🏡 Higher resale grants: No need for speed

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🧮 Let’s do the math

The biggest news from Tuesday’s Budget speech for many young adults was perhaps this: First-timer families buying HDB resale flats will now receive an S$80,000 grant from the government, up from S$50,000, for a four-room or smaller unit. For a five-room or larger flat, the grant is now S$50,000, up from S$40,000.

Getting more discounts on housing is always a welcome move. It’s not an amount to be sniffed at, especially for couples with pressing housing needs. (Singles, too, will be getting more grants. But they’ll have to wait until they’re at least 35 years old 🧓 to qualify. )

For couples who haven’t had the luck of the BTO draw, the grants may be just the thing they need to get a resale flat and finally settle down together.

But if you can afford to wait, BTO flats are much cheaper, and will still make more financial sense for many.

Let’s take for example a couple in their mid-twenties looking to get their first home in Bukit Batok, a non-mature town.

During the latest BTO exercise last November, the price of a four-room flat at West Glades @ Bukit Batok started from S$309,000. Assuming the couple earns a combined income of S$7,000 per month, that’s a starting price of S$284,000 after the enhanced CPF housing grant.

Meanwhile, four-room resale flats nearby have sold for between S$460,000 and S$585,000, based on HDB data. With the higher resale housing grant on top of the enhanced CPF housing grant, a resale flat is still likely to set them back between S$355,000 to S$480,000.

That’s at least 25 per cent ❗ more expensive than a BTO flat.

And that gap may soon widen. Property analysts have flagged that the higher grants may drive up demand for resale flats, inadvertently leading to even higher resale prices.

Married couples aged 40 and below, as well as families with children, will also be getting an additional ballot chance for their BTO applications. If you want a higher chance at that coveted BTO allocation, getting married first might just be a 200-IQ move. 🧠

🔎 Zooming in on resale flats

There are, of course, some benefits to buying a resale flat over a BTO. 

For instance, resale flats — especially the older ones — are often larger than BTOs. And you can move in immediately after a sale is complete — no need for awkward living arrangements with your mother-in-law while waiting for your flat to be built.

If you’re willing to fork out more for a resale flat, here are some things you may want to consider.

Living near parents: You may be eligible for the Proximity Housing Grant of up to S$30,000. (BTO applicants only get priority under a similar scheme, with no extra grant.)

Sale of Balance flats: If you don’t want to wait more than three years for a BTO flat, perhaps try applying for leftover flats from past BTO exercises, which have a shorter wait time. A warning – these flats have become notoriously hard to get, with success rates as low as 17 per cent in 2021.

Remaining lease: Certain HDB grants for resale flats are only eligible if the resale flat has a sufficient remaining lease to cover the buyer up to the age of 95 years. Otherwise, the grant amount will be pro-rated. The loan that you can get from HDB or the banks will also be reduced.

Last but not least, make sure you’re ready. For both BTOs and resale, you’ll need to tie the knot within three months of collecting keys to the flat. But unlike applying for a BTO, there’s little to no waiting time with a resale purchase. So take a step back and make sure you’re committed before getting a resale flat because break ups happen (touch wood). And things can get even more complicated when there’s a flat involved. 

👶 Birth and taxes

Housing matters aside, there was also a whole host of announcements during Budget 2023 that could affect you. Yes, you. But don’t fret if you missed them, here’s a short summary:

• More cash handouts, including a one-off S$200 to S$400 Cost-of-Living Special Payment, to be disbursed in June 
• New parents will be getting a fatter baby bonus and a slew of benefits for doing their part to boost our fertility rate
• Smokers will pay more, as taxes on tobacco products were raised by 15 per cent
• More taxes on the wealthy, from higher-value properties to luxury cars

TL;DR:

• Hit pause before you rush for a resale flat
• Check your finances to decide if a BTO or a resale flat makes more sense
• Resale flats have their advantages too
• Be sure you’re ready before committing to a resale purchase