new flats vs. resale- the classic dilemma

New Flats:

There are basically 2 types of flats which you can buy 'fresh' from hdb. Those already built (aka ballot flats -hahaha yup I do note that I've made it sounds strange), and those that are built-to-order.

Flats that are currently available (ballot flats) are usually either in short supply, or in less desirable locations. The short supply has also meant that instead of a bi-monthly ballot for the sale of flats, applicants can now only apply bi-annually for these ballot flats. (ie: see whether you lucky la) This basically means that you will have to wait for those 2 magical times in a year where you can apply for your flat, and hope & pray that your stars are aligned. :p It's obviously not ideal, but for many couples, it's pretty much a 'bo pian' scenario if you want cheap(er) flats that those currently out in the market.

Build-to-order flats are basically hdb flats which have not been built yet, but will be ready in 3-5 years time. It is obviously not ideal in terms of timing (ie: you have to be married before you have a home together), but again, these flats would be cheaper than those currently in the market in the same area.


Resale Flats:

Resale flats are flats that are for sale in the open market. They allow for flexibility in terms of area to stay, etc. However, they are more costly as they are bought at market rates. In addition, many sellers are presently looking to sell their hdb property for amounts higher than they are valued at due to market demand forces. (E.g: 5 room HDB in Hougang valued by real estate valuers at $400k, but seller is asking for $430k) This 'extra' is commonly referred to as 'cash over valuation' or COV.

What this means is that the potential buyer will need to fork out that extra $30k in cash from his own pocket, as loan amounts from HDB or banks will only allow for mortgages for up to 90% of the valuation of the property. And no- in case you're wondering, you will not be able to use your CPF money to pay off that extra $30k. You can only use your CPF monies to offset the valuation amount of the house.

HDB has a nifty site where you can see the market statistics of resale flats around the area you're interested to live in. They carry average COV amounts per area as well as the selling price of hdbs in the area.

Again, a whole load of reading to do.. but well worth it! :)