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Is BTO Really Cheaper than Resale?

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You may have frequently heard that BTO flats are cheaper than resale flats. But, is it really the case? Let’s dive deeper and compare a BTO and resale flat in Punggol area.

Comparables:
BTO Northshore Edge: the most recently launched BTO flat (2017)
vs
RESALE Punggol Central: a 6-year old property in Punggol area.

Overview of Listed/ Indicative Pricings

Purchase Type Property Address Room Type Estimated Floor Area (sq ft) Price Price Per Square Feet ($) Nearest MRT
BTO Northshore Edge 4-room 1033 287,000 – 347,000 277.83 – 335.91 Nibong LRT (350m)
Resale Punggol Central 4-room 1001 385,000 387.61 Punggol MRT (700m), Damai LRT (600m)

Pricing

Concerning pricing, Northshore Edge is cheaper, a 4-room flat range between $277.83 to $355.91 per square feet. On the other hand, Punggol Central is listed at $385,000 which works out to be $387.61 per square feet.

Punggol Central may seem to be more expensive but is that true? Many take it at face value and proceed to purchase BTO flat. However, we will further analyse the price you are paying at the end of the day by factoring negotiations and grants.

Actual Agreed Price

Listing prices for resale properties are usually subject to negotiations as property agents typically mark up the prices. In normal circumstances, the listing price can generally be driven down by another $20,000.

For BTO flats like Northshore Edge, it is sold directly by the HDB, so there is no room for negotiation. You will be paying the same price as what they have indicated.

Grants

Let’s assume you are a fresh graduate and both you and your spouse and you are earning $3,200 each. That will form a monthly household income of $6,400. Now let’s work out the grants you can receive for each property purchase type.

Punggol Central, a resale flat can usually further obtain a family grant worth of $50,000 for first timer families as the income ceiling is set at $12,000. This unit will drive the value down to $315,000 and at an effective cost of only $314.69 per square feet.

On the other hand, Northshore Edge has a more stringent requirement for obtaining grants. A 4-room unit in Northshore Edge can obtain Special Housing Grant of $20,000 as it fulfilled the obligation of restricted room-types and located in a non-mature estate. That will drive the pricing down to a range of $267,000 to $327,000 which will work out to $258.47 to $316.55 per square feet.

Summary of the Calculations

Purchase Type Property Address Room Type Estimated Floor Area (sq ft) Effective Price ($) After grants And negotiations Effective Price Per Square Feet ($) After Grants And negotiations
BTO Northshore Edge 4-room 1033 267,000 – 327,000 258.47 – 316.55
Resale Punggol Central 4-room 1001 315,000 314.69

Is BTO cheaper than resale?

For this case study, the answer is likely to be yes if you compare strictly on pricing even though the margin is not huge.

However, if you factor in the locality, Punggol Central is in better location since it is still within walking distance to Punggol MRT station and Waterway Point while Northshore Edge is twice the distance away at 1.6km away.

Furthermore, you have to wait 2.5 to 4 years for a BTO flat’s completion. While a resale flat is readily available and the resale completion date happens after eight weeks from the date of HDB’s acceptance of the resale application if the necessary documents are submitted accurately and promptly.

Now, it’s up to you to choose whether you will get a BTO or a resale flat. This comparison is just a case-study on the Punggol area to overturn the assumption that BTO is always cheaper than resale. The key takeaway is that you still have to do your homework first before making one of the major decisions such as a property purchase. Sometimes, you can pick up a cheaper deal in the resale market.

Interested in buying a resale property?

Download the Ohmyhome app now from Google Play or App Store to commence your house-seeking journey. All listings in Ohmyhome app are genuine so fret not about the complications.

Don’t know what to do after finding your ideal resale flat? Engage Ohmyhome Buyer Documentation Service at $1,688 nett.

Call 6886 9009 to arrange for a non-obligatory discussion.

Sources: HDB, HDB First-Timer Applicants

Contributor: Leow Wei Min


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