Buying a House in Singapore

It has been noted that the cost of living in Singapore is relatively-high, and the price of real estate reflects that reality. In fact as of 2019, the Lion City holds the distinction of boasting the second-costliest housing market in the entire world. However, it has also been noted that the country enjoys a high home-ownership rate which concurrently stands at about 90%. This may not seem logical, but what it is actually due to is the government itself intervening in the name of making home ownership more affordable, especially for Singaporeans. So even though owning a home in the Lion City can be expensive, it is still, as the above statistic indicates, a realizable expense for many, if not most, Singaporeans.

Generally speaking there are three types of property which can be purchased in Singapore. Those are HDB flats, executive condominiums (ECs) and private properties.

HDB FLATS

HDB Flats are another name for apartments which are managed by Singapore’s Housing Development Board (HDB), which itself is a government agency. Or stated otherwise, the HDB Flats are a form of public housing. Yet apartments can be bought and sold by individuals. However, stipulations do apply.

For example, even if you already own the flat and are selling it, in doing so certain HDB documentation must be obtained. For instance, both the buyer and seller must submit a resale application to the HDB. So basically just as the government had to approve the original buyer, they must give their official okay to all subsequent buyers also.

Also a foreign national in Singapore cannot buy an HDB flat unless he or she is also a Permanent Resident. And even then, a permanent resident can only purchase a flat which is being sold by its current owner. In other words, he or she cannot obtain one directly from the HDB (which are known as Built-to-Order or BTO Flats).

The previously-mentioned high level of home ownership in Singapore is largely attributable to the existence of HDB flats. Or stated otherwise, they are the most-affordable homes one can purchase. But unfortunately, as noted above, this is not a benefit which extends to foreigners who are not officially residents. So if you are such a foreigner in the Lion City who is intending to buy a home and you want to increase your options in terms of affordability, the best thing to do would be to file for permanent residency first.

Another stipulation to owning an HDB flat which may seem a bit strange is that you cannot own one and private property, either in Singapore or abroad, simultaneously.  Also if you decide to take this route to home ownership and want an original BTO flat, the sooner you apply the better, as it has been that there is a lengthy waiting list. However, in terms of buying an HDB flat that is currently being sold by its owner, there are a number of websites listing those which are currently available.

Moreover you have to be at least 21 (35 if you are single with no children) years old to buy a HDB flat that is being resold. And in terms of original BTO flats, the applicant has to be at least 35 years of age.

PRIVATE PROPERTY

So in the truest sense of the term, even though an individual may own an HDB flat, it is not considered to be private property. As a general point of reference, any form of home ownership that is not a HDB flat can be considered private property. This includes landed properties (those that are rented out by the owner) and the various types of condominiums, including ECs.

Also keep in mind that whether you can afford it or not, you have to be at least 21 years of age before acquiring private property Singapore.

EXECUTIVE CONDOMINIUMS (ECs)

An Executive Condominium, as described by Wikipedia, is “a hybrid of public and private housing”. But it is in fact private property. Perhaps the reason they described it as such is because the land upon which they are situated receive government subsidies. Thus the condos themselves are not as expensive as they would be if the land were completely private. In other words, their prices are regulated, and the Singaporean government is heavily involved in the sale of ECs. For instance, if an individual purchases an EC direct from the developer, the buyer cannot sell it nor rent it out entirely for a period of five years. This is what is referred to in Singapore as a Minimum Occupation Period (MOP), and it applies to HDB flats too. 

So if you’re looking to acquire an HDB flat or EC and then resell or rent it out quick, it would be wise to familiarize yourself with these statutes. In fact all things considered, it is generally recommended that you don’t purchase a home in Singapore for the express purpose of reselling it.

Simply put, an EC is like an upper-class version of a conventional flat. For instance, they are located in gated, secured communities which commonly features luxuries like swimming pools and what have you. But this is not to imply that they’re the residences of the rich per se. For instance, in order to be eligible for an EC, the entire household of the applicant cannot make more than SGD$16,000 (US$11,652) monthly. Also if you are single (no spouse and no children), you have to be at last 35 years of age before applying for your own EC, as with an HDB flat.

FINANCING A HOME

Like other parts of the world, it is quite common for Singaporeans to fund their home owning ambitions via the acquisitions of a loan. For instance, Singapore has what is referred to as a HDB Concessionary Loans which can afford borrowers up to 90% of the value of a HDB flat. The HDB Concessionary Loan is then paid back for a maximum of 30 years at an interest rate of 2.6%. Moreover it can be acquired with no money down, with the down payment rather being derived from the applicant’s Central Provident Fund (or CPF, which is like a pension plan). And no, a person doesn’t have to work for years on end in order to earn enough CPF for the down payment, as it has been noted that they can save enough to do so on a BTO flat in just three years’ time. 

So it is via such considerate financing that many Singaporeans are able to acquire their HDB flats.

For those looking for a loan in the name of acquiring private property, they would have go to a bank as opposed to the HDB. And a bank can in fact lend them up to 75% of the property value, to be paid back within a maximum of 25 years. However, you would have to consult with respective institutions in order to ascertain their interest rates, which at times can fluctuate. So again, private property is generally for those who are of a higher economic bracket than average workers.

CONCLUSION

Anyone familiar with the modern history of Singapore’s development knows that its government is committed to efficiency and maximizing space. Moreover they want to give their residents the best the world has to offer in terms of living in an urban environment. And all of these ideals are manifest in their housing market, as even moderately-waged Singaporeans are afforded the opportunity to own a home, despite living in one of the world’s priciest cities.

But that being said, the way the market operates is not like many other places. For example, if you try to resell your home too soon after purchasing it, you can be slapped with what is called a Seller’s Stamp Duty which could even cost you 12% of the price you’re selling it for. Or stated otherwise, when buying a home in Singapore you should be in it for the long haul. Perhaps such goes without being said, but let’s just say that if you’re a real estate professional, the Lion City may not be your best locale in terms of flipping houses. Also foreigners who are not officially residents and are interested in buying a home in Singapore should expect to pay a bit more, since the least-expensive options are not available to them.

But the good news is that, in the grand scheme of things, housing in Singapore is expensive yet still affordable. So if you don’t mind perhaps being in debt for a couple of decades, owning your own home in the Lion City is a realistic option, especially if you’re someone who actually lives there.