Buying a home can be an exciting adventure but identifying the perfect dream home can potentially be a nerve wrecking journey in anyone’s life. In the vibrant city-state of Singapore, known for its modern infrastructure, multicultural society, and booming real estate market, the task of selecting your dream home can be both exciting and overwhelming. With numerous options available, it is crucial to have a clear strategy to make an informed decision. Whether you are a first-time homebuyer or an experienced investor, these six essential tips (your handy checklist) will help guide you in identifying and shortlisting your dream home in Singapore.
1. Determine Your Budget and Financial Planning
The first step in searching/identifying your dream home is establishing a realistic budget. Begin by assessing your financial situation, including your income stability, savings, loan eligibility (including current interest rates) and any outstanding debts you may currently have. Consult a real estate agent or mortgage specialist to determine how much you can afford and the mortgage options available to you.
Take into account factors such as down payment requirements, monthly mortgage payments, property taxes, insurance, and maintenance costs (for condominiums). Factor in your long-term financial goals, as a mortgage is a significant financial commitment. By setting a budget, you can narrow down your choices and focus on properties that fit within your financial means.
In Singapore, your monthly loan repayment amount will be determined by calculating your Total Debt Servicing Ratio (TDSR) or Mortgage Servicing Ratio (MSR).
TDSR: TDSR applies to all housing loans. It limits how much you can spend on your monthly loan repayments, to 55% (current 2023). This includes all kinds of loans such as home loan, personal loan, car loans, student loans etc.
MSR: MSR only applies to HDB flats and Executive Condominiums (ECs). It limits monthly loan repayments to 30% of the borrower’s monthly income.
2. Identifying Your Needs and Preferences
Before embarking on the home search, make a list of your needs and preferences. Consider factors such as location, size, layout, and amenities. Reflect on your lifestyle and future plans to determine the features that are essential to identifying your dream home. For example, if you have a growing family, you may prioritize proximity to schools or parks. If you work in the central business district, a property with easy access to public transportation would be advantageous.
Furthermore, consider the type of property that suits your lifestyle. Singapore offers a range of housing options, including HDB flats, condominiums, landed houses, and executive condominiums. (Depending on your citizenship and marital status, some housing options may not be available to you.) Each has its own advantages and considerations, so understanding your preferences will help narrow down your search. Let’s take a look at some common requirements homebuyers take into consideration.
a. Proximity to MRT and amenities
Do not underestimate the importance of having an MRT station near your home – preferably within walkable distance from your humble abode. Locations further from the MRT station may require a feeder bus ride, which could add 15 to 20 minutes to your daily commute. It may not seem excessive, but that extra time in the mornings can go some way for those who need to take their children to school or those who are simply sleep deprived.
Furthermore, your property will certainly be more appealing to resale buyers, fetching 5% to 10% more if you are located within a 5 to 8 minutes’ walk to an MRT station compared to those which are not. Buyers also should not underestimate the importance of having nearby amenities such as a mall, supermarkets and eateries, which not only value-add to convenience but also enhances the quality of life.
b. Proximity to good schools
Do you have school-going kids at home or have a little one on the way? Proximity to schools – perhaps you have specific schools that you wish to enrol the kids in – should be a key consideration, as this impacts their daily commute throughout the school term. This is especially crucial if you are buying an HDB flat, where you will be locked in for at least 5 years before you can sell the flat and move to another area.
c. Apartment size and family planning
Are you planning to have kids in the near-term? Do you foresee your parents moving in with you in the future? That 3-room flat at Queenstown may look appealing and affordable but will it be spacious enough to accommodate any changes to the family unit? Family planning is an important step which all young couples should not skip, especially for those purchasing HDB flats; since any upgrading to a bigger unit can only be done after the 5-year minimum occupation period.
3. Lease tenure and remaining lease balance
There are several types of lease tenures for Singapore property, among them are freehold, 999-year, or 99-year leasehold tenure. For most HDB flats, they are issued on 99-year leases, with a reversionary title to the state. If you are interested in a leasehold property, particularly a HDB flat, it is important to check its balance lease. If the remaining lease is less than 70 or even 60 years, it may be harder to sell the unit later on as the prospective buyer in the future could face challenges in securing financing to buy your flat.
For properties with freehold titles, usually private residential properties, they would not have to be returned to the state since their titles are effective into perpetuity. Freehold properties are usually popular with home buyers since they tend to better retain their value and can be passed down to generations to come (legacy planning).
4. Consider Future Resale Value and Investment Potential – Future Transformation Plans For The Area
Even if your dream home feels like a long-term investment, identifying if your future dream home has resale value is essential. Factors such as location, amenities, transport links, and proximity to commercial areas influence a property’s investment potential.
Buyers should also take note of any transformative efforts and initiatives to rejuvenate or gentrify the area, such as a new MRT station or a new commercial centre or mall. Typically, a new transport infrastructure or commercial development in the area could help to lift your property’s growth potential in the years to come.
This isn’t to say that you should specifically look out for homes in areas which are slated for redevelopment, since gentrification is a long process and owners must be prepared for dis-amenity such as construction noise and other such inconveniences related with building and construction activities.
While your current needs are crucial, thinking ahead and considering the potential return on investment will help you make a more informed choice.
Look into recent property price trends and consult with experts to better understand the market outlook.
5. Seek Professional Advice
Navigating Singapore’s real estate market can be complex, especially for first-time buyers. Engaging the services of a reputable real estate agent can simplify the process and provide valuable expertise on your home buying journey. Look for agents who are knowledgeable and updated about the Singapore market, possess good communication skills, and have a proven track record.
A reliable agent will understand your requirements, guide you through the home-buying process, and negotiate on your behalf. They can help you find properties that match your criteria, arrange viewings, and assist with legal and financial matters. A professional agent’s expertise will save you time, effort, and potentially help you secure a better deal.
Besides determining what are your preferences and priorities, perhaps the most fundamental question that buyers will need to ask themselves is: what is the end goal for the property? Will it be a forever home or will you be upgrading to another property in the future? There is no right or wrong answer, but a property purchase is a big financial commitment which needs careful consideration. For many, a property has been used to preserve their wealth and grow their capital, provide stable recurring rental income, build a retirement fund or a tool for social mobility when they upgrade to a private property. Happy home hunting!
Read more: New Private Homes – Sales Hit One-Year High In May 2023, On Strong Demand For Fresh Launches In The City Fringe, 8 Reasons Why Singapore Is a Safe Haven for Real Estate Investment, April Resale Volume In The Suburbs – Hougang Project Booked Gains Of More Than $720,000 On Average, 5 Essential Skills to Learn When Living Alone for the First Time: Singapore Edition, What is the HDB Flat Eligibility (HFE) letter?, The Continuum, Jervois Treasures – A Freehold Luxury Collection in District 10