Condominiums play a major role in Singaporean property owners’ desire to constantly upgrade their property, often marking their first step into private property and serving as an intermediate and affordable stage between public and landed housing.
Many articles have been written about why Singaporeans should get a condo, using sensible financial arguments to show why it’s a good idea. We won’t revisit that much-travelled road in this piece. Instead, we’d like to tell you about how buying a condo is more than just a good financial move—it’s also a “national service” that helps with our country’s social and economic development!
Disclaimer: Of course, it is never good to over leverage and buy above your means. If you’re not sure whether you have the budget for a private condo, use our PropertyGuru mortgage affordability calculator to work out the sums.
Alternatively, you can speak with our Home Finance Advisors who can help you explore your home loan and financing options.
Investment vs Affordability: the HDB dilemma
Singapore has the highest percentage of home ownership in the world—90.4% as of 2019. This sterling result has been the result of the combination of high-quality affordable housing, subsidies, and our CPF scheme that ensures citizens can afford to buy their houses.
However, in recent years, affluence, inflation and demand for property (as Singapore’s preferred asset investment) have led to upward pressures on HDB property prices that generated intense public debate on the affordability of housing in Singapore. It also led to the government cooling down the market with a slew of measures as well as a strategy of oversupply to address the still-healthy demand for homes.
While this has addressed the affordability issue, The Economist has reported before that there is also an expectation for Singapore homes to be a wealth-building asset, not just a place of habitation. For HDB homes, the affordability they were built for is incompatible with the investment aspirations of Singaporeans. Neither is oversupplying to cater to a high demand for HDB flats going to be sustainable in one of the most land-scarce countries in the world.
That’s where condos—and you—come in.
Looking for a private condo? Browse the top condos for sale on PropertyGuru.
1. Buying a condo ease demand and frees up HDB stock for those who need it
Although we are seeing a supply glut in the private housing market, there seems to still be very competitive demand for public housing. The government is continually launching BTO launches that are consistently oversubscribed.
Hence, if you can afford to, purchasing a condo instead of a HDB flat frees up public housing for those who need it more. By removing yourself from the demand pool for HDB flats, you also help to keep prices affordable for your fellow countrymen.
2. Condos are more “suitable” as property investment assets
We said we would steer clear of financial arguments, but this point still needs to be said: Unlike public housing, condos are much more suitable as an investment asset. Without the public duty to be affordable, your condo can be both a home to live in, and also a truly wealth-building investment for the future of you and yours, with appreciating value that you can really profit from.
Additionally, condos are the only housing type that anyone and everyone can buy, which means that when it’s time to sell, you have the biggest market. Foreigners cannot buy HDB homes and landed properties. Singapore PRs can buy resale HDB flats, but there are many eligibility conditions they have to meet first.
You can read more about the basics of property investment in Singapore here: Property Investment in Singapore: How to Get Started, Calculate Rental Yield and More
3. Condos make better use of Singapore’s scarce land
Now, that’s enough of comparing condos to HDB flats. What about when you pit them against landed property? Well, when you buy a condo, you are not satisfying your own demand for property upgrading; you are also helping to create demand for a property type that makes better use of the scarce land we have that has been earmarked for private property.
Concerned about urban sprawl from landed housing and a shortage in private housing in the 1970s, the government instituted a policy to encourage the development of condominiums on land formerly intended for lower-density housing. The same land that previously housed only one family would now house many times that.
What about Executive Condos (ECs) then?
If you’re sold on the arguments above (and elsewhere) but can’t quite afford a private condo just yet and/or still prefer to buy public housing, good news: Executive condos (ECs) might be the ideal option for you.
ECs can be considered a stepping stone to private property, being priced a little lower (typically 25 to 30% less) than full condos. As they are considered public housing when first sold by HDB, buyers are eligible for subsidies and are also subjected to the corresponding restrictions, such as a Minimum Occupancy Period (MOP) of five years. After 10 years, an EC fully becomes private housing, with attendant appreciation of value that is competitive when compared to other private condos.
While this might seem attractive, the window to capitalise on this may be closing, as there are signs that EC launch prices are catching up with condos. Be sure to carefully consider all factors before making any purchase decision.
So, should you buy a condo?
Growing your own personal wealth while also helping the country to devote more resources to the betterment of society as a whole—it’s the best of both worlds. What’s not to like?
Whether you transition from HDB directly to a full condo or intermediately to an EC first, buying a condo for your home will be a momentous decision. As long as you are well read-up with the financial knowledge you need, you can look forward to investment bearing fruit—not just for yourself, but for the nation!
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