Hey, welcome to the Money Talks podcast. It's Me Andrea Heng. We're on a season break now, but I thought, hey, why don't we bring you some of our more popular episodes. You might have missed this special series called This or that, which I love so much by the way, where I get my guests to weigh the pros and cons of two options. Now, property is always a hot topic here in Singapore and I too had to ask myself once, do I want to wait and buy a brand new BT O flat or just get a resale? My guest
for this episode was Jo Anne Tay. She's a content creator on Instagram and Tik Tok under the handle house hunt with J That's Joo. She shed some light on what we should take into consideration before deciding to BT O or not. If you haven't already go to Spotify Apple or youtube music to follow us. And while you're there, please leave us a comment. Enjoy this episode. You're listening to AC N A podcast. Welcome back to Money Talks. I'm your host, Andrea Heng.
Now on this series. This or that my guest weighs the pros and cons of two options. If you've missed the last episode where we discussed, if you should own or lease a car in Singapore, do give it a listen. Now on this episode, we're looking at public housing or H DB flats. Should I buy a brand new BT O flat or skip the wait and pay more for a resale flat. The longest waiting time for a new BT O flat that I've heard of is six years,
six years, think about that. Ok. My own sibling gave up after two years and went straight to the resale market. Of course, a much higher price. Many new home buyers say the long wait time and the limited selection of BT O units are the key factors for turning to the resale market only to be hit by record prices there with more BT O flats coming up and resale prices appearing to hit a ceiling at least for now. What I want to know is should home buyers choose a BT O or a resale
flat? And to help me with this question, I have real estate agent, Joan Tay Joanne is also a content creator on Instagram and tiktok under the handle house hunt with you. Welcome to Money Talks, Joan. Hi,
Andrea. Nice to meet you here.
Likewise. Ok. So Joan, how often do you as a real estate agent get home buyers who say they can't get a BT O flat? Hence, they need a resale flat. How frequently is that occurring?
Just about every other week? I'll have someone come to me with this distressed situation. Yeah. Saying that they have been going through the BT O exercise for many, many, many times. And of course to, nobody's surprise they have given up on that dream and have to turn to the resale flat. Unfortunately.
What's the longest wait time you've ever heard?
I had someone who tried 10 times in the past three years,
10 times,
still trying,
still trying. Ok, 10 times and going. Ok. So is there a typical profile for the resale flat buyers who can't afford to wait? What are some of the reasons for needing a home? So urgently,
most of them would have been already married, they would have some sort of family nucleus going, which explains why they need a space on their own. They need a flat or home to move into more immediately than someone that's younger. Still starting out on their career and things like that. It does matter at which stage of
your life are you actually considering the purchase? So most of them who are turning into a resale flat are often in their 30 something, the younger ones who have a bit more runway in terms of their age,
they can stay with mommy and daddy a little bit longer. Ok. That's a good plan. It is a good plan. Save on that mortgage. Let's talk about the resale flat prices that we're seeing and they've increased relentlessly. Despite those rising interest rates, I bought my own flat at almost a million. Although it's in a rather prime area. So what's driving this demand, what's making those prices stay up? I
think it's the lack of immediate supply supply has been disrupted because COVID happened which nobody would have expected.
Nobody asked for
it. Yes, it's good for those people who already have the H DB because that's possibly the only time whereby you actually see your prices going up. Rationally speaking, it should not be, it should be going down according to the lease that you have left on your property. And because of this disruption, we also do notice that there's a change in lifestyle as well. Previously, we've seen a lot of people living in a multigeneration home whereby you know yourselves, you have your parents and you have
your kids that are living with you. We are all taking care of each other after COVID for some apparent reason, maybe we can't stand each other as much.
What did they, what do they say? Proximity breeds resentment or something like that or
rather true because we are seeing households now actually moving out. They don't mind staying close to each other but not trying not to be in too much contact ever since COVID that basically tested how close our relationships. That's the ultimate stress
test almost 24 hours, seven days a week in the same space and an H DB flat. I mean, if you're housing just a couple of, it's just the two of you in one flat, that's fine. That's already like, ok, I'll get on your nerves. You get on mine and then we'll be fine. But if there are multigenerational families out there living in an H DB flat, that's got to create a lot of stress points for anybody.
Yeah. That's right. And I think the change in the lifestyle was much quicker than we imagined. And you know, from one household, we used to have like three generations living in it. Now one household is going out there to buy 23 different homes. Yeah. So that is what's actually causing the stress in terms of what we need immediately from the market. Yeah. And BT O may not be the the most sound choice when it comes to moving in immediately. You do have to wait a significantly long time and
having to stay with your family. If that's actually an issue that has come up before then, of course, you will have to turn to the resale market.
Ok. We're going to get into the pluses and the minuses of the BT O in just a bit. Now, the government did implement several measures to increase the attractiveness and the availability of BT O flats, right? And all the construction has been ramping up. I'm seeing a lot more H DB flats coming online from increasing supply to giving out more generous grants. Those are among the things that they're introducing to make BT O
is more attractive. But are these things enough to move some of that resale demand to the BT O market? These
two groups, the understanding that I have that they are going out there to buy BT O and resale are very different in terms of what they are looking for. Most of them who do not need, the immediate housing would turn to BT O because they are significantly more affordable. I wouldn't use the word cheaper anymore. It is no longer cheap. That has, we've all come to a consensus
on that. When it comes to BT O, we do know that they are offered at a discount from the market and they are often at lower prices that what the already flat would come with. And of course, the ready flat in terms of resale will come with lower lease remaining. For example, it goes back to why you need the, let's say you're going into a resale, you do have to deal with a whole bunch of different issues like around it versus going into a BT O. And there's
renovation to think about
as well as a lot more than that. Actually, what people don't understand is that when you go into the resale market right now, especially if you're in your very young twenties or thirties, you have a young family, for example, the cost of, it does not just come from the flat itself. You do have to account for renovation, for example. And one of the things that we cannot is the COV, which is your cash over value, which a lot of people forget. And recently we do have
someone paying about 100/1000 COV. On a certain flat, there is a
100 K COV in this market. Wow. I never thought I would hear that kind of COV amount anymore ever since the early two
1000. I'm glad I'm not the one representing the
person. I guess it boils down to what you really want the unit for, what you really want the house for. And I guess if you can afford to wait, but how long is affordable in terms of that long wait. Right. Because even if you're a newly wed, you don't really want to stay at your in-laws place for too long before you jump ship, right?
For BT O. It's really on affordability if you're just starting out in your early twenties, you know, and you're so certain that your partner is going to be with you all the way through. That's very important because that's one of the criteria of owning a, a BT O, right? You have to get married or at least a fiance fiance scheme. Yeah. Yeah. So then if you're so confident of that, then I feel like yes, you do have the runway to possibly wait it out.
You might be just starting out in your career and things like that, things may take some time to actually shift and then eventually you settle into a new home and then I then think that's perfect timing and
that waiting period allows you the time to save up for good furniture, proper renovation. So you're not rushing into it.
You do know that there's light at the end of the tunnel, I guess, like, I feel like a million weight is four point
four. Maybe not to the ones who had to go through COVID. That light at the end of the tunnel seem very far away. But I guess in today's context, it's a little bit bit different. So generally BT O flats are not cheaper, they're more affordable than resale flats, but the gap does seem to be narrowing. So let me give you a scenario. Take the February BT O launch a four room brand new flat at Farer Park Fields. I read costs up to $630,000. Now, that's comparable to a four room resale flat at
Fairer Park Gardens. So not very far away in the same vicinity that resale flat is going for $613,000. It is 45 years old. So the question is, should a prospective home buyer be looking at a BT O flat or a resale flat in this scenario? OK. It's
a bit of a predicament because I think both products are quite different. But the one thing that we have to take into consideration is of course, the balance lease that we're looking at when we look at the resale flat, one of the biggest challenge that I can't seem to figure out now is going to a resale flat at its peak at the moment, knowing that rationally, this should not be a price of a resale flat if a newly mop flat later on is going to be costing just as much. Right. Right.
And so by peak, you mean peak price,
correct? Yeah, that's right. So if we think about this five years down the road or 10 years down the road, when this particular BT O then becomes available on the market, it should be commanding more given that the resale flat has a lesser balance lease. So it's kind of like a future pricing versus what you're buying of today's resale market. In terms of comparison wise, it really depends on how much are you willing to pay for something to be ready? And in front of you,
I guess, I guess that's the premium. Yes, it's the price. It's literally the price you pay for what you want. And if you want something now ie now meaning as for as short a time as you can afford versus ok, I'll wait a while, I'll pay the same amount, I'll wait a while longer. I get a brand new flat or an mop flat. It's younger, it has a longer runway. I can stay there longer. What becomes the considerations for a buyer in that situation to say, hey, how do I weigh this
out? All right. I think first of all, you have to look at your age at what age are you entering this flat? And if you're still young, I think BT O is the way to go. But if you're already trending towards 30 something going to 40 where you are at the most income productive stage of your life, then it could be a BT O for you. I like that. Yeah. So, but when you go into a resale flat at the moment, there are some considerations which is that now that prices have peaked.
It is likely that once the supply has caught up into the market, the prices of your flat may start to come down. If you do decide to then move on to another property, you might end up with a negative sale, which is, I think a lot of people, they have not put this into much thought or consideration before going to a resale flat. Now,
I completely agree with you on that because when I made the decision to spend $800,000 on my very old H DB flat, I knew that this was the flat that I was going to retire in. I'm not going to move anymore. That was the only reason that would justify that price tag that willingness rather to pay that price tag. If like you said, if I was younger or if I had a family or kids, and I knew that there was a possibility of moving to another unit later on. I'm short changing myself. That's
right. We don't the same way in terms of how we amass our wealth. If you do go into a resale flat, when your income is actually peaking in your career and things like that, the challenge later on would be that when you have the capacity to earn, you don't have the capacity to take on a longer loan tenure. Then that makes the difference when you're considering a jump in your lifestyle and things like that. Later on a lot of us say that this is going to be our last home. It doesn't matter,
never say never right. Yeah, but you know, it's always good to have an option, you know, remaining open for you at the end of the day. Be it upon mop. You can then look back and say, hey, did I make a right decision when I entered this flat? Do I have enough cash? If I wanted to do something I needed an extra room? Do I need facilities? These are things that you can consider later
on. Things in life happen. Life just throws things at you that you don't, for example, we don't know another COVID. Yeah or you know, someone falls ill one of you ill, physically disabled for life and you need more space to maneuver around. For example, you need a bigger flat for that, for example. So yeah, I mean, there are things that there are curveballs that life throws at you that you really cannot plan for. So would you say then that some level of forward planning was would be recommended?
Yeah, so I always have this idea of this project Kampong Spirit. I always feel like going back to a H DB flat later on will make a lot more sense as an individual. So we start off maybe with a BT. And then after that, you have a first pot of goal because obviously you bought it as so called a discount. We don't know how much, but we know for sure that prices move up upon mop of a BT usually will get some proceeds that can help
you in your next purchase. Be it whether you move into a EC, whether you move into private, that's something else to discuss at a point in time, how you're doing, go ahead a mess, your wealth for the next few years. Do what you like, come back to the,
the whole resale flat that we're talking about today. The 45 years old resale flat, 20 years down the road when you're ready to retire, that lease would have been left with what 25 years do you then think it's a better idea to then sell off what you have, go back to H DB. Retire and then be able to enjoy what you have made over the lifespan of yours, working so hard and then retire in this H DB without any financial obligations. So, I think that's the end goal for what, like project composed.
It's meant to be, you know, like it's ok to be uncomfortable and then comfortable later.
Yeah, I call it short term pain for long term gain.
Yeah. Yeah. Don't go for instant gratification. If you lay out this plan and then you look at your options at the moment, even for myself, that will be my angle. I don't mind retiring in H DB and then like, oh for sure. Yeah, that's a good space. Knock down the room, one big room doesn't
matter. Me and my husband anyway.
That's all. And then maybe all my neighbors who I sold this plan to.
Yeah, that's, that's quite a genius plan. I have to say, like I said, right, this is the house for me. I'm done. I don't want to move anymore. And if you have that in mind, then I think you would make the best financial decision for your future, for your future. I think that's the most important thing to note. Hello, everyone. My name is Christina and I'm Adrian and we're the host of a podcast called Work It, if
you never heard of it. Well, it's a good time to tap in, in the last 20 episodes, we've discussed topics like how to negotiate for a salary increase or how to get along with younger colleagues who have different values from you. Incidentally is our top performing episode. If what consumes your life and you want some perspective on issues like management stress, even office romance. This podcast should be on your list.
A new episode drops every Monday. Catch us on the CN A app or wherever you get your podcast. Ok. So let's make things more even say a couple wants to move out immediately because reasons does it make financial sense then to do BT O plus rent while waiting? So presumably the renting will be during the waiting period or B buy a resale flat, move in immediately.
I would do C or just leave off my parents for if I could. But for
how long though, I mean, you're married, you're newly married. Not every episode of living with the in laws is a cheerful one. I mean, you're going to get in each others
way. Every time we do a consultation, there's always one party that doesn't want to do that
like, oh, no, no, no. But can we buy a house? So, so what's the best combo for a newly wed itching or really just eager to move out? Yeah,
I think most important consideration is whether you have enough cash to actually move into resale because what we fail to plan is that when we go into a resale flat. There are a lot of costs involved in acquiring the flat. So COV is one thing that we are all expecting if you go into a four room. Now, five room now even a four room, which is one of the most highly contented space at the moment. Given the last cooling measures, we have more four rooms hitting $1 million
than before. It then depends how much cash you have in terms of the cov the cash over valuation that you are about to pay for. And you do have to note that because it is a bigger space, older space, you have to account for renovation, which which could easily cost about 80 grand, 100 grand to do up something nice in a four
bedroom. And if, if you buy a ready made or ready move in condition flat and the renovations are nice and you're not fussy, it's gonna come at a
premium. Yeah, that's right. So if I were to consider, you know, this 120 to 100 and 50 K that you're going to spend on above what you are buying already, then does this translate to a better than go and rent out for two or three years? But given that today's rental is also at its peak, it then becomes very challenging because the average wait time for BT O is about 4.4 years, you're not going to spend $2000 anymore unless you're ok to do room rental.
For example, I would do that with my parents and then just live in a room and lock myself in for the rest of the day option. C Yeah, but then again, if you're going out there to properly rent even A H DB four room flat, for example, they are already hitting about four K in non mature estate, non mature estate as we have some in Punggol, Seng Kang, like the four rooms and five rooms already hitting about
five K to six K in terms of rent. So you times that across a span of maybe 12 months, four years,
that's a lot of bleeding.
Yes, correct. And that's pure financial loss because someone else is going to benefit
from this. So you would say option C stay with your parents, your
parents or if I have to, then yes, going to the resale market would be my next best option because like I said, it's whether you're willing to spend that money upfront and then at the place you want to live or are you then willing to wait out things a bit? And then of course, if you do have to go with option B in this case of a resale flat, do consider something that is newly mop. I was just
about to say something that's younger, then at least you can turn it around later on if you decide to move to another
place. So trading off the mature estate housing for something else that might have a bit of growth later, might be your best way to protect whatever wealth you have left after, you know, giving it
a That's true. No, that's a good strategy honestly. Because again, short term pain for long term gain, if you're young and you're newlyweds, you really need to think about your future and where that money where that dollar is going to take you. Right.
Yeah. And in that particular segment whereby you're still young and this is your first home. That's where a lot of people actually make mistakes because they don't actually have people advising them what to do on their BT O flats. There is no agent serving that market, unfortunately, because there's no money to be made by the agents. Right? Not until five years later, a lot of people often trend towards BT O. Right. Yeah. But actually going into a resale market with a newly mop flat
and mop is a minimum occupation period. Am I right?
Correct. So when someone actually just fulfilled the minimum occupation period and then buying off these flats with a brand new sort of like almost 90 over years lease does sound like a better decision than having to wait for a BT O flat for the next 4.4 years or six years in some, in some estates that we know four
years, it may seem short to some. But when you compare it to the growth of a child from baby to a child. I mean, that's, that's huge growth. But say there are some young people, be it single or married or engaged. They still, for some reason they need to rent. What is your advice? What should they look out for and how should they manage that financially?
So say for example, you are just two very young couple without kids, you're ok to travel, then go out somewhere maybe close to the new home that you're about to buy. Experience the neighborhood, live there for a while and get to know things around how to get around. I think that is a good and sound decision to make if connectivity is an issue for you, some of the clients that I know about a majority of them are actually
moving for schools reasons. So if that is the case, then you really have to go out there and rent something within the vicinity of the schools that the kids are going to. So that's actually the other spectrum of buyers in the market now who are renting because of that.
Yes, I know the number of people doing that. Now before we let you go, wanted to get your advice to home buyers. Given the current market,
the current market is a very, very weird one because it's no longer rational. It's a crazy market. So it's, it's hard to be rational about it because there's so much emotions going in when you're buying your home. The best advice that I can give to anyone buying a home is to imagine who is going to buy this flat from you later on. Because that would be your exit strategy. If you can't imagine someone else who could live in there, then don't buy
it. I could not agree more with you, Joanne. Like that is spot on sound advice from Joanne Tay there. If you're in the current market and a great end to our conversation. Home Suite H DB, it's become a question of the ability and willingness to wait versus paying top dollar for the right flat. And as construction delays fade, post pandemic and housing supply gets back in line with demand. Hopefully home buyers will have
a wider selection of options for their housing needs. Thanks Joanne for helping us the options on this or that. And thanks to you, our listener. If you've enjoyed this episode of Money Talks, there's more content for you to enjoy. Simply follow us on Apple podcasts or Spotify, give us five stars or leave a review. The team behind Money Talks is Joanne Chan, Jacqueline Chan, Christina Robert Sa Wind and I'm Andrea Hing.