When it comes to buying their first home, the majority of first-time homeowners in Singapore tend to opt for HDB flats over condominiums or landed properties. However, a recurring dilemma amongst homebuyers interested in public housing is the choice between buying a new BTO (Build-to-Order) flat and an HDB resale flat available in the secondary market.
With all those delays in BTO projects caused by the pandemic and the recent spike in HDB resale prices, aspiring homebuyers might feel intimidated to make their first or subsequent purchase. This article will discuss the top factors you should consider when deciding between an HDB BTO flat or a resale flat.
If you are tight on budget and looking for a cheaper housing option in Singapore, then BTO is a no-brainer. A Build-to-Order flat, also known as BTO flat, is a new, highly subsidised flat directly from the HDB, with a fresh 99-year lease.
Brand-new BTO flats are launched every quarter and follow a balloting process for flat allotment to potential buyers. Eligible buyers usually have to wait for 3 to 5 years before getting keys to their home and fulfil the Minimum Occupancy Period (MOP) of five years before re-selling their flat on the resale market.
Newly-launched HDB BTO flats usually have the lowest property prices among other public housing options available in Singapore. They make an attractive public housing option for young buyers because they may be unsure about taking a large home loan for their first-ever property purchase.
If you want to take control of where exactly you want to live – right from the locality to the preferred building floor, you should turn to buy a resale flat. Also popularly called “pre-loved”, resale flats are older, ready-to-move-in HDB flats that have reached their MOP of five years and are now up for sale in the open market.
Resale flats impose fewer restrictions on potential buyers and generally come with bigger floor spaces, balconies, and square-ish layouts – but with a higher price than their BTO counterparts.
|Price||Generally cheaper than the market value of resale flats in the vicinity||More expensive than BTO flats|
|Lease||Fresh 99-year lease||Declining lease|
|Size||Unit size is smaller than older HDB flats||Older HDB flats are typically bigger than new ones|
|Wait time||Anywhere between 3 to 5 years||As fast as 2 months|
|Location||Pre-determined by HDB||A wider selection of locations|
|Unit selection||Balloting process||No balloting is required; one to freely choose the desired flat|
|Housing Grants||Enhanced Housing Grant (EHG)||Enhanced Housing Grant (EHG); Family Grant; Proximity Housing Grant (PHG); and others applicable|
While many of us believe that new is better, there are many other factors that you should contemplate when deciding between a BTO or resale flat.
The key factors that usually govern most property-buying decisions are price and eligibility. BTOs are generally lower in price and come with a longer waiting time, while HDB resale flats have a higher price tag but guarantee a shorter or no waiting time.
Now let’s check out all the factors one by one.
Before moving on to the details, here is something that will help you identify your eligibility for either a BTO or resale flat.
|Eligibility Factors||BTO Flat||Resale Flat|
|Citizenship||At least one Singapore citizen, together with another SG citizen or PR||At least one Singapore citizen or two Singapore PRs|
|Age||No less than 21 years old for those who are married, orphaned, or widowed||At least 21 years old for people who are married, widowed, or orphaned|
|Income ceiling||Combined household monthly income should be below $7,000 for 2- or 3-room flats; below $14,000 for 4-room flats||No income ceiling|
|Property ownership||Must have only bought 1 HDB or DBSS flat, or EC formerly||No limit on past purchases|
For BTO flats, the buyer should not have owned any private properties, locally or overseas, or disposed of any such properties within the last 30 months before the BTO application.
On the other hand, those looking to buy resale HDB flats must dispose of all previously-owned HDB flats or any private property, held within or outside Singapore, within 6 months of purchasing the resale flat.
Overall, resale flats come with fewer restrictions on HDB purchase eligibility.
Typically, newer BTO flats are believed to be smaller in size compared to older HDB resale flats with larger unit layouts. However, this difference in size can be seen more often in older HDB flats ageing 30 years or more, mostly found in mature towns.
The difference in size is less significant in their non-mature counterparts. After that, the HDB flat sizes have been pretty consistent with more optimised layouts to have more space despite being a bit smaller.
Other factors like the outside view, ventilation, sunlight during the day and overall condition of the flat can also be easily gauged in completed units rather than in-construction BTO projects.
BTOs are mostly built in non-mature estates that are still in development phase compared to the mature estates and they may lack certain facilities.
However, that is not true for all BTO launch sites. Some BTOs are in prime locations with access to a variety of large shopping centres and have nearby schools, but they are very hard to get.
Coming to resale flats, you have a better chance of finding a residence of your choice providing you could find a seller keen on selling their HDB flat. While the location is predetermined by HDB in BTO projects, resale flat buyers can pick their desired location alongside other amenities, such as a nearby MRT station from the myriad of HDB resale flats spread all over the country.
Since BTO flats are sold by the government at highly subsidised prices and not by owners looking for capital gains, BTOs are generally cheaper than resale flats.
Also, BTO flats are smaller than older HDB resale flats, so they have a lower absolute price for each unit and hence more affordable.
Note that the difference in prices of BTO and resale flats does not vary much in non-mature estates. The price gap is more evident in mature estates, where BTOs are in high demand.
Since BTO flats are sold when the construction is still in process, homebuyers usually have to wait for about 4 to 5 years before they can collect their home keys.
Add in a few years for successful balloting for the flat. Due to unprecedented circumstances like the COVID pandemic in 2020 and 2021, several BTO projects faced delays due to a lack of labour and disruption of construction supply chains. It can further increase the total waiting time for new BTO launch projects.
If you want to upgrade to a bigger resale flat or even private property, you must consider the MOP of 5 years. So, coupling the MOP with the waiting time of the new BTO project launch means you will have to wait almost 10 years before selling your property.
If you want to move in urgently, resale flats are the best bet. For resale flats, you can move into your new house as early as 2 months from the date of purchase.
In general, the property price decreases with less number of years left on the lease term.
A new BTO flat will have a full 99-year lease. If you are planning a family or want to ensure that future generations can continue to live in the same flat, then a BTO’s 99-year lease can be a great benefit.
Depending on the number of years the HDB flat was first launched, a resale flat may have a shorter lease term left. A 4-room resale flat in Serangoon may look like a good deal until you know it has only a few years left on the lease term.
Singapore government has a list of CPF housing grants that can ease the burden of buying BTO and resale HDB flats. However, the number of grants for resale HDBs is significantly higher than BTOs.
Here’s a quick run-down for grants for both BTO and resale flats:
|TYPE OF GRANTS AVAILABLE||BTO||RESALE||INCOME CEILING||GRANT AMOUNT|
|Enhanced Housing Grant (EHG)||*||*||$9,000||$5,000 – $80,000|
|Proximity Housing Grant (PHG)||*||None||Families: $20,000 + additional $10,000* Singles: $10,000 + additional $5,000**|
|Family Grant (FG)||*||$14,000||2- and 4-room: $40,000 – $50,000 5-room and bigger: $30,000-$40,000|
|Step-Up Housing Grant (for second-time applicants)||*||*||$7,000||$15,000|
|Half-Housing Grant||*||$14,000 or $21,000***||2- and 4-room: $25,000 5-room and bigger: $20,000|
Since newly-built BTOs come minimally furnished, think of them as blank canvases. While they will require some renovation, you will have more freedom to make changes, such as a false ceiling, tiles or built-in carpentry. The renovation cost may vary based on the design and how much you want to renovate.
On the other hand, while older HDB resale flats are usually equipped with useful features already, they may result in higher renovation costs if you choose to remove existing carpentry and other fixings in order to give your new home a facelift. At times, hacking old flooring or walls, installing of water heater, or getting multiple telephone points done may quickly stretch your bill.
According to the home renovation portal Qanvast, the average renovation cost for a BTO/new HDB flat:
|BTO flat type||Median renovation cost in 2022|
|3-room||$35,000 – $38,000|
|4-room||$40,000 – $46,000|
|5-room||$47,000 – $56,000|
The average renovation cost of a resale HDB:
|HDB resale flat type||Median renovation cost in 2022|
|3-room||$40,000 – $50,000|
|4-room||$50,000 – $58,000|
|5-room||$68,000 – $80,000|
It is always prudent to buy a property with an exit strategy if that is the plan, like whether you plan to stay in it for many years or just want to cash it out when the time is right.
Once the MOP period is over, BTOs are much more likely to increase in price in the open market since the remaining lease term is still much more attractive than most other resale flats available for sale.
Also, BTOs in non-mature estates have a potential for significant developments in future, which can add to their market value over time. Note that it does not apply to BTO flats in mature estates.
On the other hand, there are less chances of capital appreciation for resale flats. Moreover, capital growth will depend on the market cycle at that specific time when you decide to sell it again. They might even see a depreciation in market value if there are only a few years left in the lease term.
HDB BTO flats of the same size and in the same area as resale flats are usually significantly cheaper, thanks to their long waiting period.
Here’s a table that shows a comparison between approximate BTO+ and resale flat prices based on area and flat type:
|Area and flat type||Approx. BTO flat price||Approx. resale flat price|
|Bukit Merah 3-room||Starting from $377,000||$265,000-$1,742,000|
|Bukit Merah 4-room||Starting from $540,000||$395,000-$990,000|
|Toa Payoh 3-room||Starting from $289,000||$280,000-$980,000|
|Toa Payoh 4-room||Starting from $420,000||$465,000-$1,080,000|
|Queenstown 3-room||Starting from $369,000||$319,000-$735,000|
|Queenstown 4-room||Starting from $511,000||$475,000-$1,000,000|
|Jurong West 3-room||Starting from $215,000||$270,000-$559,000|
|Jurong West 4-room||Starting from $320,000||$428,000-$710,000|
|Jurong West 5-room||Starting from $412,000||$530,000-$888,000|
|Yishun 4-room||Starting from $328,000||$368,000-$920,000|
|Yishun 5-room||Starting from $485,000||$438,000-$1,060,000|
+as per May 2022 BTO launch
++ All resale prices are an estimate only
Yes, resale HDB flat owners can buy BTO flats as long as they meet other eligibility criteria laid out by HDB. However, note that they may be subject to a resale levy if they had received grants in their resale flat purchase.
Unfortunately, the answer is no. Once you commit to a BTO, you will have to wait until its construction is complete (at least 3 years) and then stay for a minimum of 5 years, i.e. fulfil MOP before selling it. Only then you can move into your next resale HDB unit. In other words, you cannot own more than one HDB unit at a time.
Deciding between a BTO and a resale flat is one of the first and foremost financial decisions an adult Singaporean makes.
While we have tried our best to help you answer this question, you cannot measure some considerations quantitatively. Ultimately, it depends on your budget, time constraint and other household preferences.
Both BTOs and resale flats have their benefits and drawbacks; the final decision is what seems best for you and your family. If you are not eligible for a BTO, are in a hurry to move in or are very particular with your choice of locality, resale flats would make a better option.
Choose a new BTO flat if you don’t have a big budget for your first property or thinking about upside appreciation potential on your investment.
Other options. Apart from resale and BTO flats, Singapore’s public housing market also offers other types HDB flat options to homebuyers, such as:
Prime Location Public Housing (PLH) flats. PLH flats have almost all the advantages of BTO flats (modern amenities, heavily subsidised and high capital growth potential) plus a highly desirable central location. Take time to know about the limitations of PLH projects before you make a decision.
Sale of Balance (SBF) flats. SBF flats are another option for those looking to enter the public housing market. These are basically ‘leftover’ flats that usually take a shorter time to obtain as they are close to completion.
This means you can expect a much lesser waiting time compared to BTOs. You can also possibly move in after a short renovation within 3 to 4 months. However, you may have to compromise with your choice of location within the development, such as poor ventilation or blocked view.
Buyers in the HDB property market should ensure the flat price is within their means but refrain from being overly cautious. If you can afford a bigger-sized flat (BTO or resale), you must go for it! Remember larger properties tend to appreciate faster and could help you finance your next property purchase when it’s time.
If you are looking for more assistance on a hdb bank loan, Dollarback Mortgage can help you find the perfect HDB loan according to your specific needs.
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