HOUSING MATTERS
The “Must-be” Reasons Why Resale Flats Are More Expensive Than A BTO
As reported, the price of resale flats are coming down but nevertheless, it is still a good amount of money being used on the property. The social norm is that the price of a Resale flat is higher compared to a BTO (Build-To-Order) flat.
With that, let’s debunk the reasons why a Resale flat is listed at quite a high price. And maybe you can feel justified by the reasons. Or maybe you even will shift your mindset and buy a BTO flat instead.
It is “bigger”
This is rather true where most resale flats are bigger than the ones of a BTO flat. History shows that the in the early 1990s, the size of a 5-Room flat is 123 square meters. Currently, an average 5-Room is about 110 square meters.
A difference of 13 square meters. That approximately can be another storeroom for you.
Since most properties are priced on a per square foot basis, it is only fair for a resale flat (which is bigger), to charge you a higher price.
Location and Convenience
Resale flats are always known to have a good location in mature estates.
Hence if you want a good location, you do have to pay a price for it.
When we talk about location, we are also talking about the short distance of reaching a location that we need to go. It could be your office, your child’s school or even a shopping mall.
In other words, you will be saving either time or money. Whatever the reason, you get to enjoy the convenience.
Thus due to the convenience, you have to pay extra for it. It is the same as food delivery services. If you want the convenience of having food delivered to your doorstep, you would need to pay extra (delivery cost).
Savings on Renovation
Typically when you buy a BTO flat, you would really need to do an extensive renovation for your flat. You are given like a blank piece of paper and you would need to draw on it to create your “art”
Starting from scratch would cost you a good amount of money.
However, if you buy a Resale you do have that possibility of having your flooring already fixed. If you are lucky enough, maybe an installed air conditioning system as well.
Well to compensate for the already prepared and renovated flat, you do have to pay extra when purchasing on the flat.
So is it worth it, to pay that much extra?
The factors above are debatable. Like for example, you can mention the cost of renovation. Sometimes the renovation for a Resale flat might is higher than a BTO.
Nonetheless, it all comes down to weighing out the pros and cons. Sometimes the price of a pair of shoe might be absurd but you still buy it due the brand and comfort.
But do approach it differently when it comes to buying a property. It will be one of the most expensive purchases in your life and there is no reset and restart button.
Most likely if the purchase price of the property is high; your monthly payment for the mortgage should be high as well. Hence, it a large financial commitment for you for the next 25 or 30 years.
If you put most of your income in financing your home, it is somewhat the same as putting all the eggs in one basket. Thus, there maybe not much room for you to focus on your other financial goals.
Preparing for retirement
To add on, since you are buying a resale, you do not have a full 99 years lease.
If so happen you live beyond the remaining lease of the lease of the flat, you would need to find another place to live in. By that time, you might already have retired.
The question is, do you have the money to buy or even rent a property when at an old age?
It might already be tough to manage your retirement funds for your daily expenses. There might not be enough for any other extra expenses.
That is the end of the article and hope the information is useful. Do share it with your friends and families. Till next time.
Disclaimer
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
