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As a first-time condo buyer, buying your first property can feel like navigating a labyrinth, with each turn presenting new doubts and challenges. Are you grappling with the fear of hidden costs, or stressed about choosing the wrong one and regret later?
The list goes on. It is completely natural for any first-time condo buyers to have a million questions embarking on condo ownership journey.
But fear not! This article aims to provide you a checklist, breaking down the 10 essential criteria every first-time condo buyer must evaluate before signing on the dotted line.
Let’s break down the process together and step confidently towards your dream condo!
1. Budget & Affordability
The first thing we are going to talk about is your finances. Like many other first-timer condo buyers, you want to determine what you can realistically and comfortably afford, not just the purchase price but also other monthly recurring costs like maintenances, taxes and utilities.
1.1 How to determine your budget
Most first-timer condo buyers won’t be able to buy without getting a loan from the bank, especially young couples in their early 30s.
Unless you are born in the purple, you are going to need a loan, most of the time up to 75% of the property price.
To calculate your budget, simply use calculator here.
1.2 Three conditions to match
After finding out your budget, the next step is to check on the below 3 conditions:
- Have the 25% down payment in cash/CPF, stamp duty (in cash for resale) and legal fees.
- 12 months of cash reserve for other running costs – condo MCST fee, utilities, property tax.
- Keep the monthly installment at 30% of your gross income albeit TSDR of 55%.
If all the boxes are checked, more or less you are good to go. The last thing you want is becoming a slave to your condo, trust me, it is miserable.
2. MRT In Close Proximity
Owning a car in Singapore is extreme costly for most people, so taking the public transport become their top choice.
A study shows that approximately 6/10 of the population prefer a maximum of 10 minutes walk to an MRT station. Of course the shorter the distance, the better it is for the residents living in the vicinity.
Whether you are buying for own-stay or with the intention of renting it out, having an MRT nearby will never go wrong. It is going to be a strong plus point for all the users.
Your children can easily travel to school and your tenant travelling to their work place within minutes.
In addition, your property value will rise due to popular demand for its great connectivity. I mean, who doesn’t love being able to travel around with ease?
3. Entry Price Vs Nearby Projects
When it comes to comparative market analysis, it is paramount to do an apple to an apple comparison to make it fair.
Recently, I had a chance to work with a couple to get their first property.
Their budget was $1.5m and looking to purchase a 2-bedder condo unit in the west. After some in-depth research and analysis, I discovered this ultra-undervalued project at hillview – Hillhaven. (link)
At the hillview region, most of the existing projects are low-rise, freehold, and older condo.
So comparing a brand new 99-year leasehold project to these didn’t seem fair. The one comparable project was just right beside the future Hillhaven, which was Midwood.
The two projects shared many similar attributes: 99-year leasehold, high-rise and just received its TOP.
This is a perfect apple to do a comparison for Hillhaven. The most attractive thing is the price – both of their 2B2B units are selling at $1.4xm at $20xxpsf.
In this case, it was a no brainer for my client to go for the new launch project since the entry price is the same!
The couple work hard to get to this point, every single penny matters.
Most first-time condo buyers only got one bullet in the chamber, there’s no room for mistake. So it’s crucial that every decision you make comes with minimal risk.
P.s. If you need my help in selecting a good project for you, feel free to contact me, I’d be more than happy to work with you!
4. School Proximity
Whether you’re buying a condo as a family home or as an investment property for rental income, the proximity to schools is a clear benefit. Why is it so?
Firstly, to enroll into certain elite school, you must reside within the 1km radius of the campus. To be successfully enrolled, some parents would intentionally buy or rent a unit in the school district of choice.
Secondly, imagine purchasing a rental property close to a university or international schools. This location could make your property highly sought after by college students with affluent parents, who can afford to pay premium rental rates for the convenience.
Either of these will encourage parents to seek out housing near their children’s school, which, in turn, puts upward pressure on prices of your property.
5. Amenities
When considering a condo purchase, it’s important to look at the variety and quality of amenities in the development.
These can include fitness studio, swimming pools, children’s playground, communal gardens, BBQ station, and security features.
Other things such as shopping malls, parks, supermarket add convenience and enjoyment to your everyday living and make the property more appealing to renters or potential buyers.
More often than not, properties with comprehensive amenities often command higher market values and rental rates, reflecting the increased desirability they offer to a wide range of occupants.
In essence, you want to make sure the condo you are eyeing on has at least 80% of the abovementioned as it can provide a greater convenience and lifestyle elevation to your family.
6. Unit Layout & Floorplan
Choosing the right design and unit layout can significantly enhance your living comfort and the functionality of your space. Additionally, it ensures you get the most value for your dollars.
Before we talk about what constitute a good layout, let’s go back in time and understand how condos in Singapore have evolved over the decades, especially in design and regulatory aspects.
6.1 In the 2000s era
The notable features like large balcony and extensive planter boxes were popular among condo buyers.
They sought to accommodate outdoor dining and space for greenery. However, these features often consumed valuable living space, leading to a shift in design priorities.
Take note, the balcony and planter were excluded in the total gross floor area (GFA) calculation.
What it means for condo buyers is this – YOU, as the buyer, are paying for these spaces as part of the total purchase price, even though they are not included in the livable square footage of the unit.
6.2 A decade later, in 2010s
This architectural feature was particularly popular because it added aesthetic appeal to both the interior and exterior of buildings.
Bay windows provide extended views and allow more natural light to enter the space, which was a selling point for many developers and condo buyers.
Although bay windows added visual interest and light, they were also criticized for the inefficient use of space.
The protruding structure often took up floor area that could otherwise be used more effectively, especially given the premium on space in Singapore.
6.3 Fast forward till present, in 2024
Over time, as preferences shifted towards maximizing livable indoor space, the popularity of bay windows declined.
The focus moved to more straightforward, space-efficient designs like the dumbbell layout where the bedrooms are tucked at both side with zero wasted space.
This change was part of a broader trend that also saw the reduction of other previously popular features like large planter boxes, large balcony and extensive aircon ledges.
Modern condominiums tend to favor cleaner lines and more functional living spaces. So, I would say most of the first-time condo buyers today truly enjoy a high level of space-efficient home and every penny spent is worth it.
Well, I’m not saying that buying condo with big balcony and planter space is wrong, at the end of the day, it all boils down to you and your family’s needs and preference. If you like it, why not?
7. Future Transformation
7.1 Growth Hotspot
Based on past trends on emerging hotspots, property prices have shown a high correlation of growth when the government invests in infrastructure in the locality.
There are major and minor growth hotspots and investors would do best when investing long term in the major ones where upcoming commercial, residential hubs and amenities are built over time.
Taking Punggol, as an example, what was your first impression when you heard about this area back then?
Probably something along these – “Very ulu, very far, can almost see Malaysia, a place where birds refuse to lay eggs…”
Then the transformation commenced by building significant infrastructural enhancements, including the creation of the Punggol Waterway, expansions of public transit with LRT and MRT extensions, and the development of key amenities such as schools and shopping centers.
Fast forward to today, Punggol is a vibrant estate known for its modern amenities, green spaces, and family-friendly environment, making it a prime location with rising property values.
And the next big thing is going to be the Jurong Lake District (JLD) transformation happening in the west. What do you think of the property prices is going to perform in the future?
7.2 Potential GLS plots nearby
Government Land Sales (GLS) are the main source that developers buy their raw ingredient from.
In major transformation areas, there are many unreleased plots of land that are released slowly over time.
It is to create supply for HDB upgraders and increased populations for a new estate.
Land released in stages along with inflationary pressures in labor and raw material costs, historically resulted in higher breakeven prices.
Don’t understand? Let’s look at one of the new estate in the west – Tengah.
In 2022, a 936sqft, 3 bedder unit in Copen Grand was selling from $1.18m and fast forward to 2024, a similar size unit in Lumina Grand is selling from $1.35m. Almost a $200k difference in 2 years time?
Like I mentioned above, each newer plot of land is going to come with a higher price tag.
As the estate become populated, more amenities and infrastructure will be constructed to meet the needs of the residents. Over time, when the estate becomes matured, the property prices will rise in tandem as well.
8. Rental Yield & Rentability
Don’t get confuse with the 2 terms here, they are quite different thing.
Do check out this article if you are interested in buying an investment property for some rental income.
For rental yield – It is a calculation on how much your condo can generate for you in relation to its price. Simply take the annual rental income divided by the property price, for instances:
- Property price – $1,200,000
- Monthly rental income – $4,000
- Gross rental yield = ($4,000 X 12mth)/$1,200,000 = 4%
Generally, a gross rental yield of around 3% to 5% is considered decent in Singapore’s property market. Anything lower than this figure might not be a good investment return.
On the other hand, rentability is just how quickly and effortlessly you can rent out the condo. It is somewhat related to your tenant’s catchment and location.
If your condo is near an educational institution or office buildings, chances are your unit will have very low vacancy rate, compared to, say in the outskirts of Singapore, where the demand for rental is slightly lower.
9. Size Of The Project
Like many first-time condo buyers, you’ve likely grown up in your parent’s HDB flat, where it’s easy to overlook the neighboring blocks, facilities, and surroundings.
However, when purchasing a condo, it’s crucial to consider how the number of units and the landscaping of the project significantly influence various aspects of your living experience there:
- Community Feel: Larger projects typically have a more active community life with various events and social opportunities, whereas boutique projects offer a quieter, more intimate atmosphere.
- Privacy: Larger projects may have less privacy due to the higher number of residents and tenants, while smaller ones tend to provide more serenity.
- Management Fee: MCST fees are typically lower in a bigger development as it is shared by more owners, whereas a boutique project usually cost more because of the smaller pool of shareholders.
- Amenities: Bigger projects usually offers a more extensive amenities and full condo facilities, which can enhance lifestyle. In contrast, smaller projects tend to have fewer amenities due to its limited land space.
Again, depending on your needs and wants – if you are looking to flip condo for profits, it is better to consider a bigger project with more units as there will be a higher number of transactions and prices tend to rise slowly because of that.
And go for boutique, smaller project if you are seeking tranquility, seclusion and exclusiveness in your everyday living.
10. Future End Game
This is the final piece of the puzzle before you sign on the dotted line, it’s important to consider your long-term plans for the property, as these will guide your purchasing and investment directions:
- Primary Residence: If you are buying for family occupation, you need to evaluate the condo’s suitability for your lifestyle, local amenities, and proximity to work or schools, focusing on daily comfort and quality of life.
- Rental Property: If aiming for rental income, assess the area’s rental demand, potential yields, and tenant demographics. Properties near business hubs or educational institutions often offer higher demand.
- Future Resale: If you are looking to sell for profit, consider the property’s appreciation potential. Work closely with your preferred agent to monitor the market trends and development plans, and time your exit to maximize returns.
Defining these goals helps align your purchase with your financial and lifestyle objectives, ensuring it serves your needs effectively over time.
11. In A Nutshell
I dare say there is no perfect property that checks all the boxes, yet brand new and cheap. If there is, please call me immediately, I would be the first to snap it up! (Just kidding!)
All in all, the above-discussed 10 criteria certainly provide a guideline and insights to all the first-time condo buyers, including yourself, who read the article till this point.
Still got question? Feel free to reach out to me, it is my honor to be part of your property ownership journey!
