Ask Mr. Propwise #1 – Soon-to-be married couple asks if they should rent or buy

Have a question about Singapore property? Ask Mr. Propwise (AMP)!

Dear Mr. Propwise,
My husband and I have booked a 4-room unit under the HDB BTO scheme recently, and the estimated completion date is September 2015. But our wedding is scheduled in June 2011, so we were thinking of buying or renting a 3 room resale flat during this interim four years.
We have checked with HDB that we are allowed to purchase a resale flat even though the MOP is now 5 years now. However we have some concerns about buying a resale flat:
1. No grant is allowed for this resale purchase, so we have to pay the full cost of the valuation plus COV.
2. We will have used up both chances for a HDB loan, 1 for this resale flat, 1 for the BTO. So if we buy another place we will have to take up a bank loan.
3. We will need to sell off the resale flat within 6 months once we get the keys to the BTO
4. Resale prices are still high at the moment.
If we rent a 3 room flat, we have to pay at least $1,500 to $2,000 in cash per month for the rental over the next 4 years, plus the other cons that you mentioned in your article. And I do feel that it is a “waste”.
We would appreciate it if you can provide us with some advice to help us make a better decision.
Many thanks, J+K

Hi J+K,
The decision to buy vs rent is a very personal one indeed. While you will ultimately have to choose what is best for yourself, I’ll just share some thoughts based on your situation:
1. As you mentioned, buying now will suck up a lot of your cash. Have you prepared enough cash for the wedding?
2. Also, buying and moving into a place will take a lot of time and effort, as will planning a wedding. You will also need to set aside some cash for the renovations. Do keep that in mind when deciding.
3. As you mentioned prices and COVs are still high – it might increase but personally I don’t think it will in the near term so you probably still have some time to decide.
4. Here’s a scenario to think about: If you buy now and prices fall, will you be able to absorb the losses in 4 years time? Of course if prices rise you will have a windfall to help pay off the other flat.
5. While renting feels like a “waste”, it is only a waste if prices stay flat or rise. If prices fall, renting will have saved you a lot of money indeed.
Hope this helps and best wishes on your decision!

Mr. Propwise

4 Replies to “Ask Mr. Propwise #1 – Soon-to-be married couple asks if they should rent or buy”

  1. I had the honor of arguing with my wife on renting and purchasing a HDB. Fortunately we were able to purchase a HDB when Sing is in a Crisis. Hence now that economy picks up we were able to sell it at a handsome price with minimum renovation. Hence I feel for a first time buyer it is better to purchase flat like 2-3 rm flat at current economy as upside potential is there. Unfortunately I have seen professionals purchasing flats more then 500k for a 4rm/5rm which is like 200% more then when I had paid for a heartland HDB.
    I wonder how is my children going to support a flat when they are born 20 years from now?


    1. I believe that the government will continue to keep at least some public housing affordable, BUT it will come at the cost of being in more “ulu” areas. New entrants into the housing market will have to get used to longer commutes of an hour or upwards. When people complain about housing prices, it is because they want something affordable AND in a good location. As housing prices go up, more compromises will have to be made.

  2. just move in with parents for the time-being if money is tight. thought grant is given to first time buyer regardless of resale or new…??

  3. that’s what happened to my brother
    they bought resale while waiting for their new flat to be built
    when the new flat was ready, they had to sell off their resale
    prices at the point of selling had gone down quite a bit and they ended up losing quite a lot of money

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