Should I Buy a Recently MOP-ed HDB or An Older Resale HDB?

 

Finding a property that is both affordable and desirable to purchase and reside in remains one of the greatest challenges facing Singaporeans. As a result of the immense pressure and competition to purchase real estate, the Singaporean authorities have provided specific guidelines regarding property ownership.

In this article we will have to navigate the competing realities of finding a property which they can afford and yet have a healthy remaining lease. We will consider the option between buying a recently MOP-ed HDB, or an older resale HDB.

First, the definition of MOP, or Minimum Occupation Period, is a 5 year period where the property owners must reside in the property. Older resale HDB properties are usually collectively referred to those with less than 65 years left on the initial 99 year lease granted to the property when it was built.

The costs and investment potential of both property types vary, which is why it is crucial to evaluate your own personal situation and objectives before exploring which property is the best fit for you.

It Depends On Your Circumstances

The question of whether one should purchase a recently MOP-ed HDB property or an older resale property is highly dependent on your personal life circumstances, whether you are married or single, or if you plan to live with other occupants. Also consider how costly potential renovations can be, and what your investment objectives are. The size of the unit, as well as its location in Singapore, will be significant contributors as well.

For the purpose of this article we are going to focus on the decision between a recently MOP-ed HDB property vs older HDB resale property.

Single vs. Married

In Singapore, singles are not allowed to purchase property until their 35th birthday. While this restriction does ensure every property buyer who is single ought to have many years of savings for their down payment, this restriction does prevent singles from building their personal wealth through property ownership for many years after their careers have already started.

Couples who are married, on the other hand, have the option to explore recently MOP-ed HDB properties or older resale HDB properties earlier before singles can at 35 years of age. This option allows young married couples to purchase their first property sooner and perhaps even upgrade to a bigger HDB or to a private property by the time singles are allowed to purchase their first HDB property.

How Long Will You Live There?

Do take some time to evaluate how long you wish to live in this property and what your goals are for the future. If you plan to live in your property only long enough to satisfy the MOP and then upgrade to a more expensive property, your best bet is to purchase a recently MOP-ed HDB property.

The reason being that the longer the length of the remaining lease on the property when you sell it, the property will likely fetch a higher price. Lease length is a critical factor in the price and appreciation or depreciation of a property over time. Although the purchase price will be higher than an older resale property, the property will likely retain its value better than an older resale property.

Longer Term Living Situation

However, there are Singaporeans who do not intend to immediately upgrade from their current property once their properties meet its MOP. It could be due to the proximity of their workplace, or staying close to their parents for caregiving arrangements or just for daily convenience.

Whatever the reason, perhaps for this group purchasing an older resale HDB property makes more sense because your property is in a convenient location and checked the proximity to work and family checklist.

If that is the case for singles who plan to live in one area for a very long time, then purchasing an HDB resale property with its lower price point and likely price depreciation over time may be the better option.

How Many Rooms Do You Need?

As you explore whether to purchase a recently MOP-ed HDB property or an older resale HDB property, one crucial factor to consider is the size of the flat. Many times the spatial requirements of the flat are driven by the number of occupants. If you plan to live alone, then you are likely to be more content with less space to reside in. But if you plan for a roommate to live with you and defray the housing costs, or perhaps your parents will need to move in with you at some point in the future, then you will likely need a larger space.

If you intend to live alone and do not require much space, then a 2 or even 3 room flat would be ideal for you. If you wish to future proof your home for a bigger pool of buyers (and affordability is not a concern), 4-5 room flats might be worth considering. According to the HDB Resale website, the 4-room flat routinely receives the most resale applications compared to the 1-room flat, 2-room flat, 3-room flat, 5-room flat, and executive condos.

Which Region of Singapore Do You Want To Live In?

As you weigh whether you wish to purchase property in the Core Central Region (CCR), Rest of Central Region (RCR), or Outside Central Region (OCR), do keep in mind that certain parts of Singapore benefit from greater rates of appreciation while other regions have more HDB properties available.

Properties in the Core Central Region are some of the most exclusive and expensive regions in Singapore. As a result, it comes as little to no surprise that property in this region has some of the most superior value.

The Rest of Central Region is also a viable option for prospective property buyers who wish to have close proximity to the Central Business District, or CBD, in Singapore. Given that more development occurs away from the Core Central Region, there are likely to be more recently MOP-ed HDB properties and older resale properties.

However, the Outside Central Region has the highest number of HDB flats out of all 3 regions of Singapore. Given that the Outside Central Region has the highest number of HDB flats, it will also have the highest number of recently MOP-ed HDB properties available for prospective buyers. So if your main objective is to acquire an HDB property that recently MOP-ed, you will have the best chance of locating one in the Outside Central Region.

Your budget and purchasing power will ultimately drive your consideration of which parts of Singapore to purchase property in. And as you move further away from the heart of Singapore there will be increasing numbers of HDB properties to choose from.

Do Consider Property Renovations

A major factor in the decision between a recently MOP-ed HDB property and an older HDB resale property will be the potential costs of renovations and other improvements to the property during your ownership.

Although the HDB manages relatively strict regulations of the types of renovations that property owners can implement when they live in a property, renovations are certainly a point worth considering.

Do consider your personality and your willingness to undergo property renovations. There are many property buyers who are comfortable with engaging in certain property improvements, including replacing appliances or enhancing furniture and fixtures throughout the flat.

Do-It-Yourself Property Renovation

If you align with this perspective and are comfortable renovating a property you reside in, then selecting an older HDB resale property may be a viable option for you.

Given a property is more advanced in age, the more likely it will require improvements to be made to it at some point during your ownership, so set aside enough cash to prepare for these renovations. It is also advisable to enter into this transaction fully aware that at some point, these renovations may become your responsibility if you own the property long enough. And you may have to complete these renovations yourself, or hire a contractor to execute the renovations yourself.

Renovation Averse?

If you find yourself hesitant to undertake the responsibilities of property renovation, or simply do not want to handle property renovation while you engage in other pursuits, then a recently MOP-ed HDB property is likely the better route for you.

The reason the recently MOP-ed HDB property may be more desirable for the renovation-averse buyers is that the recently MOP-ed HDB property is newer. Since the property was built less than 10 years ago and likely only one or two cycles of occupancy, the fixtures have a longer lifespan to last during your stay in the property.

As the property owner, fewer faults throughout the apartment will translate to a less stressful property ownership experience.

Amenities

As one might expect, a recently MOP-ed HDB property will be newer and will be built with the most contemporary options and features available. If you are a property owner who prefers to have the latest and greatest amenities where you reside, then a recently MOP-ed HDB property will likely be your most ideal property.

However, if you view your property as simply a place to eat and sleep in between your professional and personal pursuits, then perhaps the amenities are of less importance to you. If that is the case, then an older resale HDB property with older amenities and style will be more of a consideration in your property purchasing journey.

Is This Property One Of Your Primary Investments?

Another crucial consideration is your approach to your property buying journey and what your objectives are for the property. No property buyer purchases a home in hopes that it will immediately depreciate in value.

However, some property owners treat the purchase of an older HDB resale property, which is likely to depreciate in value over time, almost like they would treat renting an apartment. They view the payment of their mortgage as similar to rent on an apartment; they know they might not receive any capital back from the sale of the property than they put in, but ultimately they want the stability and control that a renter may not have because a landlord can change his or her mind about the rental of their property.

If your property purchase will be a core component of your investment portfolio, then you are better off purchasing a recently MOP-ed HDB property simply because the property will retain its value better than an older HDB resale property. But if you prefer to own a property so you have more stability and control over your housing, unlike those renting from a landlord, then purchasing an older resale HDB property may be a great opportunity for you.

Whether A Recently MOP-ed HDB Or Older Resale HDB Property Is Right For You

Hopefully this article has answered some of the questions of whether a recently MOP-ed HDB or an older resale HDB property is the better purchase. It is highly dependent on your personal preferences and future objectives.

As you complete your purchasing journey, do be sure to consider:

• How long you intend to live in the property.

• Whether you wish to upgrade to a more expensive property later on.

• How much space you need in a property.

• The region of Singapore you wish to live in.

• Your attraction or aversion to renovations.

• Your desire for quality amenities.

• Whether this property will be a primary investment for you.

Work With Experts

Your property purchase is one of the most expensive financial decisions you may ever make, and it ought to be one of the most informed decisions you make as well. If you’d like an expert opinion to guide you through your property buying journey, do be sure to reach out to the team at Property Lim Brothers to ensure you achieve your goals!