We own a 2-bedroom EC: Should we sell to buy a condo, a HDB flat or rent?

We bought a two-bedder at executive condominium The Vales in 2017 for $650,000. We have an outstanding loan of $400,000 at 1.5 per cent interest rate at a five-year fixed rate, which ends September 2025. 

We now have a four-year-old daughter, and are thinking of our options and which may work best for us. 

1. Sell The Vales and buy Foresque Residences. Two bedder. Continue to own a car at $20,000 depreciation, outstanding loan of $110,000. 
2. Sell The Vales and buy Hillion Residences at $1.27 million. Two bedder. Sell away car and no more outstanding loan of $110,000. 
3. Sell The Vales and buy Jelebu four-room HDB at $750,000. (Need HDB to waive off waiting period). Sell away car and no more outstanding loan of $110,000.
4. Rent out the Vales and hope it continues to appreciate higher than three per cent. Then rent Hillion Residences or Jelebu HDB. 

I am trying to strike a balance of:

• Stay near parents at Bukit Panjang
• Stay near MRT so don't need to drive
• Capital gains > interest paid

Hi there,

Thanks for writing in, and that's an interesting situation that you have. 

While it's not impossible, it can sometimes be challenging to find a property that checks all of your boxes. Even though the requirements you've laid out are not unattainable, the current interest rate environment might pose a hurdle.

The 10-year average growth rate for non-landed private properties is 2.9 per cent, while mortgage interest rates for some banks are at least 2.9 per cent for a two-year fixed-rate package. This means you would need to find a property performing better than the average growth rate.

Let's begin by making some comparisons to gain a clearer understanding of how executive condominiums (ECs) are faring in comparison to apartments and condominiums. This general analysis encompasses properties situated in all districts and of varying ages, so do note that the performance of individual products may differ.

All 99-year ECs VS All 99-year Apartments & Condominiums 

 

All 99-year EC 2-bedders VS All 99-year Apartment & Condominium two-bedders

*Here I've set two-bedders as units under 850 sq ft

Year	All EC two-bedders (resale)	YoY	All Apt & Condo two-bedders (resale)	YoY
2015	$785	–	$1,383	–
2016	$825	5.10 per cent	$1,672	20.90 per cent
2017	$874	5.94 per cent	$1,503	-10.11 per cent
2018	$983	12.47 per cent	$1,404	-6.59 per cent
2019	$1,006	2.34 per cent	$1,423	1.35 per cent
2020	$984	-2.19 per cent	$1,441	1.26 per cent
2021	$1,039	5.59 per cent	$1,432	-0.62 per cent
2022	$1,177	13.28 per cent	$1,534	7.12 per cent
2023	$1,340	13.85 per cent	$1,693	10.37 per cent
Average	–	7.05 per cent	–	2.96 per cent

*As older ECs do not have two-bedders, the first resale transaction done was in 2015.

All 99-year EC three-bedders VS All 99-year Apartment & Condominium three-bedders

*Here, I've set three-bedders as units under 1,250 sq ft

 

Year	All EC three-bedders (resale)	YoY	All Apt & Condo three-bedders (resale)	YoY
2013	$818	–	$1,127	–
2014	$793	-3.06 per cent	$1,073	-4.79 per cent
2015	$748	-5.67 per cent	$1,081	0.75 per cent
2016	$733	-2.01 per cent	$1,228	13.60 per cent
2017	$745	1.64 per cent	$1,197	-2.52 per cent
2018	$860	15.44 per cent	$1,202	0.42 per cent
2019	$900	4.65 per cent	$1,245	3.58 per cent
2020	$898	-0.22 per cent	$1,283	3.05 per cent
2021	$972	8.24 per cent	$1,292	0.70 per cent
2022	$1,126	15.84 per cent	$1,411	9.21 per cent
2023	$1,267	12.52 per cent	$1,562	10.70 per cent
Average	–	4.74 per cent	–	3.47 per cent

Reviewing the three comparisons provided, ECs have consistently surpassed apartments and condominiums. One reason could be due to the age, as out of the 76 ECs in Singapore, 63 commenced their leases after the year 2000, with 24 of them being less than a decade old.

Before delving into the particular developments you have in mind, let's assess the performance of The Vales.

Performance of The Vales

 

Year	The Vales (resale)	YoY	D19 99y non-landed (resale)	YoY	All 99y non-landed (resale)	YoY
2019	$912	–	$1,025	–	$1,178	–
2020	$948	3.95 per cent	$1,027	0.20 per cent	$1,173	-0.42 per cent
2021	$1,040	9.70 per cent	$1,107	7.79 per cent	$1,207	2.90 per cent
2022	$1,224	17.69 per cent	$1,258	13.64 per cent	$1,337	10.77 per cent
2023	$1,361	11.19 per cent	$1,373	9.14 per cent	$1,463	9.42 per cent
Average	–	10.63 per cent	–	7.69 per cent	–	5.67 per cent

As it was only completed in 2017, there is limited historical data available for The Vales. However, considering that it reached the minimum occupation period (MOP) recently in 2022, it's not unexpected that its growth rate surpasses that of 99-year leasehold non-landed private properties on average.

Near the project, there are three other ECs: OLA, Treasure Crest and Bellewaters. Among these, only OLA features 30 units of two-bedders, but it hasn't yet reached its MOP. However, the two projects closer to Sengkang MRT station, La Fiesta and The Luxurie, each offer over 200 units of two-bedders. Let's compare them against The Vales.

	The Vales	La Fiesta	The Luxurie
Lease start	2014	2012	2011
No. of units	517	810	622
Avg two-bedder price (in 2023)	$1,076,439	$1,107,236	$1,142,432
Avg two-bedder PSF (in 2023)	$1,389	$1,448	$1,381
Avg two-bedder size (sqft)	775	765	835

Here, you can see that the average price per square foot (psf) for the three developments is rather comparable, even though La Fiesta and The Luxurie are classified as condominiums. As such, it's likely that the demand for two-bedders at The Vales will remain strong especially since it currently stands as the youngest resale development in the area (prior to OLA reaching its MOP).

These are some of the recent two-bedroom transactions:

Date	Size (sqft)	PSF	Price	Level
Apr 2024	753	$1,497	$1,128,000	#08
Mar 2024	764	$1,492	$1,140,000	#12
Mar 2024	764	$1,335	$1,020,000	#01

Assuming the average selling price of $1,096,000:

Selling price	$1,096,000
Outstanding loan	$400,000
Estimated sales proceeds (CPF + cash)	$696,000

Now let's take a look at the options you’re considering. 

Potential pathways

Option 1. Sell The Vales and buy Foresque Residences

Let's look at how Foresque Residences has been performing. 

 

Year	Foresque Residences (resale)	YoY	D23 99y non-landed (resale)	YoY	All 99y non-landed (resale)	YoY
2015	$1,181	–	$809	–	$1,033	–
2016	$1,095	-7.28 per cent	$785	-2.97 per cent	$1,129	9.29 per cent
2017	$1,110	1.37 per cent	$815	3.82 per cent	$1,115	-1.24 per cent
2018	$1,160	4.50 per cent	$876	7.48 per cent	$1,153	3.41 per cent
2019	$1,177	1.47 per cent	$898	2.51 per cent	$1,178	2.17 per cent
2020	$1,178	0.08 per cent	$936	4.23 per cent	$1,173	-0.42 per cent
2021	$1,197	1.61 per cent	$1,001	6.94 per cent	$1,207	2.90 per cent
2022	$1,339	11.86 per cent	$1,108	10.69 per cent	$1,337	10.77 per cent
2023	$1,443	7.77 per cent	$1,267	14.35 per cent	$1,463	9.42 per cent
Average	–	2.67 per cent	–	5.88 per cent	–	4.54 per cent

*As the first resale transaction for Foresque Residences was done in 2015, I will look at the data over the last eight years instead of 10.

The table above indicates that the average growth rate of Foresque Residences over the past eight years has been below average when compared to the growth rates of 99-year leasehold developments in D23 and across the island. Now, I will compare it to some neighbouring projects, all of which are also 99-year leasehold properties.

	Foresque Residences	Tree House	Eco Sanctuary	The Skywoods
Lease start	2011	2009	2012	2012
No. of units	496	429	483	420
Avg two-bedder price (in 2023)	$1,115,600	$1,237,250	$1,094,657	$1,000,000 (only 1 transaction)
Avg two-bedder PSF (in 2023)	$1,520	$1,444	$1,546	$1,602
Avg two-bedder size (sqft)	734	861	708	624

 

Year	Foresque Residences (resale)	YoY	Tree House (resale)	YoY	Eco Sanctuary (resale)	YoY	The Skywoods (resale)	YoY
2018	$1,160	–	$1,039	–	$1,231	–	$1,317	–
2019	$1,177	1.47 per cent	$1,073	3.27 per cent	$1,269	3.09 per cent	$1,290	-2.05 per cent
2020	$1,178	0.08 per cent	$1,074	0.09 per cent	$1,284	1.18 per cent	$1,276	-1.09 per cent
2021	$1,197	1.61 per cent	$1,158	7.82 per cent	$1,321	2.88 per cent	$1,347	5.56 per cent
2022	$1,339	11.86 per cent	$1,254	8.29 per cent	$1,388	5.07 per cent	$1,446	7.35 per cent
2023	$1,443	7.77 per cent	$1,458	16.27 per cent	$1,543	11.17 per cent	$1,518	4.98 per cent
Average	–	4.56 per cent	–	7.15 per cent	–	4.68 per cent	–	2.95 per cent

*As The Skywoods only has resale transactions from 2018 onwards, I will be comparing data over the last six years instead of 10.

Looking at the tables above, it's evident that Tree House, despite being the oldest development in the area, leads the pack. Among the four projects, it offers the lowest average price psf for two-bedders. However, due to its larger unit sizes, the overall property price is higher. When compared to the other three projects, buyers may find it worthwhile to pay an additional $100,000 to $200,000 for a notably larger living area.

In terms of growth rate between The Vales and Foresque Residences during the same period (2019 to 2023), The Vales clearly showed stronger appreciation at 10.63 per cent, compared to Foresque Residences at 5.33 per cent.

These are some of the recent two-bedroom transactions in Foresque Residences:

Date	Size (sqft)	PSF	Price	Level
Jan 2024	743	$1,525	$1,132,500	#15
Sep 2023	743	$1,519	$1,128,000	#09
Sep 2023	732	$1,571	$1,150,000	#16

Let's look at the costs involved should you decide to buy a two-bedder at Foresque Residences. For calculation purposes, I will assume an average price of $1,136,833 and a 10-year holding period. Since I do not have your numbers, I will presume you take the maximum 75 per cent loan and that the depreciation of $20,000 a year would be the cost of your car.

Purchase price	$1,136,833
BSD	$30,073
25per cent down payment	$284,208
75per cent loan	$852,625

 

Description	Amount
BSD	$30,073
Interest expenses (Assuming 30 year tenure at four per cent interest)	$307,574
Property tax	$11,260
Maintenance fee (Assuming $250/month)	$30,000
Car depreciation (for seven years since that is the maximum loan tenure)	$140,000
Total costs	$518,907

Option 2. Sell The Vales and buy Hillion Residences

As before, let's look at how Hillion Residences has been performing.

 

Year	Hillion Residences (resale)	YoY	D23 99y non-landed (resale)	YoY	All 99y non-landed (resale)	YoY
2019	$1,517	–	$898	–	$1,178	–
2020	$1,443	-4.88 per cent	$936	4.23 per cent	$1,173	-0.42 per cent
2021	$1,501	4.02 per cent	$1,001	6.94 per cent	$1,207	2.90 per cent
2022	$1,597	6.40 per cent	$1,108	10.69 per cent	$1,337	10.77 per cent
2023	$1,720	7.70 per cent	$1,267	14.35 per cent	$1,463	9.42 per cent
Average	–	3.31 per cent	–	9.05 per cent	–	5.67 per cent

Similar to The Vales, Hillion Residences was completed in 2017, with the first resale transaction done in 2019, providing limited data for analysis. Compared to other 99-year leasehold non-landed properties in D23 and across the island, Hillion Residences' performance over the last four years hasn't been remarkable.

However, it boasts a unique feature as an integrated development and stands out as the newest addition in the vicinity of the Bukit Panjang MRT station. Let's examine the other 99-year leasehold projects in the area.

	Hillion Residences	The Tennery	Maysprings
Lease start	2013	2010	1994
No. of units	546	338	636
Avg two-bedder price (in 2023)	$1,270,833	$1,066,500	$947,063
Avg two-bedder PSF (in 2023)	$1,789	$1,229	$1,121
Avg two-bedder size (sq ft)	710	868	846

 

Year	Hillion Residences (resale)	YoY	The Tennery (resale)	YoY	Maysprings (resale)	YoY
2019	$1,517	–	$1,135	–	$865	–
2020	$1,443	-4.88 per cent	$1,073	-5.46 per cent	$864	-0.12 per cent
2021	$1,501	4.02 per cent	$1,138	6.06 per cent	$885	2.43 per cent
2022	$1,597	6.40 per cent	$1,219	7.12 per cent	$977	10.40 per cent
2023	$1,720	7.70 per cent	$1,281	5.09 per cent	$1,084	10.95 per cent
Average	–	3.31 per cent	–	3.20 per cent	–	5.92 per cent

Given that Hillion Residences is an integrated development, The Tennery offers only one and two-bedroom types, and Maysprings is considerably older, it's not entirely fair to compare them directly due to their distinct characteristics.

Interestingly, Maysprings experienced the highest appreciation over the last four years. One potential explanation could be its location, which is comparable to Hillion Residences. Despite not being an integrated development, residents still benefit from the convenience of having Hillion Mall just across the street.

Comparing the average price psf for two-bedroom units, Hillion Residences is nearly 59 per cent higher than Maysprings. Buyers may view it as a worthwhile trade-off to opt for an older and more spacious unit at a lower price while enjoying similar convenience.

As both The Vales and Hillion Residences only recorded their first resale transactions in 2019, comparing their growth rates over the last four years, The Vales demonstrated significantly stronger appreciation at 10.63 per cent compared to Hillion Residences' 3.31 per cent.

These are some of the recent two-bedroom transactions in Hillion Residences:

Date	Size (sqft)	PSF	Price	Level
Mar 2024	710	$1,788	$1,270,000	#08
Jan 2024	710	$1,830	$1,300,000	#15
Aug 2023	710	$1,774	$1,260,000	#13

We'll also take a look at the costs involved should you buy a unit at Hillion Residences at the average price of $1,276,667 and hold it for 10 years.

Purchase price	$1,276,667
BSD	$35,666
25 per cent down payment	$319,167
75 per cent loan	$957,500

 

Description	Amount
BSD	$35,666
Interest expenses (Assuming 30 year tenure at 4per cent interest)	$345,407
Property tax	$13,780
Maintenance fee (Assuming $250/month)	$30,000
Total costs	$424,853

Option 3. Sell The Vales and buy a four-room HDB in Jelebu

As you've highlighted, one concern with this option is the 15-month waiting period after selling your private property. There's no assurance that HDB will grant the waiver. Consequently, if the waiver is not approved and you lack alternative accommodation, you'll need to rent a place, which could result in significant expenses.

Let's take a look at the price movements of HDBs as compared to private properties. 

 

Year	HDB Resale Price Index (RPI)	YoY	Non-landed Private Property Price Index (PPI)	YoY
2013-Q4	145.8	–	147.6	–
2014-Q4	137	-6.04 per cent	142.5	-3.46 per cent
2015-Q4	134.8	-1.61 per cent	137.4	-3.58 per cent
2016-Q4	134.6	-0.15 per cent	133.8	-2.62 per cent
2017-Q4	132.6	-1.49 per cent	135.6	1.35 per cent
2018-Q4	131.4	-0.90 per cent	146.8	8.26 per cent
2019-Q4	131.5	0.08 per cent	149.6	1.91 per cent
2020-Q4	138.1	5.02 per cent	153.3	2.47 per cent
2021-Q4	155.7	12.74 per cent	168.4	9.85 per cent
2022-Q4	171.9	10.40 per cent	182.1	8.14 per cent
2023-Q4	180.4	4.94 per cent	194.2	6.64 per cent
Average	–	2.30 per cent	–	2.90 per cent

Certainly, purchasing an HDB entails lower costs. However, if prioritising capital gains is important to you, opting for a private property might offer greater potential for growth. Over the past decade, HDBs generally experienced negative growth rates for most years until the pandemic happened.

As the market recovers, it's improbable that we'll witness similar growth rates as observed in the past three years. Additionally, the government's efforts to boost HDB supply to enhance affordability could further diminish the likelihood of good appreciation, especially for resale flats.

Here are some of the recent four-room transactions along Jelebu Road:

Date	Block	Level	Floor Area (sqm) /Flat Model	Price
Apr 2024	182	13 to 15	94Premium Apartment	$780,000
Feb 2024	185	28 to 30	91Premium Apartment	$758,000
Jan 2024	181	07 to 09	93Premium Apartment	$705,888

Presuming you purchase a unit at the average price of $747,963, let's take a look at the costs involved to hold the HDB for 10 years.

Purchase price	$747,963
BSD	$17,038
25per cent down payment	$186,991
75per cent loan	$560,972

 

Description	Amount
BSD	$17,038
Interest expenses (Assuming 25 year tenure at four per cent interest)	$194,656
Property tax	$5,780
Town council service & conservancy fee (Assuming $76/month)	$9,120
Total costs	$226,594

Option 4. Rent out The Vales and rent another property for own stay

When comparing the performance of The Vales with that of Foresque Residences and Hillion Residences, it seems to be outperforming the latter two. Considering that it only reached its MOP two years ago and examining the price comparison between it and its neighbouring projects, there could still be potential for growth, making it a viable option to retain for a few more years.

However, let's assess whether the figures align with this notion.

Project	Avg two-bedroom rental (Jan – Mar 2024)
The Vales	$3,600 (this was the last transaction in Dec 2023, no two-bedders were rented out in the last three months)
Foresque Residences	$3,356
Hillion Residences	$3,883
Four-room HDB at Jelebu	$2,725

As I do not have your exact figures, these are the assumptions that I will be making. 

Outstanding loan for The Vales: $400,000

Remaining loan tenure: 23 years (I am assuming you had the full 30-year tenure when you purchased the place in 2017)

Interest rate: 1.5 per cent for year 2025, 4 per cent for the remaining loan term

As before, let's assume a 10-year holding period. Given that the HDB offers the same convenience as Hillion Residences but is more affordable, for calculation purposes, let's say you rent that. 

Description	Amount
Interest expenses (Assuming 25 year tenure at four per cent interest)	$124,774
Property tax	$62,400
Maintenance fee (Assuming $250/month)	$30,000
Rental income (Assuming $3,600/month)	$432,000
Rental expense (Assuming $2,725/month)	$327,000
Total costs	$112,174

What should you do?

Let's do a quick summary of the costs incurred with the four options.

Option	Costs over 10 years
1. Sell The Vales and buy Foresque Residences	$518,907
2. Sell The Vales and buy Hillion Residences	$424,853
3. Sell The Vales and buy a four-room HDB in Jelebu	$226,594
4. Rent out The Vales and rent another property for own stay	$112,174

Upon reviewing the expenses, Option 4 emerges as the most favourable choice due to its lower overall costs. This is primarily because the purchase price of The Vales is actually lower compared to the other three options, which means a lower monthly mortgage.

In other words, the cost to replace is expensive because your mortgage is low especially when you're not upgrading in size. Additionally, the BSD has already been settled, constituting a significant sum saved.

However, this hinges on the condition that the rental expenses for an alternative accommodation are lower than the rental income generated from The Vales. For instance, if you were to rent a unit at Hillion Residences instead, the total costs would increase to $251,134.

Moreover, when considering the potential appreciation of the other three options, it may not be financially prudent to switch, given The Vales' superior performance. It's plausible that this trend will persist for a couple more years, especially considering it has a comparable price point with other two-bedroom units in the vicinity, which are slightly older. 

Taking all these factors into account, Option 4 appears to be the most viable choice. It allows you to stay near your parents in Bukit Panjang, be near an MRT station so you don't need to drive and has the lowest cost while allowing you to benefit from The Vales' growth.

ALSO READ: I just bought my first condo at age 50: Should my wife buy another condo or invest the cash?

This article was first published in Stackedhomes.