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8 Good Reasons Why You Should Sell Your HDB and Buy A Condo in Singapore

Updated: Apr 10


8 Good Reasons Why You Should Sell Your HDB and Buy A Condo in Singapore

“Sell your HDB and buy a condo in Singapore” is likely one of the most frequent advices that you will hear in Singapore.


But I believe the following are also the most common thoughts that will run through the minds of many HDB owners: Condos in Singapore are so expensive, is it worth it to sell my HDB and take on a heavier debt just to buy a condo in Singapore? Or is it really worth it for me to sell my HDB and buy a condo just to have condo facilities or a security guard when I do not really need them?

Or to some, they may even just find this statement to be entirely a gimmick.




But hold your horses for a while now here. The intention of our article today is not to tell you how beautiful condos in Singapore are, or how you should sell your HDB and buy a condo in Singapore just for vanity or aesthetics reasons.


Sure, these are good to have, but our main purpose today is to equip you with more knowledge about the current property market landscape in Singapore, and also to share with you in the financial aspects and why it does actually make more financial sense for you to sell your HDB and buy a condo despite them being higher priced as compared to HDBs.


Here are the 8 good reasons why you should sell your HDB and buy a condo in Singapore:

 

1)    Widening Gap Between HDB and Condo Prices in Singapore


Let us first have a look at the price performance trends of HDB vs Condos in Singapore.   


We have pulled out data from the past 20 years to show you the statistical price trends of both HDB and condo prices in Singapore. Blue represents HDBs in Singapore while red represents the condo price trend line in Singapore.


Is HDB or Condo a Better Investment? Price growth of HDB vs Condo in the last 20 years

Source: Edgeprop


At the very first sight, the most obvious difference that you can tell from both trend lines would be that the growth rate of HDB is much more muted as compared to the condo price trend line which is on an uprising movement.


To illustrate clearly how much the price gap has widened between condos and HDBs in Singapore over the past 20 years, we will be using a size of 1000sqft for comparison’s sake: 

 


HDB vs Condo Appreciation in Singapore

Source: Edgeprop


Back in 2004:

-       HDB average psf = $235psf x 1000sqft = $235,000

-       Condo average psf = $563psf x 1000sqft = $563,000



HDB vs Condo Appreciation in Singapore

Source: Edgeprop


Now in 2024:

-       HDB average psf = $585psf x 1000sqft = $585,000

-       Condo average psf = $1927psf x 1000sqft = $1,927,000


Despite HDBs doubling on their average price as compared to 20 years ago, but average prices of condos have more than tripled in growth. It used to be only a $300,000 difference in the purchase price back then between HDBs and condos, but it is now a staggering difference of about $1.3 million.


So, what is the reason why this is happening? Which brings me to my next point.






2)    The Rate of Appreciation of HDB vs Condo in Singapore



The reason why the price gap has grown to be so significant is due to the rate of appreciation. Let us take the most recent past 10 years to have a look at the differences in rate of appreciation for HDB vs Condo in Singapore: 



How Much Does Condo Appreciate in Singapore?

Source: Edgeprop


As we look at the last 10 years price growth trend, you can also tell that the condo price growth has clearly outperformed HDB price growth with an increase of 53% vs 27% respectively. The price growth rate of HDBs have simply been unable to catch up with condos in Singapore. 


With this being said, HDB owners will find it harder and harder to solely tap on the profits from selling their HDB to upgrade to a condo in future should this price gap continue to widen.


This brings us back to the point on why it does make financial sense to sell your HDB and buy a condo in Singapore as soon as possible should you have the opportunity and are financially able to.


Otherwise, you may eventually get priced out of the market when you can actually be the one to enjoy the appreciation rate of condos in Singapore.

 

3)    The Price Quantum Difference of HDB vs Condo in Singapore


Condos have a larger overall price quantum as compared to HDBs, and therefore their capital appreciation is on a larger quantum also.


Using a condo price of $1.5 million for example, a 1% growth on $1.5 million is already $15,000 as compared to a 1% growth on a purchase price of $500,000 for a HDB which equates to $5,000.


Additionally, given the fact that condos appreciate at a faster rate (53%) as compared to HDBs (27%) over the last 10 years in Singapore, just imagine the price quantum difference over a longer period of time.


And apart from the differences in rate of capital appreciation, another thing to take note is the higher amount of “forced” savings that you will put into a condo which brings me to my next point.

 


4)    A Form of Savings Plan




As condos have a larger price quantum, naturally the loan amount that you will be taking on is larger with a higher monthly instalment.

 

The monthly repayments for a condo might be more taxing as compared to a HDB, but did you know that your property can also serve the function of a savings account apart from its investment nature? This is what we mean by that:

 

This is the monthly repayment schedule for a $1.5 million condo with a 75% loan amount of $1.125million, over a tenure of 30 years and at an interest of 2% (under normal market conditions).



Savings When Buying A Condo


Every month, your monthly instalments are made up of Principal repayment as well as Interest repayment (to the bank).


Your Principal repayment is the forced savings portion that will come back to you should you decide to sell the house one day. In the above scenario, the total amount you would have saved in the condo for a period of 2 years is a total of $55,860.

 

This is the monthly repayment schedule for a $750,000 HDB with a 75% loan amount of $562,500 over a tenure of 25 years and at an interest of 2.6% (HDB loan interest as a guide):



Savings When Buying a HDB

In the above scenario, the total amount you would have saved in the HDB for a period of 2 years is a total of $32,805.

 

Both figures above have only reflected a timeframe of 2 years, and over a longer timeframe, you will definitely see the amount accumulate differently.


Therefore, should your income levels now be able to afford a condo, we would highly encourage you to sell your HDB and buy a condo in Singapore, for it is also a good way to instill discipline and good saving practices.


You may not get instant gratification right now, but they will add up in the long run towards the later years of your life closer to retirement, which brings me to my next point.

 


Condo Can Be A Good Investment For Long Term Retirement Planning

5)    A Form of Retirement Plan


Be it a HDB or a condo that you have purchased, you will pay down the entire mortgage loan by the age of 65.


Let us therefore assume the scenario that you are 45 years old now and that you have decided to hold onto your HDB until the age of 65. Your HDB is currently worth $750,000 and with an estimated yearly appreciation of 2.7%, your HDB will likely be worth $1.15 million 20 years later with a fully paid-up loan.


A 2nd scenario assumes that you have decided to sell your HDB at the age of 45, and switched it up for a condo worth $1.5 million for example. With an estimated yearly appreciation of 5.3%, your condo will likely be worth $3 million 20 years later with a fully paid-up loan.


Even if we were to assume a more conservative yearly appreciation percentage, the numbers for a condo will still emerge higher than a HDB due to the differences in rate of appreciation.


Therefore, at the age of retirement, would it not be better to own a higher value property which gives you the option to downsize and free up more cash for retirement by then? This is what we mean by delayed gratification.


These are the real benefits of long-term planning, which is why we would recommend you to sell your HDB and buy a condo in Singapore as early, and as young as possible. Another important reason why you should start early is also because of your age limitations, which brings us to the next point.

 

6)    Declining Loan Quantum Due to Age




The older you get, the tougher it is to qualify for a substantial loan amount due to the limited loan tenure left. This therefore causes you to have to put in a higher proportion of down payment from your cash or CPF when you buy a condo in Singapore.  


The following are examples of how your loan quantum is affected due to the age factor:

Average Age of Both Owners

Loan Tenure

Combined Monthly Income

Qualifiable Loan Amount

35

30 years

$15,000

$1.59million

45

20 years

$15,000

$1.28million

55

10 years

$15,000

$788,000

 

You can see that the older you get, the larger the difference in the loan amount that you can qualify for. Especially with how fast condo prices are rising in Singapore, the longer you wait, the harder it will be for you to upgrade to a condo with your lessening loan amount


Therefore, those whom typically start early and as young as possible will reap the most benefits due to their age; which brings us to our next point – a typical Singaporean’s property cycle.


7)    Typical Singaporean’s Property Cycle (Sell HDB, Buy Condo or Landed Property, Downsize)



Sell HDB Buy Condo and Downsize, Singaporean's Typical Property Cycle

Most Singaporeans will typically start from a BTO (Build-to-Order)/Executive Condominium (EC) first in their 20s, and with the gains that they have obtained after a 5 years Minimum Occupation Period (MOP), they will leverage on that to upgrade to a condo in Singapore without forking out extra from their own savings. This is what we term as the “Asset Progression” stage.


Some have also skipped the whole BTO/EC stage entirely, and went for a condo straight for their first property.


Subsequently in their 30s after their condo has appreciated, the couple then explores various ways to own a 2nd property. This is possible by way of decoupling, selling their current one to buy 2 separate condos, or they might have even gone for 2 separate condos after their BTO/EC from the onset (one for their own stay and the other for investment).


Thereafter, in their 40s, the couple may then combine both condos that they have (all the capital appreciation and savings accumulated) to upsize to a larger bedroom type or a landed property as typically, the larger the size the more the capital appreciation. This is what we term as the “Wealth Creation” stage in their 30s to 40s.


Eventually, nearing to the age of retirement between 55 to 65, they would have the option of down-sizing into a smaller condo or back to an HDB, and still have additional cash freed up to either have a more comfortable retirement or to invest into smaller sized properties for passive rental income when they are not working already from the age of 65 to 85 years old. They may also choose not to downsize and rent out their extra bedrooms for passive income.

 

 

How You Can Leverage on Condo Appreciation To Plan For Retirement

Looking at this life timeline chart, the years that we will be actively working and earning an income are mostly between the ages of 25 to 65. However, there will come a day when we decide to stop working, and should have sufficient funds on hand to allow us to continue to spend and retire comfortably for the after-years after 65.


Therefore, should you be financially able to afford it now, we would highly encourage for you to sell your HDB and buy a condo in Singapore to leverage on the quicker rate of appreciation and higher amount of savings, as part of a long-term retirement plan.



8)    Characteristic Differences of HDB vs Condo in Singapore



And finally, the following are also some of the general characteristic differences that HDB and condos have in Singapore. We do find that condos have more flexibility and lesser restrictions.


 

HDB

Condo

Holding Period Before Allowed to Sell

Anytime but there will be a Seller Stamp Duty (SSD) should you sell within the 1st 3 years of purchase

Decoupling

Allowed

Need Cash

From The House

Have to sell to release cash

Higher chance due to the slower rate of appreciation vs CPF accrued interest growth (especially for older resale HDBs)

Less likelihood to happen

 

 

All in all, we believe that selling your HDB and buying a condo in Singapore is a safe and stable route to accumulate wealth and will make up a large part of your retirement plans.  




We understand that the whole idea of leaving your comfort zone and taking on a larger amount of debt can be a scary one. It can also be an emotional journey for you to have to leave the place where you have been staying at comfortably for the last 5 to 10 years.


However, if you would be willing to be a tad uncomfortable while you are younger, you will get to enjoy the comfortable fruits later on during your retirement years. We recommend to start young, start early and start planning for yourself for the longer term.  


We will be able to help you to plan out a safe upgrading plan without over-leveraging beyond what you can afford. We can also assist you in planning out a safety buffer for rainy days so that you know you have something to fall back on. Do reach out to us if you would like us to assist you with your upgrading plans.


We hope that you have found this article – 8 Good Reasons Why You Should Sell Your HDB and Buy a Condo in Singapore to be useful for you, and we look forward to be a part of your home journey.



 

More About Us:

Here at The Open House SG, we help home buyers & investors find their dream home and make better-informed investment decisions.


We also help property owners market and sell their properties at the most optimal price & in the shortest time possible through digital marketing, home styling and creating buyer experiences.

Contact us directly if you need any assistance with your property buying & selling needs.



 

People Also Ask:



Why people upgrade from HDB to condo?


People usually upgrade from HDB to condo for various reasons, such as a better quality of life, a form of status symbol but mainly for financial reasons as condos have better capital appreciation as compared to HDB. You can refer to our full article pointers above on the 8 reasons why you should sell your HDB and buy a condo in Singapore.


Is upgrading to condo worth it?

Upgrading to a condo can be worth it especially in the long term due to the quicker rate of appreciation for condos vs HDBs in Singapore. However, do ensure that you upgrade within your means, and that you are able to cope with the monthly commitments. You can refer to our full article pointers above on the 8 reasons why you should sell your HDB and buy a condo in Singapore.


How much does it cost to upgrade from HDB to condo?

It depends on individual financial circumstances, the price performance of your current HDB and which condos you are intending to purchase next. This requires a thorough financial plan, but there have been instances when our clients did not have to top up for the condo downpayment from their savings as they had profits from their HDB.




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