I Chose To Pay The ABSD To Buy A Condo And Keep My HDB: Here’s Why

With the ABSD for a second property now at 20 per cent (for Singapore Citizens), the decision to retain one’s HDB flat has become quite rare. However, that’s precisely what our reader YX did. In April last year, he bought a two-bedder condo unit with no intention to move into it. Here’s why he decided to do it (especially since he also doesn’t consider himself a property investor):

Moving on from the previous property  

YX previously lived in a 5-room flat in Tampines, which he bought with his late wife in the early ‘00s. After YX’s wife passed on, the flat was inhabited by just him and his daughter, so he no longer needed the space. YX then downsized into an older 4-room flat in Bedok. 

“My daughter is already 17 and she has expressed she’d like her own place in future, so there’s no point in me keeping such a big flat,” YX says.

YX then chose a cheaper and older flat, to maximise his cash holdings after the sale:

“I knew already I wanted to help my daughter get her own place, and my friend is a realtor, so he had helped me work out the numbers with the ABSD and all. I don’t feel it’s any sacrifice at all, because I’m still comfortable here in the East, and I really like this neighbourhood.”

Deciding on the right property

YX and his daughter viewed a few different condos, but as the plan is to get into NUS, they decided on a two-bedder in the One-North area, close to Kent Ridge. YX says that:

“It’s close to Kent Ridge and also to Buona Vista and Holland V, so she gets a good mix of places to hang out, and she can still get to NUS quite easily. Plus she’s into this digital art and anime stuff on the side, and there are some studios and such around that area; another reason it might be nice to stay there.”

YX was initially told to get a much smaller unit, however:

“I was told to get a mickey-mouse house (a one-bedder) because it was cheaper, and after she moved out I could still rent it for income. But I felt it was uncomfortably small, and I don’t like being a landlord collecting money. And it’s not for me, it’s for her, I want something she can live in for a long time, not just a temporary place and then it becomes my kopi money.”

Before One-North however, the father and daughter pair had considered locations as far-flung as Sixteeen35 in Paya Lebar, and Trilinq in Clementi. However, they either didn’t meet the price point, or the layout and location didn’t sit right. YX notes that:

“The biggest hurdle is that we’re both very comfortable in the East, so we had a total lack of familiarity with places near NUS. Luckily my former army buddy lived around that area for almost seven years, so he helped a lot.”

A strong temptation to keep the ABSD money 

When YX announced the plan to his parents, they offered to let him move back into his old room instead. Given the sizable amount of the ABSD, YX admits it was a huge temptation. In addition, YX stays over at his parents’ quite often anyway. 

“I seriously considered calling my agent and telling him I needed a change of plans; can I sell my flat first, and then we go and find a condo. But by that time we had already locked eyes on the one that my daughter also liked.”

On top of this, YX didn’t exactly fancy moving into his parents’ 3-room flat, as he had grown accustomed to his own privacy. He says: “It’s all the small things. Like I eat out every day nowadays and I like it. But mum is the type who insists every meal must die-die be at home unless it’s some special occasion. I just don’t want to be nagged about eating out every time.”

YX says he “let it stew” in his mind for one entire weekend; but came Monday afternoon, he was talking to the property agent about going ahead.

Communicating the intent to his daughter

YX has explained the reasons for the condo unit to his daughter, which would eventually be transferred to her name. He says:

“I don’t want to just give her money, as she’s still young, and I think you need to mature into an inheritance. And the flat I bought is so old, her grandparent’s flat is the same, it’s all going to be worthless by the time I am gone.” 

In addition, YX believes that – by letting her maintain her own property and live independently – she will develop life skills and independence. These may be more important for her to learn as YX is her only parent, and she would be alone (barring ageing grandparents) if anything happened to him. 

As part of this process, YX intends to gradually transfer the relevant obligations to her. The pair have agreed, for example, on her paying a small part of the monthly maintenance once she gets her first job; and that she will slowly take on more of the maintenance fee and property tax as she moves up in the workforce.

Concerns over housing costs for the next generation

YX says one of his biggest concerns is that:

“I have seen how fast the prices of housing can go up, and when they go up they don’t come back down. I think it’s good times for us now, but I don’t know how future generations are going to afford it. So a big part of it is that, if I wait for my daughter to graduate, find a job, and get married, I don’t know how high the housing price will be by that point.

Maybe by that time buying a condo is impossible already; so even if I am paying ABSD now, it may still be cheaper than what it would cost in 10 or 20 years’ time.” 

As such, he still feels that – stamp duties or otherwise – it’s worth the peace of mind he’s getting. To others who aim at buying a second property, however, he has this bit of advice:

“If you make sure it’s for something besides rent money, like a place that you really like to live in, or a place for your children or parents, you are less likely to be disappointed. Then even if it turns out to be a bad investment, it’s at least giving to you in other ways.”