Should Singles buy a condo before 35 – 7 Factors to consider

You are a Single under 35 and is wondering if you should buy a condo 

As a Single living in Singapore, 35 is a magical age. It is the age in which you are eligible to purchase your own HDB flat.

Hold on, does that mean that Singles under 35, earning a decent income, are to relent to this antiquated housing policy ? And stand by the by line, as equally if not less successful married peers partake in the profits of owning a property in Singapore ?

Absolutely not, let’s assume we are somewhat aligned in our views, given that you have landed on this article. 

Housing Options available to Singles before 35

To set the context, for those that are unitiated, let’s layout the housing options that you are not eligible for and options that are made available for you

Options not available for Singles under 35

• Resale HDB – mandatory criteria for Singles to be 35 and above in order to apply under the HDB Singles Scheme
• New BTO – Similar, need to be a least 35 years of age to be eligible for balloting
• New EC – 35 years of age and only eligible if you apply with another Single, under the joint singles scheme. 
• DBSS – considered a resale HDB, can only purchase if Single is 35 and above

Options available for Singles under 35

• Private condo – this includes all private condo developments, all the quaint walk up apartments that you come across when cafe hopping
• Resale ECs – ECs that have fulfilled their 5 year minimum occupancy period and is considered a private property
• Cluster housing – landed with shared compound

Back to the big question – Should you buy a condo, if you are Single and under 35 ?

To address the question objectively, let’s run through the 7 considerations below. You can take this as a checklist to evaluate the go or no-go decision for your condo purchase. 

#1 – Can you comfortably afford a condo ?

Before moving on to any other consideration, the responsible and mandatory question to ask is if you can comfortably afford a condo ? 

We will use this section to give you an idea of how much savings you need and how much you need to be earning monthly in order to afford a condo. 

And if you don’t see yourself meeting these financial requirements, then the decision is rather straightforward, you will have to make a U-turn to work on increasing your savings and monthly income before revisiting the decision to purchase a condo. 

The cash and CPF savings you need to purchase a condo

Let’s set the context by laying out the funding structure for purchasing a private resale condo. 

• 5% cash – mandatory cash requirement stipulated by MAS
• 20% cash or cpf 
• 75% loan – assuming your gross monthly salary, qualify you for the 75% loan quantum

Transactional cost to be incurred when purchasing a condo 

• Buyer stamp duty – progressive tax rate on the value of your property
• Additional buyer stamp duty – 5%, if you are a Single PR 
• Legal Fee – averages $3,000
• Valuation Fee – estimated at $600

As a side note, for more in depth coverage on how Singles can afford a condo in Singapore, refer to the article inline.

Example – Single under 35, purchasing a $1.1 mil private condo

Here’s a summary of savings requirement, referencing table below

• Cash requirement – $95,000
• Cash or CPF requirement – $251,000

Does your salary qualify you for the required loan quantum ?

There are two parts to affording a condo, one being cash and CPF savings, the other factor pertains to whether your salary qualifies you for the maximum 75% loan. 

Referencing the similar example of purchasing a $1.1 mil property, you will need a 75% loan, amounting to $825,000. 

TDSR ratio

Taking one step back, loan eligibility is determined largely by the MAS’s total debt servicing ratio, TDSR. 

TDSR, total debt servicing ratio is a limit, stipulated by MAS, restricting the maximum loan quantum you can undertake. To qualify for the maximum 75% loan, your monthly recurring debt obligation, including mortgage must not exceed 55% of your gross monthly income. 

Assuming

• Only recurring loan is a $500 credit card minimum required payment every month
• No car loan or another other loan

You will need an income of at least $8,100 to qualify for a $825,000 loan. 

Need help working on the financial calculations – Singles Financial Calculation Service

Is working on the numbers tailored to your financial circumstances a hurdle to overcome ?

Drop us a whatsapp text, and we can help you overcome that with a detailed financial calculation. 

Fyi, this is something we do for many Singles to get them started on purchasing their first condo. 

#2 – Have your current income already exceeded HDB’s grant’s income ceiling ?

Many Singles wait out till they are 35 to buy a HDB due to the attractive HDB grants that is being offered.

As you consider if you should wait out, you should first check if your current income or future income have already or would surpass the income ceiling for HDB grants.

If your income has already passed the income ceiling, then the incentive of waiting out for HDB grants would be invalid for you. Hence less reason for you to hold out till 35 and more reasons for you to act earlier to purchase a private condo.

To help you with the consideration, we have listed all the HDB grants that a Single is eligible for upon hitting 35 and its respective income ceiling.

CPF Housing Grant 

• Income ceiling – $7,000 as a Single
• Subsidy in the form of CPF payout
• $50,000 for 2 to 4 room flat
• $25,000 for 5 room flat

Enhanced CPF Housing Grant

• Income ceiling – $4,500 as a Single
• Insert table – rates of subsidy

Parent Proximity Grant

• Income Ceiling – None
• Live with Parent – $30,000
• Live near Parent, within 4km – $20,000

So if your current monthly income has already exceeded the income ceiling or you foresee your income to progress past the ceiling before you hit 35, then the incentive to wait out till 35 may not be as attractive as it seems.

Quick Intro – Decoupling Expertise 

Before committing the next 5 mins to reading this article. It helps to know who’s behind the pen.

We are Decoupling Expertise, a real estate consultancy built with the singular focus of helping Singles purchase their 1st condo.

Just like a noodle store that only sells wanton noodles and nothing else. We are relentless in staying focused on helping Singles own private condos with investment potential.

Drop us a whatsapp text if you need help getting started on your first-condo plan.

#3 – Is the end goal to ultimately live in a condo ?

What is your end goal in property ownership ? Do you see yourself ultimately progressing from a HDB to a private condo ?

Or are you content living in a HDB and paying down the entire property and be free from mortgage.

If your ultimate goal is to live in a condo, then it would be a better option to purchase a condo right from the get go, if you can afford it.

This hold true due to the fact that;

The price of a private condo appreciates faster than both the price of a HDB and potentially the growth of your income.

Price of private condo appreciate faster than growth in your income

If you can afford a condo today, it will be better to purchase it now and enjoy its price appreciation, then to purchase it at a higher price a couple years down the road.

Opportunities to upgrade down the road

In addition to that, being able to take the first mover advantage into owning a private condo and riding on its price appreciation, provides you with the capital base to upgrade into a higher value property down the road.

5 years lost due to HDB mandatory MOP period

It is also important to note that owing a resale HDB comes with a mandatory obligation to fulfil a 5 year minimum occupation period. 

If your end goal is to live in a condo, you will only be able to sell off your HDB after 5 years from age 35. 

This means that you will only be able to fulfil your aspiration of living in a private condo only after age 40. 

If you are still considering if you should get a HDB or a private condo, check out the article inline – Should I buy condo or HDB as a Single. 

#4 – Is real estate investing a priority ?

Aside from owning your own place, consider if real estate investing is a priority for you ?

Or you could even fall into the other extreme, whereby real estate investing is the main motivator for you to purchase a condo before 35.

If that is the case, it would definitely make more sense to purchase a private condo as soon as possible. 

In a separate article on Property Investment for a Single in Singapore. We compare the pros and cons of a private condo vs HDB from an investment perspective. 

Private condo is a better investment asset than HDB flats 

The TLDR for this is that a private condo,especially a new launch condo, possesses a lot more positive attributes that makes it a better investment asset than HDB. 

A HDB, built with the purpose of providing affordable housing for Singaporeans faces the following headwinds from an investment perspective.

• Headwinds from Government policies suppressing HDB’s price appreciation – Government to trigger price cooling measures when HDB prices spikes upwards.

• Lease decay – future resale value to be negatively impacted if you purchase a older resale HDB with short remaining lease

• Entry price – if you are purchasing a resale HDB, especially in mature, central estate with proximity to MRT. You will be paying a premium to the seller. 

Where else a private condo would provide the following advantages 

• Greater capital appreciation and demand driven by HDB upgraders
• Greater flexibility, without the need to fulfil a 5 year MOP before selling the property 
• Option to purchase newer property in a centralised location or location near MRT station. 

In essence, the flow of money is moving from HDB to private condo. Driven by both buyer’s sentiment and government policy.

So it would be advantageous for you to position yourself early in the right asset class to take advantage of it.

#5 – Are you doing this for passive income ?

At a high level there are two types of investors when it comes to real estate investing.

Majority of investors are growth investors who prioritise the capital appreciation potential of a property. 

There are also yield investors or passive income investors that prioritise the property’s ability to generate passive rental income as priority. 

If you fall into the latter camp, then it would make sense to not purchase a condo before 35 and wait till 35 years of age to purchase a HDB.

Consider the following two supporting reasons.

HDB provides higher rental yield

One, HDB being a property with lower quantum purchase price, can generate somewhat rental income as a private condo, differing by only a couple of hundreds of dollars. 

This makes HDB a higher yield asset than a private condo, meaning it is capable of generating higher rental income with less capital infused. 

Yield of HDB ranges from 4% to 5%, while the yield of a private condo ranges from 3% to 4%. 

In addition to that, you would have to lose at least $200 to $300 a month from your rental income for condo maintenance fees. On the contrary, the conservancy fee paid to the town council does ot exceed $100 per month.

Other lower risk investment option with higher yield

Next, aside from a HDB flat, while you are waiting for age 35. There are many other investment instruments that can bring you higher than 3% yield, with much lower expense and risk than a private condo. 

Reits and Singapore Saving Bonds being some of the most effective passive income generating assets, can bring you 6% and above 3% yield respectively.

So if passive income is your primary motivation for getting a condo before age 35, then you would potentially want to reconsider other more yield efficient investment assets first before purchasing a private condo. 

#6 – Does the end goal of owning both a private condo and a HDB entice you ?

One often overlooked benefit of getting a condo before 35 is that you could potentially be owning both a private condo and HDB at the same time.

Consider the possibility of eventually finding a partner that is 35 years old or older and has already purchased her own HDB flat.

With you owning your own private condo, both of you can get to keep both the private condo and HDB flat, If you were to get married.

This is one of the few situations in which a Singaporean couple can own both a HDB flat and private condo at the same time without paying ABSD.

#7 – Would you have sufficient disposable income remaining after paying for your condo ?

Another important consideration, while making money and owning your own priority ranks high on the priority list. It is also important to ensure that you are able to enjoy other aspects of your life while addressing the monthly overheads of a condo. 

The least ideal situation is to be stuck in your one bedroom condo eating instant noodles. 

To help you with your decision, let’s account for the recurring cost of maintaining a condo. 

To evaluate if you have enough disposable income remaining after paying for your condo, consider netting off these monthly expenses and your other recurring living expenses to check if the remaining disposable income is sufficient to cater for your lifestyle needs. 

Conclusion

To sum up our discussion on whether you, a Single age under 35 should purchase a private condo. Use the following checklist to help you make your decision. 

More Reads Regarding Condo Investment

• How to make the most money off your first private condo ?

Turnkey solution to put thoughts into action – Decoupling Expertise

This article is 10 pages long, I was panting psychologically as I put the last word to this article. But your effort to put thoughts into action could be way easier.

That’s why we created Decoupling Expertise.

Our goal is to provide a fuzz free turnkey solution to help Singles purchase their first condo.

Starting upfront, there are no fees involved in our consulting services. We earn our keeps by taking a “co-broke” commission from the seller of the property that you purchase. So there is really no cost on your side.

Our suite of consulting service include

Singles home finances

• Singles budget and affordability calculation
• Helping Singles in IPA application
• Helping Singles overcome loan eligibility challenges
• Loan package comparison and advisory for Singles

Singles real estate strategy

• Property research and shortlisting
• Location selection
• Unit type selection
• Layout review for unit selected
• Negotiation and purchase of unit

Singles real estate planning

• HDB or private condo consideration
• Boutique condo or mainstream development consideration
• Solo purchase or joint purchase with other Singles
• First property flip strategy
• Second property flip strategy

Feel free to drop us a text for whatsapp chat. No sales obligation, promised 🤞