$5,000

2. Edmund CPF ordinary accounts have S$85,000, cash on hand S$250,000.

3. Emily CPF ordinary accounts have $72,000, cash on hand S$180,000

With the above financial status, Edmund and Emily can actually buy 2 units of 2 bedrooms in private properties.

One unit is their dream home and the others will be for investment.

Suggest the investment unit be a new launch property.

Let's take a look at how the performance of the new launch development after when T.O.P.

Let's take High Park Residences as an example

The entry price for High Park Residences during the launch is about S$960psf when the Temporary Occupancy Permit (T.O.P.) is granted at end of 2019, the transaction price reach as high as S$1,260psf within 3 and half year time.

There is a difference of S$240 per square foot.

Just imaging, you bought a 2 bedroom unit of sizes 678 sqft, and you profited $162,720 within 3.5 years.

Let's take another new launch project, H2O Residences

The entry price for this new launch is S$930psf and when T.O.P, the selling price is at S$1,110psf, a difference of S180psf, for a period of 4 years.

For a 2 bedroom unit of sizes 850 sqft, you will profit S$153,000.

As you can see, most of the New Launch development will have a substantial appreciation, if you be able to know when to exit, you will be able to gain and build your wealth through property investment.

Do contact me, your property wealth planner for more detailing and structural planning in your property venturing.