Will you BTO with me?

I WAS explaining to an Australian friend that couples here have to wait for at least four years before moving into their marital home – if it is a new built-to-order (BTO) flat.

“Then they get married after getting the flat?” she asked incredulously.

“Yes. The most romantic thing a guy can do here in Singapore is to ask, ‘will you BTO with me?’,” I said with a laugh.

She seemed flummoxed, and I empathise. Growing up watching Hollywood movies, we all assumed the natural progression would be the proposal first, followed by house hunting. But alas, that is not the case on our sunny island.

To cite an example – a 28-year-old would be 32 by the time he/she is settled into the new flat if the engagement was four years earlier. 

And of course, for the women, who needs the inevitable “when are you starting a family” query from well-meaning relatives?

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“This is the dilemma I am facing, now that I am looking to settle down with my fiance,” griped a friend who has tried her hand at balloting for a BTO more than five times without success.

A home means many different things to people, not least independence and a dream come true. Hence, most would be willing to fork out a pretty penny for it.

But now, with resale and rental prices on the rise, and my friend’s BTO nowhere in sight, she was feeling quite beaten down.

“My wedding is kind of put on hold now ‘cause of this. Can people stop selling HDB flats to make a profit” she sighed. When I raised the idea of living with her parents or in-laws, she vehemently insisted that it was out of the question.

My friend’s case is not unique. With the much talked about latest cooling measures, I have been hearing stories ranging from laments about living with the in-laws to cases of over-leveraging and borrowing money from the parents to buy a condominium or executive condo (EC) unit.

There is obviously no panacea as everyone’s situation is different but can anything be done to maybe alleviate the pain? After all, although 95 per cent of the BTO flat supply in mature estates is set aside for first-timer families, there will always be some who fall through the cracks.

Christine Sun, OrangeTee & Tie’s senior vice-president of research and analytics, suggests that young people perhaps consider buying flats in non-mature estates instead. 

“In the past, many people bought flats in the mature estates for their investment value and convenience. However, in recent years, the narrative may be shifting as more people are willing to pay higher prices for resale flats in non-mature estates. Moreover, with more companies adopting work-from-home arrangements or hybrid work mode, staying near the suburbs may be a viable option for some people.”

She adds that owing to BTO flats’ lower sale prices, some homeowners could even potentially make more profits eventually than those who bought flats in mature estates.

Personally, I do think that a smaller three or four-room resale flat, or an EC in the suburb, could also be an option. And Sun concurs.

“Sometimes, there could be merits to this strategy of buying a smaller unit first as they will incur less downpayment and smaller monthly mortgages for their first homes. In so doing, they can accumulate or save more cash/CPF funds to upgrade to a bigger home next time,” she says.

Property agent Michelle Lee points to opportunity cost.

“You are setting yourself back another three months every time you try for a BTO and fail. You might want to set yourself a target, and if you still don’t get it after xx attempts, it may be a sign that it’s time to move on.

“ECs are a great, if not better, alternative for couples who had no luck with BTO applications and can afford it. They still get to enjoy CPF grants for first timers, and the track record for EC’s capital appreciation over the years is clear to all.”

But one of the pitfalls, of course, is possible over-leveraging.

OrangeTee & Tie’s Sun says: “There are stringent rules in place such as the TDSR (total debt servicing ratio) and MSR (mortgage servicing ratio). Therefore, most buyers should not be buying beyond their means if they are unable to pass the stress tests.”

For me, I thought it best to also seek advice from a banker or a realtor first, which was what I did before I bought a resale flat three years ago.

And of course, one can also consider renting in the interim, and perhaps the government can also look into offering more HDB flats for rental.

But is there really a magic number of BTOs that should be built? Even if there is, will that cause prices to fall for current HDB flat owners, and how will that affect prices of flats in non-mature estates? There are ramifications all around.  

So at the end of the day, it really depends on your own views of the situation, and whether you are buying a home or an investment unit. High property prices are happening not just in Singapore – it is a harsh reality faced by many people around the world, especially those living in other global financial centres.

So as I told my friend, as cliché as it may sound, she may have to adjust her expectations and stop trying for BTOs in areas such as Bishan or Ang Mo Kio. And that, at the heart of it, it’s about building a life together with your life partner, going through the highs and lows. This journey may also help clarify things and strengthen the relationship. Sounding like an agent, I even offered her the contact info of someone she could speak to.

She became quiet, deep in thought, leaving me to only hope that I did somehow get through to her.