It has been two years since clients came to me for one-to-one property consultation sessions. Different homebuyers have different personal circumstances and housing needs. Some know better than others. Some are more prepared to buy.
No matter which stage they are in, I thoroughly enjoy answering their questions and sharing my knowledge. It is satisfying to see that, at the end of the session, they are better informed, enlightened, or given food for thought.
“In general, they all want to know three things – whether they should buy a particular condominium project, whether they can afford to buy, and whether this is a good time to buy.
– “Can you really afford that property?”, Propertysoul.com
Size matters for homebuyers now but …
After what we have been through in this 3-year pandemic, homebuyers are looking for more spacious homes. These days everyone demands more personal space and privacy. We need a bigger place to support working from home and our children’s occasional home-based learning.
Forget all the shoebox unit sales talks last time. No one buys that story about “small housing units is the trend” anymore. Just because small-size homes are more profitable for developers and easier for agents to sell doesn’t mean that we homebuyers need to settle for less. No one can deprive our right to have a proper living and dining area, decent size bedrooms and reasonable space for a comfortable living. Above all, we don’t want to waste our money on oversized balconies, planters or aircon ledges.
On the other hand, population census might tell us that Singapore household size is getting smaller. However, it is not uncommon to see families with two to three young children, elderly parents, one to two maids, and pets as well.
However, it is rare to find 4-bedroom units in newer projects. And chances are: Only the master bedroom and second bedroom are of decent size. The third and fourth bedroom are more like a study room or a storeroom. Despite this, these biggest units in a project often cost an arm and a leg – not only the large quantum, but also the high monthly maintenance fees that comes with higher number of shares.
Older condominium projects is another option. But there is possibility of being sold en bloc after the third attempt. After paying buyer’s stamp duty and renovation cost, and enduring all the en bloc nuisances, new owners may risk having to pay seller stamp duty too. Worse still, they have to do house hunting all over again.
I’ve been there myself
Last week I had a consultation session with a middle-aged couple looking to move to a bigger home. By coincidence, they inquired about the part of Singapore we currently reside. Furthermore, they were interested in the same type of landed housing we are staying in.
Naturally, the session brought back all the memories 15 years ago when we were homebuyers looking for a new place. Since I was supposed to be the “expert” in the field, house hunting and flat viewing automatically fell under my responsibility.
As I was already buying the fifth private property, I thought it wouldn’t be a difficult task. Little did I know that there were many new things to learn buying a landed house compared with buying a condominium unit.
What’s more, it was the first time I was buying a place not for investment but for our own stay. The former is like closing a business deal. I only need to go through the checklist, run the numbers and negotiate the terms. In comparison, the latter is more complicated. I need to meet individual requirement of family members, especially when the plan is to stay there for a long time.
Lessons I learned as homebuyers
No one can do something very well for the very first time. Homebuyers learn through trial and error. It is important to highlight the mistakes we made so others won’t repeat them. Therefore, I am most willing to share with the client the lessons I learned buying a similar landed home 15 years back.
1. Hard work and patience
Most homebuyers will say that they have already spent a long time house hunting. But in reality, they only went for ten to twenty flat viewings over a year or so. Then they concluded that “the market is like that” and settled for one.
I made the same mistake buying my first private property two decades ago. Looking back, I should have done more work, be more patient and waited a bit longer. The property market is a cycle. Even if I miss the chance to buy, there is always another one later. Above all, it is much better dealing with a lost opportunity than a mistake.
For my fifth time buying, after narrowing down to an area, I viewed tens of houses for sale and for rent. These were all in the same housing estate. For the house we finally bought, I had waited one whole year. I waited till the owner had a hiccup with the previous buyer, was so fed up and so desperate to sell that I believed it was finally my turn to submit an offer.
Lesson learned: Buy from a serious seller when the time is right. Otherwise, don’t waste your money, time and effort.
2. Total cost of ownership
Before taking the plunge, all homebuyers should ask themselves one question: Is buying or renting more cost-effective in my case?
Everyone’s situation is different. And both home prices and rental rates can go up or down over the years. However, we can do an objective cost analysis for buying versus renting for the time period we intend to stay in that new home.
Renting is more straight forward with one single cost item. In contrast, buying involves both initial investment (downpayment, stamp duties, legal fee, renovation and furnishing costs) as well as running costs (mortgage, property taxes, maintenance fees, repair and upgrade costs).
In our case, buying makes more sense than renting because our purchase price is low. It is among the lowest few in the transaction history of the housing estate.
Don’t underestimate the maintenance of a home. In hindsight, we haven’t thought of extra money that need to be spent on utilities, roof leakage, pest control, etc. However, we save more over the years with no parking and maintenance fee compared with staying in a large-size condominium unit.
Lesson learned: Calculate the total cost of ownership of your dream home in the next 25 years. The numbers may surprise you.
3. Location problem
I told the client frankly that one of the landed housing estates they were considering is not a good choice. It has location problem.
A home should be within reasonable walking distance to an MRT station. It is inconvenient for school-going children, older family members and maids who don’t drive to take an infrequent bus or a private hire to the nearest shop or eatery.
Lesson learned: Beware of cheap properties that are cheap for a reason. Homes with location problem are the first to drop in prices when the market softens. They are also the last to appreciate in value once the market recovers.
4. Owners under water
Another housing estate that the client shortlisted has a different problem. Most owners there bought at the last peak of the market during its first launch. They are still under water. Despite cheap money for easy borrowing during Covid-19, prices never climb back to the level during launch. This is the same dilemma owners are facing after their purchase of suburban condominium projects launched in 2013 or prime district projects launched in 2007. (Read my earlier blog post “What happened to buyers who overpaid at new launch?”)
Don’t even bother to bargain with these owners. Because they can hardly breakeven, not to mention the stamp duties, legal fee and expensive renovation they have spent for their home. Besides, Singaporeans who bought landed homes are often for their own stay. They have house pride and can be quite emotional. This is different from rational investors who bought the wrong thing and won’t hesitate to cut loss.
Lesson learned: Whether the property is leasehold or freehold, condo or landed, in prime area or suburban district, beware that its price may have peaked during launch if you bought the wrong thing at the wrong time with the wrong price.
5. Resident profile
Staying in a landed housing estate is very similar to staying in a kampong in the old days. Basically, everyone knows each other. Unless you are one of the residents there, there are many things you have no clue until you move in – your neighbors’ background, resident community, building quality, noise/pollution level, traffic at peak hours, parking problem, crime rate, etc.
How I wish I had someone who told me all these before I bought our current home!
Lesson learned: There are many things that the agent selling the house to you didn’t tell you or didn’t even know. As homebuyers, it is important to find out the few key things before you buy. Reading google reviews doesn’t count. It is good to know someone who is staying there to share with you all the pros and cons, the ins and outs. Alternatively, rent first before you buy.
We need the whole day, not two hours!
At the end of the two-hour consultation, we managed to cover all the topics as planned. The whole session I was taking a trip down the memory lane. If it was not limited to two hours, I could have shared everything in more details and continued answering questions for the rest of the day!
Back then, if only there was someone who could do the same. Someone who knew the subject backwards and forwards and I could simply pick his brain. After all, buying a private home is a very expensive investment and a big long-term commitment. Buying the wrong thing is no different from dumping money into the sea.
With this in mind, I decided to run full-day workshops again to share what I have learned over two decades about buying private homes. I will keep the workshop name “How To Buy First Private Home”.
A similar workshop “Buying My First Private Property” has been running since 2015. It’s time for a new revamp. I will update all the content and slides and add new topics that first-time homebuyers need to know.
Apart from this list of topics, I am more than happy to answer any question participants might have regarding their first private home purchase. How To Buy First Private Home Workshop will be held on March 25 (Saturday) at Raffles Town Club. Workshop details and registration can be found here.
For those who purchased the Buying My First Private Property online course during the pandemic or attended the same workshop in the past, there is a 25 percent discount if you want to sign up for this workshop to learn the new content. Seats are limited. Registration will be closed once we reach full capacity.
If you need advice on property matters or residential properties in Singapore, you can check out my personal consultation service.
My new book Behind The Scenes of The Property Market is now available for preview and order online. You can also check out my online courses.
Leave a Reply