Buying a New Condo in Singapore

Courtesy of Kingford Hillview Peak

To buy or not to buy a condo? That is the question for many Singaporeans looking for new homes.

Riding on one of the most buoyant property markets in the region, private apartments has become one of the most discussed topics here. To slow down white hot demand, the government announced a seventh round of cooling measures on 12 January. More recently, Minister Khaw Boon Wan has also spoken about bringing government-built HDB flats back to their original purpose as homes rather than investments.

Before signing on the dotted line, however, there are several things to note. Thanks to my sis-in-law's hubby Paul Lim, I was able to understand the intricacies involved in this.

Factors to Consider

The first thing you need to think about is the general neighbourhood of your future home. Singapore is divided into 5 areas known as planning regions, namely Central, West, North, East and North East. These regions are further broken down into 28 districts.

When assessing a condo and its vicinity, consider the following:

1) Neighbourhood - which area do you like better and why? Some prefer mature estates with well-developed infrastructure while others prefer newer ones with more modern amenities suited to young families.

2) Amenities - shopping malls, markets, clinics, sport facilities, parks, etc?

3) Transport - Buses, LRT, MRT stations? (there is usually scope for capital appreciation near MRT stations)

4) Schools - any elite or preferred schools within the vicinity?

5) Tenure - freehold, 999 years or 99 years? Each comes with its benefits and drawbacks.

6) Facilities in Condo - do you need a swimming pool, gym, karaoke room and clubhouse? Generally, BBQ pits and function rooms are useful for entertaining and hosting of parties. However, these come with a cost.

On the issue of defects, new condominiums normally allow owners to spot and demand rectification for them within 12 months of the date of notice of vacant possession. Developers must rectify these within one month, failing which the owner can claim for the cost of rectifications at his own expense from the developer or ask the developer to carry them out 14 days later.

Budgeting for a New Home

As private properties are probably the largest expense you'll ever incur, you need to consider your finances carefully. Typically, existing condos will require bigger initial down payments while the payment for a new condo may be staggered over its construction period.

As an illustration, consider a $1 million new property where the buyer takes a $800,000 loan over 30 years with a 1.3% interest rate. Typically, these new condos would take about 3.5 years to build. The schedule of payments would be broken down in 3 stages: Sales, Construction and Completion, and look something like this:

1) Upon grant of option to Purchase (Option Fee): 5% ($50,000) in cash

2) Upon signing of Sales & Purchase (S&P) Agreement: 15% ($150,000) in cash/CPF/both - within 8 weeks from option date (for 2nd property, CPF minimum sum of $139,000 per couple needed).

3) Completion of Foundation Work: 10% ($335.60/mth) - estimated 6 to 9 months later

4) Completion of Reinforced Concrete Framework: 10% ($671.21/mth) - estimated 6 to 9 months later

5) Completion of Brick Walls: 5% ($839.01/mth) - estimated 3-6 months later

6) Completion of Electrical Wiring, Plumbing & Installation of Door & Window Frames: 5% ($1174.62/mth) - estimated 3-6 months later
7) Completion of Car Park, Roads & Drains: 5% ($1342.42/mth) - estimated 3-6 months later

8) Notice of Vacant Possession, ie Temporary Occupation Permit (TOP): 25% ($2181.43/mth) - estimated 12 months later

9) Legal Completion Date, ie Certificate of Statutory Completion (CSC): 15% - estimated 12 months later

10) Upon completion, monthly installments would then need to be paid.

Wait, there's more...

1) Stamp Duty: after exercising the S&P agreement,a Singaporean has to pay a Buyer's Stamp Duty (BSD) for the 1st property within the next 14 days. This is calculated as follows:

$1 Million Property = $1M x 3% - $5,400 = $24,600 (CPF)

If a Singaporean is buying a 2nd or 3rd property, Additional Buyer Stamp Duty will be incurred. This is calculated as follows:

$1 Million 2nd Property = $1M x 7% = $70,000 (CPF)

2) Legal Fees: these range from $2,500 to $4,500 and can be paid through CPF.

3) Cash Portion:

In general, an owner only needs to pay 5% cash for option fees only if he/she has sufficient CPF to cover the 15% balance, Buyer Stamp Duty, and legal fees for 1st property. Additional Buyer Stamp Duty will kick in for owners who purchase 2nd and 3rd properties, PRs and foreigners (see below). The balance 80% can be serviced by a bank loan (lowest interest rates estimated at 1.3% per annum).

4) Furniture and Fixtures:

Finally, ensure that you've worked out a budget for furnishings and additional fixtures for your new home. Do you need to hire movers to pack and shift your stuff? What about new cutlery and kitchen ware?

Cooling Measures on 12 Jan 2013

Now that you understand how payments are made for new condos, consider the impact of the recent cooling measures. These create an Additional Buyer's Stamp Duty (ABSD) over the Buyer's Stamp Duty (BSD). Using the same illustration above ($1 million property)...

BSD: 3% (Price) - $5,400 = $24,600.
ABSD: as outlined below:

1) 1st Property Purchase
- Singapore citizens - 0%, ie $0 + $24,600 (BSD) = $24,600
- PRs - 5%, ie $50,000 + $24,600 = $74,600
- Foreigners & Corporates - 15%, ie $150,000 + $24,600 = $174,600

2) 2nd Property Purchase
- Singapore citizens - 7%, ie $70,000 + $24,600 = $94,600
- PRs - 10%, ie $100,000 + $24,600 = $124,600
- Foreigners & Corporates - 15%, ie $150,000 + $24,600 = $174,600

3) 3rd Property Purchase
- Singapore citizens - 10%, ie $100,000 + $24,600 = $124,600
- PRs - 10%, ie $100,000 + $24,600 = $124,600
- Foreigners & Corporates - 15%, ie $150,000 + $24,600 = $174,600

To curb flipping in the market, sellers also have to pay a Seller's Stamp Duty (SSD) if they sell within the first four years of purchase. The duty to be paid is 16%, 12%, 8% and 4% respectively for properties sold within the 1st, 2nd, 3rd and 4th year of purchase.

A Few Last Words

Once you've determined the different costs, you ought to create your own spreadsheet to determine what your initial, monthly and annual financial commitments are like. Ensure that you're clear on what proportion needs to be paid in cash versus CPF.

Hopefully, the article above helps you to better understand what is involved in purchasing a new condo. It certainly isn't a decision to be taken lightly!

If you wish to learn more (or look for some hot new properties), do feel free to contact Paul either at his website or via email (

Bartley Ridge at Mount Vernon Road (courtesy of Bartley Ridge)

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