It’s exciting times when you’re ready to commit to your first property purchase! And hopefully, you’ve checked off the following (ground works):
- Financing: In-Principle Approval for a bank loan/ HDB Loan Eligibility Letter
- Ensure you have sufficient funds (cash/ CPF) for your down payment, stamp duties, renovation, and other miscellaneous fees
- Decided on your timeline: New Launches/ Built-to-Order or Resale
- Decided on Property type: HDB/ Private Condo or Apartment/ Landed
- Clear on your purpose/ objective: Own stay/ Investment
Buyers who have sorted out the above are in a good position to view and purchase. Or are they? Not quite yet.
Deciding where and which property to buy, is the challenging part. Some buyers try to keep an open mind and view as many units in different areas as possible.
They either learn to know what they want or they become extremely confused. I’ve met so many buyers who are fearful of buying the wrong property.
Each family and individual has varying needs to fulfill, be it finding somewhere closer to their parents/ in-laws or places of work to getting something with a high rental yield or the highest return on investment.
In short everyone’s definition of a good property may differ by a lot. That’s why I always spend some time with my clients to find out their needs before we embark on their home search.
Personal needs aside, I’ll cover some important factors to consider if your top priority is to find a property that is likely to help make money, should you decide to sell in say 10 years.
#1: Near to MRT Stations
It is now easier to live closer to an MRT Station, with our MRT network expanding to almost all parts of our island. Developments within 1km of an MRT Station (Not LRT Station) would usually be more sought after than one that is further.
Most buyers’ definition of near would entail nothing more than a 10-minute walk.
This is exceptionally important for an investment unit, since tenants tend to go for units near to MRT and usually base their search for rental units online with close to MRT Station as their top criteria.
So purchasing a unit near one makes it easier to rent and sell in future. But mind you, being too near or facing an above-ground MRT train track/ station can work against you as well.
This may not be possible for landed housing as most landed enclaves are away from amenities/ train stations.
But the ones which do will usually be popular as families with children appreciate having public transport as not everyone drives.
#2: Within 1km of Good Primary Schools/ or being near an International School
There will always be demand for properties near to good schools. Year after year, parents eager to give their children a headstart in life move to within 1km of popular primary schools.
I make it a point to remind clients with younger children to select properties near primary schools, so they do not end up having to move again prematurely just to be near a primary school when it’s time for their little one to start school.
For investors, again attracting tenants would be crucial.
Being near an International School (i.e. Australian International School in Lorong Chuan/ American School in Woodlands), would make it a breeze to rent to expatriate families.
Buying the right unit type would also be important.
I would definitely recommend getting a 3-bed unit if possible, instead of a 1-bed unit.
Bigger units are usually higher in demand due to family needs especially so when they prefer a short commute for their children.
#3: Future development in the Area – Growth/ New Launches
Many buyers tend to prefer mature estates. They enjoy the conveniences of having a myriad of amenities (think wet markets, hawker centres).
All these usually come at a higher price, which is not all bad since there will always be families who won’t mind paying more in future too to enjoy the same convenience.
However, when you purchase at a premium price, chances of you getting a profit when you eventually sell, is much lower, especially for a 99-year leasehold HDB flat or condominium.
Buyers with a smaller budget may want to consider a newer or less established estate with good growth potential.
How do you know if there are potential upsides to an area? Pay attention to the Master Plan.
Current growth hotspots include areas like like Punggol, Woodlands, Bidadari, Greater Southern Waterfront, Paya Lebar and Upper Bukit Timah.
Yes, some of them, like the Keppel / Marina area may already be too pricey if you’re a first time buyer.
Look to locations like Punggol and Woodlands, which would be the most affordable of the lot and still provide good capital growth.
Young families appreciate the waterfront view that some of the Punggol HDB flats provide, as well as a well connected park connector along the waterfront, beach and Coney Island.
Given the fact that it will be developed into a digital hub with an extended train line to Pasir Ris in future, this is no longer the “ulu” swamp that many still associate with Sengkang and Punggol.
And with growth, comes greater capital appreciation.
That said, not all hotspots are equal.
Developments in Woodland for one have not performed as well as those in Punggol. So always delve into numbers, to have a better idea on how an area/ development has performed.
But in general, government land sales helps to boost/ push up prices of surrounding projects. So when you see vacant lands surrounding the development you intend to purchase, rejoice!
However, not all vacant lands are meant for residential use, so do reach out to your realtor or conduct your own checks before you deem it a good buy.
#4: Age of property (for 99-years leasehold properties)
Post 2017 – most buyers are aware of a decaying leasehold property.
This applies to both HDB flats and private condominium units. If you’re opting for a leasehold property, be mindful that most developments remain stagnant or enjoy limited growth past the 30 year mark.
Remember, if you’re buying for your own stay – the unit will need to last you and your families’ needs for the next 8-10 years typically.
Which means if you were to buy a HDB flat in its 25th year mark and stay for another 10 years, it would be in its 35th year when you’re ready to sell.
Unless you are in a unique development / location (e.g. Tiong Bahru, Marine Parade where prices tend to be more resilient), your pool of buyers will then be more limited.
What’s more, there’s limited growth for an older development (above 30 years), and you will start to see prices stagnating, or at times fallen. So if you can help it, buy a younger property.
#5: Number of New BTO flats in the area
I get asked this quite a bit.
Is it good to buy a private condominium near HDB flats?
Why not? Being near to flats usually means it’s near to amenities.
It would be a bonus if it is an area near substantial BTOs. Why? Many people move within the same area.
How many times have you heard someone saying, “I’ll always want to live in Ang Mo Kio.”
So owners of BTO flats, may look to upgrade or move after their 5-year Minimum Occupancy Period (MOP) in the same area.
So it is good to buy into a development near many new BTO flats.
We won’t of course actively look at apartments or condominiums near to BTO flats for this purpose. But really a bonus.
#6: Ease of Getting Tenants
This would be crucial if you are buying an investment unit. Is there a potential pool of tenants nearby?
Stable rents contribute towards your monthly mortgage payments.
So do look at rental transactions for that particular development or nearby developments if you are considering a new launch.
A healthy rental yield also adds to your profit (think of the dividends you get for your share purchases).
Most investors would also like a fuss-free tenant. From experience, different types of properties/ areas attract different tenant types.
Good tenants will not only pay rent promptly, but also help to maintain the unit, until it’s time for you to sell!
I have had an investor who was lucky enough to have a tenant (family of 3) rent his place for 10 years until he decided to sell.
#7: Enbloc Potential
I always worry when the reason for buying a particular unit is for its en-bloc potential.
That is always a risk in my opinion, as it may or may not happen in the next 20 years.
And these are usually older developments, which again may or may not be properly maintained. There may be a higher maintenance fee or sinking funds.
And it is also important to understand the sentiments of owners on the ground.
Take for instance Far Horizon Gardens – where one of my clients was all for an en-bloc exercise but it fell through because it lacked the consent of just a few elderly owners (10-15%).
Is there a chance for another en-bloc exercise in time to come, I would say definitely!
There are many who have made a windfall after a collective sale.
But be sure to check on the coffers to see if the MCST has a healthy sinking funds.
If the seller is not willing to share or find out such information, chances are it’s not in a good state and you should also think twice before committing.
#8: Price & Transaction Volume Trends
Past data are often our best bet in predicting how well (or bad) a development will perform. That’s how we determine if we should buy into a particular project, and the entry price.
Study the price and volume trend of the HDB flat or condominium in question, and that would often be good enough to give you an idea if it’s a good project (investment wise).
Some find it sufficient to buy as long as it’s at a value whereby the bank is able to “match” the asking price.
But I prefer to also look at the past trend to see if it’s on a growth, stagnant or declining cycle.
Buying a property is a huge investment and factors need to be weighed carefully so you understand the pros and cons.
Before making a decision, speak to an agent who has daily on the ground experience so you can find out what you don’t really know.
Feel free to contact me for a no-obligation discussion.