We Own A 4-Bedder EC In Punggol: Should We Buy A Newer Condo Or An Executive HDB?

Hi! I have some questions about my current situation. Hopefully u can shed some light!

• Me: 43 yo/ gross 15k/mth/ airline pilot.

• Her: 37yo/ gross 5.5k/mth/ teacher.

• Us: 3 girls, 7/5/1yo.

House: punggol 4 bed EC 1,442 sq ft/bought 1.16mil/ valuation ~ 2Mil now.

Outstanding loan 545k.

Decoupled. I own 100% now. My CPF+ accrued ~ 150k. 

Servicing 2.4k cash monthly.

Our eldest girl got a placement in PLMGS, hence looking at Minton.

Options:

1. since we decoupled. Buy a ~2mil hse under her name, and rent current one out.
2. rent a hse in minton, rent our current EC out. Then sell w tenancy when we see something we like.
3. buy Minton or buy a Lorong Ah Soo EM/EA.

We r quite torn on the options. Paying 60k+ to the govt for BSD for a new spacious Minton, or just stay Punggol and schoolbus them.

Hope u can advise. Thank u.

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Hi there,

Thanks for writing in.

Having your current property solely under your name provides flexibility if you decide to purchase a second property for investment under your wife’s name without incurring any Additional Buyer’s Stamp Duty (ABSD). Any property purchase will still incur Buyer’s Stamp Duty (BSD), which, as you mentioned, can be substantial if the property value is high. Therefore, this is still an important factor to take into consideration.

As such, we will cover:

• Your affordability
• The performance of the various property types you are considering
• The costs incurred for each potential pathway
• Recommendations on what you should do

Let’s start by assessing your wife’s affordability.

Affordability

Based on her age of 37 and monthly income of $5,500, at an interest rate of 4.8%, the estimated maximum loan she can take is up to $558,490 for a private property with a loan tenure of 28 years. 

Description	Amount
Purchase price	$2,000,000
BSD	$69,600
Maximum loan	$558,490
Cash and CPF required for shortfall	$1,441,510
Total cash and CPF required (including BSD)	$1,511,110

To purchase a $2M property solely in her name, you would need $1.5M in cash and CPF funds, which is quite a significant amount. For this case, we will assume you have the necessary funds.

Since the current project you’re living in is not revealed, we’ll examine the performance of Executive Condominiums (ECs) in District 19, focusing on units larger than 1,400 sq ft.

Performance of EC units in D19 >1,400 sq ft 

Year	D19 EC >1,400 sq ft (resale)	YoY	All EC >1,400 sq ft (resale)	YoY
2013	$807	–	$741	–
2014	$751	-6.94%	$743	0.27%
2015	$725	-3.46%	$703	-5.38%
2016	$697	-3.86%	$711	1.14%
2017	$686	-1.58%	$633	-10.97%
2018	$808	17.78%	$737	16.43%
2019	$794	-1.73%	$717	-2.71%
2020	$850	7.05%	$739	3.07%
2021	$918	8.00%	$853	15.43%
2022	$1,108	20.70%	$1,008	18.17%
2023	$1,162	4.87%	$1,087	7.84%
Average	–	4.08%	–	4.33%

If we compare the ECs in D19 versus all ECs across the island, we can see that the average growth rate over the last 10 years is comparable. 

Year	D19 EC >1,400 sq ft (resale)	YoY	D19 condos >1,400 sq ft (resale)	YoY
2013	$807	–	$1,044	–
2014	$751	-6.94%	$903	-13.51%
2015	$725	-3.46%	$884	-2.10%
2016	$697	-3.86%	$791	-10.52%
2017	$686	-1.58%	$912	15.30%
2018	$808	17.78%	$933	2.30%
2019	$794	-1.73%	$988	5.89%
2020	$850	7.05%	$1,002	1.42%
2021	$918	8.00%	$1,030	2.79%
2022	$1,108	20.70%	$1,169	13.50%
2023	$1,162	4.87%	$1,305	11.63%
Average	–	4.08%	–	2.67%

However, when comparing the average growth rates of ECs to private condos and apartments in District 19, ECs come out ahead. The table shows that over the past four years, the price gap between ECs and condos has been closing. As of 2023, the average price per square foot (PSF) for condos and apartments in District 19 is only 12% higher than that of ECs. 

Now, let’s examine the two properties you’re considering: The Minton and an executive HDB in Lorong Ah Soo.

Performance of The Minton

Year	The Minton (resale)	YoY	D19 non-landed private properties (resale)	YoY	All non-landed private properties (resale)	YoY
2015	$1,127	–	$950	–	$1,191	–
2016	$998	-11.45%	$935	-1.58%	$1,248	4.79%
2017	$995	-0.30%	$984	5.24%	$1,292	3.53%
2018	$1,052	5.73%	$1,056	7.32%	$1,325	2.55%
2019	$1,056	0.38%	$1,047	-0.85%	$1,344	1.43%
2020	$1,050	-0.57%	$1,054	0.67%	$1,294	-3.72%
2021	$1,112	5.90%	$1,131	7.31%	$1,345	3.94%
2022	$1,270	14.21%	$1,276	12.82%	$1,455	8.18%
2023	$1,416	11.50%	$1,385	8.54%	$1,562	7.35%
Average	–	3.18%	–	4.93%	–	3.51%

Since the first resale transaction for The Minton occurred only in 2015, we have just eight years of data to look at.

Although The Minton has the lowest growth rate compared to other non-landed properties in District 19 and across the island, its prices have been steadily increasing. Additionally, there is no other development of comparable size nearby. Being within 1 km of the popular Paya Lebar Methodist Girls’ School could also contribute to the demand for this project.

These are some of the recent 4-bedroom transactions in The Minton:

Date	Size (sq ft)	PSF	Price	Level
Dec 2023	1,658	$1,460	$2,420,000	#03
Oct 2023	1,658	$1,465	$2,428,000	#03
Jul 2023	1,755	$1,470	$2,580,000	#03

Performance of Executive HDB

Year	Hougang Executive HDB	YoY	All Executive HDB	YoY
2013	$448	–	$426	–
2014	$434	-3.13%	$413	-3.05%
2015	$427	-1.61%	$401	-2.91%
2016	$426	-0.23%	$402	0.25%
2017	$421	-1.17%	$405	0.75%
2018	$437	3.80%	$406	0.25%
2019	$439	0.46%	$397	-2.22%
2020	$429	-2.28%	$403	1.51%
2021	$473	10.26%	$453	12.41%
2022	$522	10.36%	$499	10.15%
2023	$557	6.70%	$529	6.01%
Average	–	2.32%	–	2.32%

Although the average growth rate over the past 10 years for Executive flats in Hougang matches that of Executive flats overall, the year-on-year growth rate shows a different story. Before the pandemic, prices for Executive flats in Hougang were relatively stagnant, with most years experiencing negative growth. Despite being the largest available HDB type and no longer being built, the units along Lorong Ah Soo are 39 to 40 years old, potentially raising concerns about lease decay for future buyers. Furthermore, as the HDB market recovers, it is unlikely we will see the same level of growth as observed in the past three years.

These are some recent Executive flat transactions along Lorong Ah Soo:

Date	Block	Level	Size (sqm) & unit model	Price
May 2024	144	01 to 03	148Maisonette	$835,000
Mar 2024	128	07 to 09	142Apartment	$915,000
Feb 2024	144	01 to 03	148Maisonette	$835,000
Jan 2024	128	10 to 12	149Maisonette	$935,000

Now let’s take a look at the options you’re considering. 

Potential pathways

Option 1. Buy a $2M property under your wife’s name and rent out the current property

As previously calculated, purchasing the property with your wife’s income alone will require a substantial amount of CPF and cash. Without knowing which development you’re currently residing in, it’s challenging to advise on whether you should retain your property. However, overall growth rates for ECs larger than 1,400 sq ft in District 19 suggest they are outperforming other non-landed property types in the area.

Now, let’s examine the costs involved. For calculation purposes, we will assume you have the necessary cash and CPF funds for the purchase.

Purchase price	$2,000,000
BSD	$69,600
Maximum loan	$558,490
Cash and CPF required	$1,511,110

We will presume a 10-year holding period and a rental yield of 3% for your current property.

Cost of holding the $2M property

Description	Amount
Interest expense (Assuming 28-year tenure at 4% interest)	$198,760
BSD	$69,600
Property tax	$36,800
Maintenance fee (Assuming $400/month)	$48,000
Total costs	$353,160

Cost of holding your current property

Description	Amount
Interest expense (Assuming outstanding loan of $545K with 22-year tenure at 4% interest)	$182,825
Property tax	$108,000
Maintenance fee (Assuming $400/month)	$48,000
Rental income	$600,000
Agency fees (payable once every 2 years)	$27,250
Total gains	$233,925

Total cost if you were to take this pathway: $353,160 – $233,925 = $119,235

Option 2. Rent a unit at The Minton while renting out the current property and sell only when you find something you like

This could be a viable option, as it allows you to avoid rushing into a purchase while remaining close to your daughter’s school. Additionally, rental income from your current property would help offset some expenses. However, let’s examine the numbers to ensure they make sense.

Given the uncertain timeline and not knowing if the next property will be purchased under your name, your wife’s name, or both, we will assume for calculation purposes that you rent for two years and then purchase the next property under your name alone.

Your affordability

Sale of current property

Selling price	$2,000,000
Estimated outstanding loan in 2 years	$512,803
CPF used and accrued interest in 2 years (to be refunded into OA)	$157,594
Cash proceeds	$1,329,603

Maximum loan based on age of 45 with a fixed monthly income of $15,000 at 4.8% interest	$1,271,270
CPF	$157,594
Cash	$1,329,603
Total loan + CPF + cash	$2,758,467
BSD based on $2,800,842	$109,642
Estimated affordability	$2,648,825

*This is assuming you only have the CPF funds that is currently in your property

Looking at the rental transactions for 4-bedders in The Minton over the last 3 months (Feb – Apr 2024), the average rent is $6,633 which we will assume as the rental price. As before, we will presume a 3% rental yield on your current property.

Cost of renting at The Minton and renting out current property for 2 years

Description	Amount
Rental expenses	$159,192
Rental income	$120,000
Interest expense (for the current outstanding loan of $545K, assuming 22-year remaining tenure and 4% interest)	$42,383
Property tax (for current property)	$21,600
Maintenance fee (for current property, assuming $400/month)	$9,600
Agency fees	$5,450
Total costs	$118,225

Since there isn’t any mention of a preferred project besides The Minton, let’s say you purchase a unit there after 2 years. 

We will use the average price of 4-bedders at $2,476,000 as the purchase price.

Purchase price	$2,476,000
BSD	$93,400
CPF + cash	$1,487,197
Loan required	$1,082,203

Cost of holding the property for 8 years

Description	Amount
Interest expense (Assuming a 20-year tenure and 4%)	$296,385
BSD	$93,400
Property tax	$47,488
Maintenance fee (Assuming $400/month)	$38,400
Total costs	$475,673

Total cost if you were to take this pathway: $118,225 + $475,673 = $593,898

Option 3. Buy a unit at The Minton or an Executive HDB along Lorong Ah Soo

In this scenario, if you wish to purchase an HDB, you’ll need to sell your current property and adhere to the 15-month wait-out period. Since you’re a married couple, both your names must be listed in the HDB. Even though you can designate one person as the owner and the other as the occupier, the occupier cannot already own a private property. They can only purchase a private property after the HDB fulfils its Minimum Occupation Period (MOP). Therefore, if your plan is to retain your current property and buy an HDB under your wife’s name, that won’t be feasible.

As indicated in the previous calculations, acquiring a $2M property solely under your wife’s name requires a considerable amount of cash and CPF funds. Considering the average price of a 4-bedroom unit at The Minton, even more funds would be necessary for the purchase. If your intention is to own two properties, it might be more prudent to sell your current property, buy The Minton under your name, and acquire another more affordable unit for investment under your wife’s name. This approach optimises your resources and time, as your wife can proceed to purchase the investment property without any waiting period.

For completeness, we will examine the costs associated with both scenarios.

Buying an HDB, with the occupier going on to purchase a private property after MOP

Let’s say you were to rent at The Minton during the 15-month wait-out and purchase the HDB under your wife’s name.

Wife’s maximum loan (for the purchase of an HDB) based on the age of 38 with a fixed monthly income of $5,500 at 4.8% interest: $287,960 (25-year tenure)

We will use the average price of Executive HDBs along Lorong Ah Soo at $880,000 as the purchase price. 

Purchase price	$880,000
BSD	$21,000
Maximum loan	$287,960
Cash + CPF required	$613,040

Cost of holding the HDB for 9 years + rental of 15 months

Description	Amount
Interest expense (Assuming a 25-year tenure and 4%)	$91,488
BSD	$21,000
Property tax	$6,624
Town council service & conservancy fee (Assuming $102/month)	$11,016
Rental cost	$99,495
Total costs	$229,623

Let’s say that you were to purchase a $1.5M property for investment after the MOP and rent it out at a 3% yield.

Cost of holding the investment property for 4 years

Purchase price	$1,500,000
BSD	$44,600
Maximum loan based on the age of 49 with a fixed monthly income of $15,000 at 4.8% interest	$1,104,157
Cash and CPF required	$440,443

With the sales proceeds from your current property and with 6 years to save up, you may be able to purchase the investment property without taking up a loan. Let’s presume you pay for this property in full. 

Description	Amount
BSD	$44,600
Property tax	$26,400
Maintenance fee (Assuming $250/month)	$12,000
Rental income	$180,000
Agency fees (Payable once every 2 years)	$8,176
Total gains	$88,824

Total costs if you were to take this pathway: $229,623 – $88,824 = $140,799

Buy The Minton under your name and buy an investment property under your wife’s name

For this calculation, we will assume the average price of 4-bedders at The Minton of $2,476,000 as the purchase price and $1.5M for the investment property. Both of these have a 10-year holding period, with the investment property being rented at a 3% yield. 

The Minton 

Purchase price	$2,476,000
BSD	$93,400
CPF + cash	$1,487,197
Loan required	$1,082,203

Description	Amount
Interest expense (Assuming a 22-year tenure and 4%)	$363,035
BSD	$93,400
Property tax	$47,488
Maintenance fee (Assuming $400/month)	$48,000
Total costs	$551,923

$1.5M investment property (Similarly, we will assume that you do have sufficient funds to pay for the shortfall)

Purchase price	$1,500,000
BSD	$44,600
Maximum loan based on the age of 37 with a fixed monthly income of $5,500 at 4.8% interest	$558,490
Cash and CPF required	$986,110

Description	Amount
Interest expense (Assuming a 28-year tenure and 4% interest)	$198,760
BSD	$44,600
Property tax	$66,000
Maintenance fee (Assuming $250/month)	$30,000
Rental income	$450,000
Agency fees (Payable once every 2 years)	$20,440
Total gains	$90,200

Total costs if you were to take this pathway: $551,923 – $90,200 = $461,723

What should you do?

Considering the differing purchase prices of the various properties under consideration, it’s not a completely equitable comparison, as higher-priced properties typically entail higher costs. Additionally, the method of ownership will impact the incurred expenses, given the varying loan amounts accessible to you and your wife. But let’s do a quick summary of the costs involved for the different options.

Potential pathways	Number of property/ ies owned	Value of property/ ies	Cash and CPF required/ used to make up for loan shortfall	Costs incurred in 10 years
Option 1. Buy a $2M property under your wife’s name and rent out the current property	2	$2M + $2M = $4M	$1,511,110	$119,235
Option 2. Rent a unit at The Minton while renting out the current property and sell only when you find something you like	1	$2.476M	$1,487,197	$593,898
Option 3a. Buying an HDB, with the occupier going on to purchase a private property after MOP	2	$880K + $1.5M = $2.38M	$2,157,640	$140,799
Option 3b. Buy The Minton under your name and buy an investment property under your wife’s name	2	$2.476M + $1.5M = $3.976M	$2,473,307	$461,723

By owning two properties and renting one out, the rental income can help offset some expenses. From an investment perspective, holding two private properties might be preferable to holding one HDB and one private property, considering their growth rates. However, this hinges on selecting the right property. Over the past decade, non-landed private properties have demonstrated a higher growth rate of 2.9% compared to HDBs at 2.3%. 

Without knowledge of your current property’s location, we cannot advise on its performance or whether you should sell or retain it.

For Option 1, the incurred costs are the lowest because your wife’s eligible loan quantum is relatively low, so acquiring a $2M property solely under her name requires a substantial amount of cash and CPF funds. If you’re looking for a 4-bedroom unit near your daughter’s school in a newer, sizable development, the cost would most likely exceed $2M. Staying in your current property and perhaps acquiring a smaller unit for investment under your wife’s name might be a more prudent option if you’re considering a location that isn’t close to her school.

Option 2 provides time to find a suitable property while remaining near your daughter’s school, but the timeline is uncertain. Unless the rental income covers most or all outgoing expenses during the rental period, the rental costs incurred would diminish profits from your property sale.

Option 3 offers a comfortable, affordable living space with an HDB, but involves a 15-month waitout and a 5-year MOP. Costs are low assuming the investment property is fully paid off, but if a loan is taken, costs would definitely rise. Considering opportunity costs, this is the least preferred option.

Option 4 allows staying in your preferred development while acquiring a second unit for investment. However, high costs are incurred due to increased loans for both properties and substantial Buyer’s Stamp Duty (BSD) payable. It will also require a significant amount of cash and CPF funds.

Depending on your current property’s performance, Option 1 might be the most favourable. Holding two private properties with a lower outstanding loan compared to a purchase like The Minton reduces incurred costs. The difference in terms of monthly repayment is also huge. At the moment, you’re paying $2,400/month, but if you were to take up a loan of $1,082,203 for the purchase of a unit at The Minton, with a 22-year tenure and 4% interest, the monthly repayment goes up to $6,171. This may possibly impact your existing lifestyle. Acquiring a more affordable property for investment under your wife’s name would also lessen cash and CPF outlay.