Buy Private Property During Covid-19: 4 Homebuyers share why

The entire property market is on fire right now – so observes Glenn Jin Wong, associate marketing manager at Propnex. Despite the ongoing global battle with Covid-19, rising local unemployment numbers and Singapore’s economy shrinking to a record 5.8 per cent, property punters seem unperturbed.

Prices for the HDB resale market shot up by 5 per cent in 2020 – the steepest growth since 2012’s 6.5 per cent. This is not so surprising since HDB flats are, after all, the bread and butter of housing here. However, prices of non-landed condominiums and apartments grew 2.5 per cent the same year and landed properties, 1.2 per cent.

The Urban Redevelopment Authority (URA) shared that 1,609 private residential units were sold in January this year. On a year-on-year basis, the new home sales that month surged by 159.5 per cent from 620 units in the same month a year earlier during pre-Covid-19 times.

Of course, this begs the question: Are we really in the midst of a recession induced by Covid-19? Four buyers share their analysis behind their big purchase.

MARSHAL ONG, 27, AND EMELIA LOW, 26

BOUGHT A NEW EXECUTIVE CONDO APARTMENT

They recently tied the knot and decided to go for an executive condominium (EC) apartment instead of an HDB flat for their first home. The couple is counting on its value appreciating when their EC becomes fully privatised after 10 years. They could get even more if their home benefits from future developments around it.

Marshal and Emelia signed on the dotted line on Feb 16 last year around the time that the circuit breaker took effect. “I don’t think the circuit breaker affected our decision as this apartment aligned with our objective. We’re simple people and we chose this solely for the potential high return value it would fetch if we sell it in the future,” explains Marshal.

Slated for a handover in September 2023, they paid around $868,000 for the 829 sq ft Parc Canberra unit in Sembawang. They particularly love it because it is the only 2+1-bedder in the project and has a private back door entrance. It is also just minutes away from the Canberra MRT station. Of course, the couple did consider a private condominium apartment.

However, being very objective-oriented, Marshal says they felt that an EC would give them the most value for money in the long run. His advice to young couples or first-time buyers:

“Long-term planning is critical and always have a back-up plan. Avoid getting something you love but can ill afford or something that does not bring much value in the long run."

"An EC may not be the biggest property you will own. The future may have bigger plans for you. Hustle hard in the next five years so that, when the time comes, you will be able to get a bigger property later on.”

SINGLETON KELVIN CHONG, 35

CHOSE A NEW CONDO PROPERTY INSTEAD OF A HDB FLAT

“I had been debating between a resale flat and a condo apartment for a while, but I waited till I was 35 to decide,” says Kelvin. His recent experience from helping his dad sell his resale flat convinced him to go for private property.

In 2010, armed with the payout from the en bloc sale of his private apartment, his dad tried to buy a BTO flat but did not qualify for it. He ended up choosing a four-room resale HDB flat instead because it was cheaper.

Kelvin was shocked that it sold for just about $360,000 in 2019, incurring a loss of about $70,000 – excluding the renovation costs. His brother and sister-in-law, who own an executive apartment, did a quick check on what they could get for their place and discovered a paper loss of $20,000.

During the circuit breaker in May 2020, Kelvin shelled out $1.17m for a 753 sq ft, two-room, high-rise apartment at Florence Residences in Kovan that won’t be ready till 2022/2023. He liked that it was close to the upcoming Cross Island Line MRT Interchange.

It would also have an unobstructed view, an enclosed kitchen – rare for two-bedders today – and rental potential.He took the plunge during Covid-19 because he anticipates that prices will only keep going north.

“Since the issue with Covid-19 infections among foreign construction workers and the discovery that their living conditions were not up to standard, the government has asked dorm operators to improve operations. If contractors and developers have to pay more to dorm operators so that they can comply with government regulations, buyers will have to pay more, too.”

Kelvin believes that any new property, HDB or private, offers buyers better upsides than a resale one could. Of course, by the time it takes a BTO flat to be ready and the Minimum Occupation Period (MOP) is over, it will be at least eight to 10 years before he can cash in.

The MOP clock is already ticking on his private condo apartment purchase. Should he decide to sell it at some point, he will be able to do so without incurring Additional Seller’s Stamp Duty once he completes the three-year MOP. 

A SINGAPOREAN AND A PR COUPLE, WHO PREFER TO BE ANONYMOUS

BOUGHT A RESALE PRIVATE CONDOMINIUM APARTMENT

Many Singaporean-PR couples feel they should take full advantage of their privilege to buy and profit from an HDB flat as their first home before upgrading to private property. However, this 20 something couple had good reasons to buy their first home – a two-bedder condo apartment – at the Greater Southern Waterfront.

“We travel a lot, so we wanted a place we could settle comfortably into later in life while investing heavily in it for a good length of time. The environment and the lifestyle potential sealed the deal for us. We bought it because we liked the unit so our decision to go ahead had more to do with that than whether it was private property or not,” shares the wife.

They love their 1,324 sq ft unit for its roominess, the view of greenery from all rooms, the huge balcony that is perfect for hosting parties, the great common facilities and the fact they are near the water. They confirmed their purchase in the second half of 2020 and would only share that it was “a really good deal”.

“We compared the previous transactions and were confident that our potential capital appreciation would be quite significant as our purchase per square footage was below average. We also saw the potential in the Greater Southern Waterfront redevelopment and believe that the Keppel area will grow exponentially, especially with new launch prices hitting record highs.”

They also saw more value in buying a resale apartment. “We didn’t want to wait three to four years for a new build. In addition, we rented our unit out, so we have immediate cash flow.”

Though they initially considered ECs that are usually 20 per cent cheaper than other condominium apartments, they found their locations ulu. “Since we were buying a forever home, we wanted to have a more central location.”

Ultimately, the couple advises home buyers to buy within their means. “Don’t overstretch yourself. In this current job climate, a lot can change very quickly. Factor in maintenance charges, renovation costs and property tax because all the miscellaneous items do add up and could affect your budgeting. "

"Also, remember your priorities. If profiting from the various HDB CPF grants is your priority, then do it but be prepared to wait five to 10 years for a BTO or a resale unit. If you’re keen to move into the house of your dreams sooner, then go ahead!” 

BACHELORETTE PAULINE WEE, 44

UPGRADED TO HER FIRST PRIVATE PROPERTY

Pauline had been shopping for a private apartment since her four-room flat met its MOP of five years. Before Chinese New Year 2021, she finally forked over $2.166m for an 883 sq ft two-bedder at The Reef at King’s Dock.

“I was drawn to the magic of the Keppel waterfront and accessibility to HarbourFront MRT and the malls,” says Pauline, who will move in with her parents as soon as it is completed in December 2025. She also hopes for capital appreciation with the upcoming completion of the Circle Line and the redevelopment of the Greater Southern Waterfront.

She chose The Reef for three reasons: her agent demonstrated her personal belief in the project’s potential by also buying a unit, her usually very picky mum loved it and because she suffers from FOMO (fear of missing out). “It has sometimes driven me to act impulsively while hoping for a better outcome each time.”

Ironically, Covid-19 nudged her to make a decision. “The passing of some people around us reminded my parents and me of life’s impermanence and that we should seize the day while we still can.”

Pauline was also drawn to the low interest rates some banks offered. “The past decade of cooling measures and Total Debt Servicing Ratio (TDSR) requirements have created a lot more financial resilience in property owners."

“People have more holding power now and are not exiting en masse in land-scarce Singapore. Buy something that allows you to remain financially resilient to income disruptions for at least four to five years,” she advises.

So, should you buy that private property now?

Glenn thinks the demand for private property will continue to persist for a while or at least “until after Covid-19 restrictions are lifted”. Increased demands for resale HDB flats have significantly raised the price index, motivating many sellers with an unprecedented opportunity to cash out.

“Naturally, the progression from HDB to a condo apartment fuels the private market. Some opportunists can afford to wait and have invested in new launches with developers’ discounts. Then there are those who fear that the property prices are only going to go higher and higher.”

Glenn advises those who are still reassessing their purchase objectives and goals to “think of your purchase as a home and an investment vehicle for your retirement”.