Connect with us


Why A HDB Flat As Your First Home Makes More Financial Sense

If it’s good enough for 80% of people in Singapore, it should be good enough for you.

In Singapore, more than 80% of Singaporeans live in HDB flats. Our HDB developments are considered one of the best public housing schemes in the world. And while you see thousands of unsold condominium units around in Singapore today, you hardly ever see any unsold HDB units around your estate.

Buying a HDB flat isn’t just a first step towards owning your home in Singapore; it is also a first step towards building a (hopefully) financially prudent life. Let us explain why.

Don’t Rent, Own

We believe buying and owning your own place is better than renting. This is especially true in your own home country.

When you pay monthly rent to someone else, you are actually helping the person to own their property through the rent you are paying them. For example, their monthly mortgage could be $2,000 while the rent you are paying is $2,000. So you are indirectly funding the acquisition of the flat for your landlord.

What would be a more ideal scenario would be for you to pay that “rent” to yourself. That way, the “rent” you pay each month translates into equity (i.e. ownership) that you own for your own home, which makes more financial sense in the long run.

Grant Subsidy Available

We are not sure about you but we love maximising all the grants we can get our hands on from the Government. As it is, Singapore is already an expensive country to live in and we see no good reason not to accept all the entitlements from the Government.

When you buy a HDB flat, you are entitled to all the various types of government grants available. These include the Additional Housing Grant (AHG), Special CPF Housing Grant (SHG), Family Grant (for resale flats) and Proximity Housing Grant (for resale flats). A grant helps reduce the cost of the flat you are buying, be it a BTO or resale flat.

Read also: 5 Things You Must Know Before Buying Your First HDB BTO

Lower Interest Cost

Let’s take a math question. If a HDB flat costs $400,000 and a condominium costs $1,000,000, the difference in price is $600,000. Pretty easy isn’t it?

Unfortunately, that answer is only true if you have enough money to pay for the entire property at one go, which only few first-time buyers are able to. A more accurate picture of the cost would be as follows.

HDB Flat

Condominium Unit




Down Payment






Loan Duration

20 Years

20 Years

Interest Rates



Monthly Repayment



Total Cost Of Home (including interest) $456,800 $1,226,720

As you can see, once interest cost is included into the calculation, the actual price difference between a $400,000 HDB flat and a $1,000,000 condominium unit is $769,920, and not $600,000.

Easier To Upgrade To A Private Property

In Singapore, the current HDB regulation is created in such a way that you can own both private properties and a HDB flat, provided you buy a HDB flat first, and then a private property after the 5 years minimum occupancy period (MOP).

If you bought a private property first, and then subsequently decide to buy a HDB flat, the current regulation states that you will need to sell your private property within a 6-month period. You will then have to stay at your HDB flat for a minimum of 5 years before being allowed to buy a private property again.

Because of this regulation, it would better for a first-time homeowner to buy a HDB flat first, and then consider owning a private property if his or her finances allow in the future.

HDB or private property? Which would you prefer getting first. Share with us your thoughts on our Facebook Page. Follow us as well on Facebook to stay up-to-date with the latest insights in the Singapore’s personal finance space.

Top Image aims to provide interesting, bite-sized and relevant financial articles.

Learn together with like-minded Singaporeans at the Personal Finance Discussion SG Facebook Group by discussing a range of personal finance topics.

If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.