Tag Archives: Singapore Property

Is Singapore going towards the Hong Kong way of living?

I am at the point in my life where I am trying to think outside the shoebox. Yes, I am at the crossroads deciding between buying a resale public flat or a shoebox apartment. The former enables me to qualify for government grants and a bigger living space while the latter will require me to cough up more cash upfront for a brand new swanky apartment but with limited maneuvering space.

I was in Hong Kong last week and witnessed for myself how Hong Kongers live in extremely tight living spaces. A typical apartment size in Hong Kong is less than 500 sq ft. A queen sized bed can hardly fit into a bedroom. You can forget about wardrobes as they comprise mainly of loose hangers on raffia strings just above the bed. There is hardly any space in the living and dining room as they are cramped together. The living space essentially becomes a place where you rest, wake up, go to work and repeat the same routine. Clearly, a creative interior designer needs to be hired.

The median price of a resale three-room public flat in Singapore right now is around S$350, 000 (US$272, 447) not including the cash-over-valuation which averages around S$25, 000 (US$19, 460). On top of that there are housing grants of S$15, 000 (US$11, 676) that can be used for the down payment. The cash upfront required will be the $5, 000 (US$3, 892) deposit, $25, 000 (US$19, 460) for the COV and say, S$20, 000 (US$15, 569) for a modest renovation. I am also eligible for a government mortgage loan at around 2.6 per cent interest rate. The apartment size is larger at around 700 sq ft – enough room to do some entertainment. However, I am slapped with a 5-year minimum occupation period (MOP) and being a public housing, there is a limit on capital appreciation. I can then rent out the flat and buy a private apartment. Sounds reasonable.

Meanwhile, a studio private apartment is around S$600, 000 (US$467, 089). The deposit I would need is the initial down payment of 5 per cent ($30, 000) in cash and the remaining 15 per cent ($90, 000) in cash and/or CPF. However, I can only take a bank loan with an attractive interest rate of around 1.2 per cent. The apartment size will be a problem but the trade-off is a private apartment with security and good potential for capital appreciation (depending on location).

I don’t think I am the only one facing such tough decisions. However, it is clear high property prices have resulted in private developers in Singapore finding novel solutions for those wanting to buy their first property by offering shoebox apartments. So is it really inhumane to live in such small boxes, as what CapitaLand’s CEO Liew Mun Leong suggests? Or are developers like Oxley Holdings Chief Ching Chiat Kwong really altruistic when he said such apartments provide “a nice affordable pad” until we can upgrade to a bigger property? Such is the dilemma I face in trying to think outside the shoebox.

Source: PropertyReport – 2012 Jun 7