Photo by: R Architecture
Photo by: R Architecture
June 20, 2021

Buying your first home is not easy by any means. We ask our TOP property agents to share some advice for first-time homeowners and what to look out for.

Featured in 
Guide
 by 
Wendy Ker

For first-time homeowners, searching for the perfect place to call home can be a daunting process. It is not just about the aesthetics for your dream home - the biggest issues you have to tackle includes various aspects of the property you are looking for and most importantly, what does your financial means really allow for?

1. Consider the age, location and entry price of the property

In Singapore, properties are generally differentiated into 3 different leasehold types: 99-years, 999-years and freehold leases. For properties that fall under the latter two options, families generally do not have to worry much about the lease running out as one goes on indefinitely (or until government acquisition), whereas the other can last for generations.

However when it comes to 99-years leasehold properties, you will have to put more consideration into the current age of the property you are looking at - will you be extending the tenure when needed, or are you thinking of going for an en bloc sale in the future?

One of the biggest factors you have to consider next is the location. Are you looking for a place near your workplace or near schools if you are planning to have/already have children? Or are you leaning towards convenience and sourcing for a place near the MRT station?

There is also the option of staying within 4km to your parents, where you can then be qualified for the Proximity Housing Grant (PHG). All these are major deciding factors that can help you zoom in on an exact location.

Finally, we want to look at the entry price of the property. When you have the exact locations you are looking for, do your research and check what the entry prices are for the same unit types in the area. Some may be undervalued, and you want to seize the deal before anyone else could.

Whilst you may have chanced upon a golden opportunity, there are also odds that there might be underlying reasons why it was undervalued.

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2. Are there any similar property types in the same area?

Property types in Singapore are mainly placed into three categories: Public, Public-Private Hybrid or Private.

Under these we then have the various different property types like HDB, Executive Maisonette, Executive Condominium, Condominium, Bungalow, etc.

Based on your budget and your needs, you would have an idea of the type you are looking for.

With so many development projects, a single area can then have many similar property types that you are after.

This is when you will have to filter out the best one that suits your needs - it can be purely based on the distance to public transport, the facilities it has to offer (for condominium types), amenities nearby or you can even consider the layout of the house.

3. Consider your financial means

This is probably the most crucial factor: what do you qualify for versus what you can really afford?

While you think you can make some sacrifices and set aside more than 40% of your gross monthly income on housing to get your ‘dream place, this is probably not a good idea in the long run.

Taking into account taxes, groceries, dining out and other miscellaneous expenses, it might leave you feeling house poor very quickly.

Of course, if you have a large amount of savings, this may not be such a big problem. If not, we definitely do not recommend doing so.

We also have to take renovations cost into consideration, as not all properties come fully furnished to your liking and more often than not, a significant amount of revamping has to be done.

4. What are your overall objectives?

Think about what is most important to you in the long run: will you be staying for good,  or are you looking to upgrade in the near future?

If this will be a family home, you might want to place more importance on details like location.

If you are interested in upgrading to a better property in the near future, location might not matter as much and you would want to place more importance on the exit value of your property, which we will then elaborate in point 5 below.

5. Will the property be valuable in the future? What is the intrinsic value of the property?

If you are looking to upgrade in the near future, having the right exit strategy is crucial. The reason why you want to be thinking about potential exit strategies before you even make the deal is because by being certain of your approach, you can ensure that profits are maximized in the future.

No one wants to make a loss, much less if you were looking to upgrade as the profits can then be used on your next purchase.

You also want to look at the intrinsic value of the property. This is when you measure the property based on the land value combined with what the cost of building was, and then compare it against the market value to see if you are getting a good deal or not.

This not only helps you avoid making a huge loss, it gives you the chance to profit in the occasion there is inconsistency between the market value and intrinsic value.

For readers who are already a homeowner, have you ever considered the points above, and do you have any other tips to share with first time buyers based on your experience?

Though the process of getting your first home can be intimidating, we are here to help guide you with tips from our agents and of course, free consultations which can be accessed via our Contact page.


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