We Make $300k Per Year: Should We Buy An HDB Maisonette, Walk-Up Apartment Or A Condo?

11 min read

Hi Stacked (Ryan),

My housing situation is going to change in 2024- I am about to sell my 3BR BTO in Jan and upgrade to a bigger flat (open to either HDB 5rm/mansionette or condo) in the Beauty world area.

Here’s the information pertaining to my housing journey:

• Husband + Wife with 2 young children in the process of selling 3BR BTO that just reached MOP (target to complete by 1Q24)
• Looking to purchase a house in Beauty World/King Albert Park by Aug 2024 and the renovation completed by Dec 2024
• No extension of stay required as I am staying in a relative’s house after the sale of the BTO
• An agent who is my friend is assisting with my housing journey but I would like to have a second opinion in case I miss out some blind spots.

Demographics	Husband	Wife
Age	36	34
Annual Income	$200,000 (employee)	$100,000 (self-employed)
Approval in Principle for Pte Property from a local bank(as at Jan 2024)	$1,260,000	$680,000
CPF OA (existing balance)	$110,000	$0
CPF OA (used for housing including deferred interest)	$80,000	$70,000
Cash available for housing, buyer stamp duty, renovation	$600,000	$300,000

Current Flat in Kallang/Whampoa region

Selling Price	$800,000 (based on comparables in the vicinity)
Existing Loan	$235,000

Future housing options

Important criteria

• <5 mins walk to MRT (we don’t own a car)
• Minimum size of 1,200 sqft
• Preferably in Beauty World or King Albert Park to be near child’s primary school

Housing Options	HDB	Private Walk-up Apartment	Full Condo
Project	Blk 2, 3 Toh Yi Drive	Kilat 19, Chun Tin Court, Sun Court	Sterling, Blossomvale, Maplewoods
Tenure	99- year starting from 1988	Freehold	Freehold
Price	~1.3mil ($850 psf)	~2.3mil ($1,200 psf)	$2.6mil ($2,000 psf)
Size	1600sqft (Executive maisonette)	2000 sqft	1300 sqft
Pros	·   Highest affordability·   Spacious	·   Very Spacious	·   Condo facilities (our family uses the gym + pool regularly)·   Possible capital appreciation in the future (especially when Cross Island Line is operational + Turf City Masterplan finalized)
Cons	·   Lease decay	·   Low liquidity as each project has less than 20 units·   Walk-up apartment with no lift (inconvenient for strollers, groceries runs, injuries)·   Limited pool of buyers in the future·   Low en-bloc probability due to height limit (faces landed housing)·   Not senior-friendly so it will never be our forever home	·   Smallest in size due to budget constraints·   MCST fees are the highest of the 3 options·   Financial stress
Other notes/questions	If I purchase the resale HDB, I may purchase another private apartment (own stay or investment) after MOP, if private property prices are right	·   I am unsure about the capital appreciation of the walk-up apartments under consideration given their low liquidity?·   Is my assessment of the en-bloc potential of the walk-up apartments accurate?	·   Gardenvista, Le Jardin, Mayfair Modern, Mayfair Garden, KAP Residences, Sherwood Towers have all been ruled out owing to proximity to MRT or the design of the layout·   Other condos as a secondary consideration are Casa Esperanza (part of carpark to be given up for construction of CRL- how does this affect its capital value) and Meadowlodge (99yr)

General Questions

1. On the pros and cons of each housing option, is there anything that we might have missed out?

2. What is the maximum affordability for Option 3 based on our financial situation?

3. Any other housing option that we might have missed out?

4. Of the 3 housing options, which is most preferred in terms of

• Financial prudence
• Best risk-reward ratio

Thanks and looking forward to hearing your advice.

---

Hi there,

Thank you for reaching out and compliments to you for how thorough you’ve been in your research!

It’s great that you’ve already narrowed down your focus to one specific area so let’s just right in to review the numbers you’ve provided before we explore the three options you’re considering in more detail.

Affordability

Selling your existing property

We will assume the selling price of $800,000 as you’ve mentioned. 

Description	Amount
Selling price	$800,000
Outstanding loan	$235,000
CPF funds to be refunded into OA	$150,000
Cash proceeds	$415,000

Combined affordability (Buying a private property)

Description	Amount
Maximum loan	$1,940,000 (30-year tenure)
CPF funds	$260,000
Cash	$1,315,000
Total loan + CPF + cash	$3,515,000
BSD based on $3,515,000	$150,500
Estimated affordability	$3,364,500

*Includes all CPF and cash proceeds from the sale of your existing flat

Let’s also look at your individual affordability just to explore the possibility of buying your desired property under one name, keeping the option of purchasing a second property open.

Husband’s affordability (Buying a private property)

Description	Amount
Maximum loan	$1,260,000
CPF funds	$190,000
Cash	$1,015,000
Total loan + CPF + cash	$2,465,000
BSD based on $2,465,000	$92,850
Estimated affordability	$2,372,150

Wife’s affordability (Buying a private property)

Description	Amount
Maximum loan	$680,000
CPF funds	$70,000
Cash	$300,000
Total loan + CPF + cash	$1,050,000
BSD based on $1,050,000	$26,600
Estimated affordability	$1,023,400

In the above calculations, we allocated all the cash proceeds from your current flat to enhance the husband’s budget. Given the substantial cash reserves available, you’ve more flexibility in adjusting your individual affordability by moving the cash around. Considering that one of the options you are exploring requires a budget of $2.6M, utilising all available cash funds (including the cash proceeds and both your and your husband’s available cash) would improve his individual affordability to $2.6M. However, this would also imply that there might not be enough funds remaining for a significant renovation.

Now, let’s examine your affordability in the scenario where you choose to purchase an HDB flat. Considering you are thinking about acquiring a second property in the event of an HDB purchase, we will assume that the HDB will be procured under the wife’s name, as the husband qualifies for a higher loan quantum.

Wife’s affordability (Buying an HDB)

Description	Amount
Maximum loan based on age of 34 and an annual income of $100K with a 4.8% interest	$305,394 (25-year tenure)
CPF funds	$70,000
Cash	$1,000,000
Total loan + CPF + cash	$1,375,394
BSD based on $1,375,394	$39,615
Estimated affordability	$1,335,779

*Given that your household income exceeds the $14k ceiling for an HDB loan, you will have to take up a bank loan for the HDB purchase

As the eligible loan quantum for an HDB is considerably lower, buying a $1.3M property would need $1,000,000 of cash to be put towards the purchase. 

Now that we have a clearer idea of your affordability, let’s run through the options you’re considering.

Potential options

Option 1. Buy an HDB

Let’s take a look at how the Executive HDBs along Toh Yi Drive have been performing over the last 10 years. 

Year	Bukit Timah Executive HDB	YoY	All Executive HDB	YoY
2013	$591	–	$426	–
2014	$574	-2.88%	$413	-3.05%
2015	$597	4.01%	$401	-2.91%
2016	$606	1.51%	$402	0.25%
2017	$590	-2.64%	$405	0.75%
2018	$601	1.86%	$406	0.25%
2019	$604	0.50%	$397	-2.22%
2020	$597	-1.16%	$403	1.51%
2021	$671	12.40%	$453	12.41%
2022	$761	13.41%	$499	10.15%
2023	$792	4.07%	$529	6.01%
Average	–	3.11%	–	2.32%

Analysing the table above, it is evident that the Executive units in Bukit Timah, on average, exhibit superior performance compared to other Executive flats across the island. This observation is unsurprising, given that Upper Bukit Timah is a highly desirable location. Toh Yi Gardens, being the sole HDB estate in the area, may also contribute to this trend. Additionally, its proximity within 1 km of the renowned Pei Hwa Presbyterian Primary School serves as an added draw for families with children.

The appeal of Toh Yi Gardens, given its pricing and prime location, remains strong despite its age. This is understandable, as comparable options within the same price bracket would only allow you to purchase smaller 1-bedroom condominiums nearby. Moreover, the expected revitalisation of Beauty World is poised to further enhance the property’s value retention prospects. 

Nonetheless, it is essential to consider the implications of its 99-year leasehold status, particularly the impact of lease decay on long-term value. The market has witnessed a rapid price surge in the past three years, driven by unique conditions. However, as the market returns to stability, a return to the slower, more steady growth rates observed before the pandemic is likely.

Since you are looking to purchase an investment property next if you go down this route, let’s take a look at the costs involved. 

These are some of the recent transactions for Executive units along Toh Yi Drive:

Date	Block	Level	Size (sqm) & type	Price
Jan 2024	2	04 to 06	154.00Maisonette	$1,360,000
Jan 2024	6	07 to 09	146.00Maisonette	$1,300,000
Jan 2024	7	04 to 06	150.00Maisonette	$1,208,000
Dec 2023	2	10 to 12	146.00Maisonette	$1,350,000

For calculation purposes, we will assume the purchase price to be the average of $1,304,500.

Description	Amount
Purchase price	$1,304,500
BSD	$36,780
Maximum loan	$305,394
CPF and cash needed	$1,035,886

Seeing as your child is still in primary school, we presume that you plan to stay in this property for a considerable amount of time. For our calculations, we will look at a 10-year horizon. 

Cost incurred

Description	Amount
BSD	$36,780
Interest expense (Assuming 25-year tenure at 4% interest)	$105,971
Property tax	$14,280
Town Council service & conservancy fees	$12,840
Total cost	$169,871

Now let’s look at the husband’s affordability for the second property.

Description	Amount
Maximum loan	$1,149,704 (24-year tenure)
CPF funds	$190,000
Cash*	$342,000
Total loan + CPF + cash	$1,681,704
BSD based on $1,681,704	$53,685
Estimated affordability	$1,628,019

*Total cash after deducting cash needed for the HDB purchase

Given that the husband can only purchase the second property 5 years later, the loan quantum and tenure will be reduced. It is most likely that during the 5 year Minimum Occupation Period (MOP), you would have saved up more funds to put towards the purchase, but for calculation purposes, we will only use the remaining cash on hand after deducting the cash used for the purchase of the HDB. 

Let’s assume a purchase price of $1.6M, with a 3% rental yield. Looking at the same 10-year horizon, the holding period for the investment property will be 5 years. 

Description	Amount
Purchase price	$1,600,000
BSD	$49,600
CPF + cash	$532,000
Loan required	$1,117,600

Cost incurred

Description	Amount
BSD	$49,600
Interest expense (Assuming 24-year tenure at 4% interest)	$208,923
Property tax	$37,200
Maintenance fees (Assuming $300/month)	$18,000
Rental income	$240,000
Agency fees (Payable once every 2 years)	$12,960
Total cost	$86,683

Total cost for both properties over 10 years: $169,871 + $86,683 = $256,554

Option 2. Buy a freehold walk-up apartment

Let’s take a look at how the 3 walk-ups you’ve picked out have been performing. 

Year	Kilat 19	Chun Tin Court	Sun Court	All non-landed FH/999y (resale)
1995	$441		$403	$651
1996		$399	$422	$815
1997		$444	$365	$774
1998				$566
1999				$656
2000	$397	$321		$745
2001			$352	$616
2002		$580		$604
2003	$203			$564
2004				$572
2005				$601
2006	$288			$750
2007			$321	$920
2008			$371	$862
2009			$513	$861
2010			$500	$1,048
2011	$684			$1,196
2012				$1,289
2013				$1,427
2014		$823	$910	$1,366
2015				$1,365
2016				$1,396
2017	$826			$1,466
2018		$1,239		$1,544
2019			$846	$1,575
2020				$1,504
2021	$1,032			$1,592
2022	$1,146			$1,714
Overall % growth	159.86%	210.53%	109.93%	163.29%

Due to the scarcity of units and limited transactions in these projects, we looked at data over a longer time to see the price trends. From 1995 to 2022, you can see notable growth in the projects, particularly with Kilat 19 and Chun Tin Court displaying growth rates comparable to or even exceeding those of the overall freehold and 999-year leasehold non-landed property market. However, it’s important to acknowledge that the still limited transaction data may not offer the most precise representation.

Nevertheless, over the past 15 years, there has been evident and steady price appreciation, indicating sustained demand for these projects. Nevertheless, as rightly highlighted in your list of drawbacks, walk-up apartments come with inherent challenges such as a restricted buyer pool and the inconvenience of the lack of a lift.

Conversely, as walk-up apartments are typically older, they boast more spacious interiors, providing a comfortable living environment. Some also feature unique characteristics that enhance the property’s charm.

Being freehold, there’s no concern about lease decay. However, as you correctly noted, these properties might not be suitable for long-term residence, especially for seniors. We have previously discussed various factors to consider when purchasing a walk-up in an article, most of which align with your observations.

You also raised the point of en-bloc potential and the height restrictions around it. This is generally true, as the low-density housing surrounding these walk-ups would likely be maintained to keep the characteristics of the neighbourhood. Since accurately predicting this en bloc is challenging, we do not recommend basing a property purchase solely on this factor.

Let’s now look at the costs involved.

We will use the latest transaction at Kilat 19 which was done in January 2022 at $2,110,000 for a 1,146 sq ft 3-bedroom unit, as the purchase price. 

As we have seen with the affordability calculations earlier, it is possible to purchase a $2.3M solely under the husband’s name so you can keep the option of purchasing a second property open. 

Description	Amount
Purchase price	$2,110,000
BSD	$75,100
CPF + cash	$1,205,000
Loan required	$980,100

As before, we will assume a 10-year holding period.

Cost incurred

Description	Amount
BSD	$75,100
Interest expense (Assuming 29-year tenure at 4% interest)	$351,273
Property tax	$41,420
Maintenance fees (Assuming $350/month)	$42,000
Total cost	$509,793

Let’s say you were to purchase a second property for investment under the wife’s name for $1M, with a 3% rental yield.

Description	Amount
Purchase price	$1,000,000
BSD	$24,600
CPF + cash	$370,000
Loan required	$654,600

Since there is no waiting period required, we will assume a similar 10-year holding period.

Cost incurred

Description	Amount
BSD	$24,600
Interest expense (Assuming 30-year tenure at 4% interest)	$236,139
Property tax	$36,000
Maintenance fees (Assuming $250/month)	$30,000
Rental income	$300,000
Agency fees (Payable once every 2 years)	$13,500
Total cost	$40,239

Total cost for both properties over 10 years: $509,793 + $40,239 = $550,032

Option 3. Buy a freehold condo

We will take a look at how the 3 projects you’ve picked out have been performing. 

Year	The Sterling	YoY	The Blossomvale	YoY	Maplewoods	YoY	All non-landed FH/999y (resale)	YoY
2013	$1,456	–	$1,322	–	$1,441	–	$1,427	–
2014	$1,579	8.45%	$1,390	5.14%	$1,389	-3.61%	$1,366	-4.27%
2015	$1,352	-14.38%	$1,363	-1.94%	$1,348	-2.95%	$1,365	-0.07%
2016	$1,371	1.41%	$1,283	-5.87%	$1,342	-0.45%	$1,396	2.27%
2017	$1,413	3.06%	$1,321	2.96%	$1,383	3.06%	$1,466	5.01%
2018	$1,662	17.62%	$1,552	17.49%	$1,551	12.15%	$1,544	5.32%
2019	$1,560	-6.14%	$1,492	-3.87%	$1,554	0.19%	$1,575	2.01%
2020	$1,607	3.01%	$1,506	0.94%	$1,728	11.20%	$1,504	-4.51%
2021	$1,810	12.63%	$1,681	11.62%	$1,779	2.95%	$1,592	5.85%
2022	$1,919	6.02%	$1,868	11.12%	$1,938	8.94%	$1,714	7.66%
2023	$2,082	8.49%	$2,074	11.03%	$2,099	8.31%	$1,790	4.43%
Average	–	4.02%	–	4.86%	–	3.98%	–	2.37%

The table clearly illustrates that in the past decade, the three developments have surpassed the performance of the broader freehold and 999-year leasehold non-landed private property market. Notably, during the market recovery period from 2017 to 2018, these three projects demonstrated substantial growth. This might be attributed to the introduction of Mayfair Gardens and Mayfair Modern, which are 99-year leasehold developments that were launched at significantly higher price PSF compared to the freehold projects in the surrounding area. 

Let’s also look at your secondary considerations, Casa Esperanza and Meadowlodge

Year	Casa Esperanza	YoY	All non-landed FH/999y (resale)	YoY
2013	–	–	$1,427	–
2014	$1,315	–	$1,366	-4.27%
2015	$1,433	8.97%	$1,365	-0.07%
2016	–	–	$1,396	2.27%
2017	$1,359	–	$1,466	5.01%
2018	$1,466	7.87%	$1,544	5.32%
2019	$1,481	1.02%	$1,575	2.01%
2020	$1,631	10.13%	$1,504	-4.51%
2021	$1,658	1.66%	$1,592	5.85%
2022	–	–	$1,714	7.66%
2023	$1,836	–	$1,790	4.43%
Average	–	5.93%	–	2.37%

Despite the consistent growth in prices at Casa Esperanza, this is a small development comprising only 90 units. The chart reveals multiple years with no transactions which poses a limitation to accurately capture its true appreciation through the average growth rate. In years with recorded unit sales, the transaction volumes remained low, typically not exceeding 4 per year. 

Nevertheless, the development boasts a well-balanced mix of units, primarily featuring 3-bedroom units. This suggests a higher likelihood of homeownership compared to investor interest (likely due to the proximity to Methodist Girls Primary School).

Year	Meadowlodge	YoY	All 99y non-landed (resale)	YoY
2013	$1,145	–	$1,057	–
2014	–	–	$1,029	-2.65%
2015	$944	–	$1,033	0.39%
2016	$1,089	15.36%	$1,129	9.29%
2017	$1,046	-3.95%	$1,115	-1.24%
2018	$1,147	9.66%	$1,153	3.41%
2019	$1,174	2.35%	$1,178	2.17%
2020	$1,148	-2.21%	$1,173	-0.42%
2021	$1,187	3.40%	$1,207	2.90%
2022	$1,352	13.90%	$1,337	10.77%
2023	$1,394	3.11%	$1,464	9.50%
Average	–	5.20%	–	3.41%

Similarly, in the case of Meadowlodge, the absence of YoY data for 2014 and 2015 could cause discrepancy in accurately reflecting its appreciation. Nevertheless, a discernible upward trend in prices is evident.

The project which consists of just 64 units with a mix of 3 and 4-bedroom types, also leads us to assume that the majority of occupants are homeowners rather than investors. Another aspect to consider is the development’s age, with its 99-year lease commencing in 1997, it is 27 years old this year. If your plan is to hold the property for the long term, lease decay will be a concern.

In the analysis of 3-bedroom transactions for The Sterling, The Blossomvale, and Maplewoods in 2023, the units are minimally priced at $2.8M for 3-bedders sized between 1,300 – 1,400 sq ft. As such, acquiring the property jointly under both your names becomes necessary. 

However, this is limiting if you decide to purchase a second property, which would require either decoupling or payment of Additional Buyer Stamp Duty (ABSD). Regardless, your combined affordability extends up to $3.3M, so the three projects you’ve shortlisted are financially feasible.

Let’s look at the costs incurred assuming a purchase price of $2.8M. 

Description	Amount
Purchase price	$2,800,000
BSD	$109,600
CPF + cash	$1,575,000
Loan required	$1,334,600

Cost incurred

Description	Amount
BSD	$109,600
Interest expense (Assuming 30-year tenure at 4% interest)	$481,441
Property tax	$78,800
Maintenance fees (Assuming $420/month)	$50,400
Total cost	$720,241

What should you do?

Let’s do a quick summary of all 3 options:

	Number of properties	Total costs over 10 years
Option 1. Buy an HDB	2	$256,554
Option 2. Buy a freehold walk-up apartment	2	$550,032
Option 3. Buy a freehold condo	1	$720,241

From the options above, you can see that Options 1 and 2 offer the opportunity to own two properties at a lower overall cost compared to Option 3, where ownership is limited to one property but with higher associated expenses.

In Option 1, the combination of the lower cost of an HDB, coupled with rental income from the investment property, serves to offset expenses. As highlighted earlier, it’s advisable to segregate personal residence and investment properties if possible. Despite the HDBs along Toh Yi Drive being 35 – 36 years old, a combination of factors such as their sought-after location, and being the exclusive HDB cluster in the area may sustain demand and prices in the short to medium term. While lease decay may still emerge down the road, this is a location that is better off than most other areas. And given the current market conditions where prices and interest rates are still high, this might be an ideal route since it will also give you time to save up for the next place.

For Option 2, despite the freehold status of walk-up apartments eliminating concerns over lease decay, they possess drawbacks, as you mentioned. While they may be suitable for long-term hold, as evidenced by price appreciation from 1995 to 2022, they may not be the most practical choice as you age. Although there is demand for walk-up apartments, the potential buyer pool is narrower compared to conventional properties so their liquidity is lower. Nevertheless, this option provides the opportunity to acquire a second property for investment, offering an alternative avenue for profit generation.

Regarding Option 3, the higher price point of the projects necessitates joint ownership. Analysing their growth rates over the past decade reveals that all three developments have consistently outperformed the market. Considering their strategic location, tenure, proximity to amenities, and renowned schools, prices are likely to remain resilient in the long run. Although the costs associated with this option are higher, they are primarily driven by elevated interest rates. 

From a risk-reward perspective, Option 1 seems to achieve the right balance of both market timing and prudence, while allowing you to purchase a second property later on for investment. Option 3 is also viable if considering long-term hold, however, you’ve mentioned the possible financial strain so this may not be the most optimal choice.

We hope that our analysis will help you in your decision-making. If you’d like to get in touch for a more in-depth consultation, you can do so here.