Top 5 Questions to Ask : Is Singapore Property Investment for Me?
Singapore has long been a popular destination for property investors, both local and international. The city-state's stable economy, strong infrastructure,...
Read More
TLDR
One-bedroom condos in Singapore are attractive for their lower entry price and rental potential, but buyers should be aware of key risks. These units can lack flexibility for changing personal needs (like accommodating family or future life events) due to limited space. Resale and rental prospects depend heavily on location, supply of similar units, and market sentiment. Selling a private condo also triggers a 15- to 30-month wait before buying a flat, which can complicate future moves. One-bedroom units typically face higher competition for tenants and may be harder to resell since most buyers prefer larger family homes. Owners also have less influence in en-bloc sales or condo management. Consider your long-term plans, exit strategy, and lifestyle needs before buying; a slightly larger unit may offer better flexibility and security.
In a climate of increasing interest rates and soaring prices, one-bedroom condominiums are frequently viewed as an attractive purchase due to their lower price point. For many individuals, they signify the most economical option for private property ownership and a possible entry into the rental market. However, is the lower cost truly as secure as it appears? Although a smaller investment may mitigate certain risks, it does not eliminate potential drawbacks—particularly in the face of unforeseen life circumstances.
For instance, if your elderly parents suddenly require accommodation or a sibling needs a place to live urgently, having only a one-bedroom unit may restrict your ability to assist. With a space of merely 500 sq. ft. or less, accommodating anyone other than yourself can prove challenging. Even a two-bedroom unit provides minimal additional flexibility, potentially necessitating that your relatives seek rental options elsewhere, while others with more spacious homes might be able to offer temporary refuge.
Therefore, before making a decision, it is essential to consider these critical risks associated with purchasing a one-bedroom unit:
1. The location where you purchase your one-bedroom condo is important.
Certainly, if you’re purchasing for your own use, then almost anything is acceptable. However, if you’re considering a potential future sale, the location will be significant depending on the type of unit.
For example, think about acquiring a one-bedroom unit in a sought-after location such as Cuscaden. Although the design may be stunning and the surroundings opulent, the crucial question is: how many buyers in the market will be able to afford such a specialised property when it’s time to sell? In this price bracket, buyers often emphasise space, as demonstrated by developments like Park Nova, where the larger units were the first to be sold.
Similarly, you should also consider the availability of one-bedroom units in the vicinity. You might find yourself in an area with strong rental demand, yet there could be an oversupply of one-bedroom units – which is obviously not ideal when it comes to selling.
2. First-time home buyers should keep in mind that there is a waiting period before purchasing flats if you decide to sell the one-bedroom apartment.
When selling a private property, there is a waiting period of 15 months before you can purchase a resale flat, and 30 months before buying a BTO flat. Unless your one-bedroom unit is going to be your first and only home, this can lead to potential complications later on.
A clear example would be if you get married and require a larger space to establish your home, or if you’re renting out the one-bedroom and your living situation changes (for instance, if you’ve been staying with parents or in-laws, but they decide to sell).
In addition to the challenges of selling (hopefully, the market isn’t down at that time), the waiting period can create significant logistical hurdles. You may find yourself needing to rent during the 15-month wait or for 30 months if you opt for a BTO flat. Keep in mind that if you choose the resale option, it will likely come at a higher cost compared to a BTO flat.
We recommend having a well-defined exit strategy before making a purchase, just in case such situations arise. If you already anticipate getting married or having your first child in a few years, it might be wise to save up and consider a larger first home (perhaps starting with a bigger HDB flat initially and upgrading from there).
*This does not apply to Singaporeans aged 55 and above who are downsizing to flats of four rooms or smaller.
3. Take note of the number of additional small units within the development.
There can be notable variations in returns or overall performance, influenced by the mix of units. For instance, a small unit in a condominium populated by other one or two-bedroom apartments may lead to heightened competition when searching for tenants. This can also impact future resale opportunities, as certain homebuyers prefer not to reside in exclusively small-unit condominiums – even if they are single themselves (some individuals simply prefer not to live in areas predominantly occupied by transient tenants).
4. When it comes to smaller units, one-bedroom flats may have disadvantages compared to two-bedroom ones.
Some real estate agents might advise against purchasing anything smaller than a two-bedroom property. There is some merit to this advice, as two-bedroom units tend to be easier to rent: they provide tenants with the option to find a roommate, which can reduce the likelihood of vacancies during a challenging market.
Additionally, there’s a matter of negotiation: it’s often possible to convince someone to pay a little extra for a two-bedroom due to the additional space; however, it’s significantly more difficult to get someone to agree to a one-bedroom if they feel it’s too cramped. For certain couples, a one-bedroom is simply not an option.
Lastly, in challenging circumstances, you may discover that a two-bedroom can serve as a home for you and your partner, especially if there are numerous vacancies or a sluggish rental market. In contrast, a one-bedroom may remain empty and unutilised in such situations.
5. There is a greater vulnerability in the rental market.
Even if you do not rent out your one-bedroom flat, the rental market can still have an impact on its value. This is due to the high demand for one-bedroom properties among renters, with many prospective buyers being landlords themselves.
The rental market can be quite volatile. For example, during economic downturns, businesses may decrease the number of expatriate staff or reduce housing allowances, which can negatively influence the value (or perceived value) of a one-bedroom, particularly in prime areas where expatriates tend to rent.
Government policies, such as cooling measures, also play a role in this dynamic. An increase in the Additional Buyer’s Stamp Duty (ABSD) on second properties might result in a rise in one-bedroom sales as investors look for more budget-friendly options than family condominiums; however, it may also reduce interest in rental properties altogether, making it harder for one-bedrooms to attract buyers. It is important to mention that family units continue to dominate the condo market, and many buyers do not require a one-bedroom unit.
6. Keep in mind that your influence is limited during an en-bloc or general meetings.
One-bedroom units typically have less square footage and a lower market value, which helps keep maintenance expenses down. However, it’s important to note that an en-bloc sale requires an 80 per cent agreement, determined not by the number of owners but by the total strata area owned.
This implies that owners of larger family-sized condos will wield more influence, both in the everyday management of the condo and in decisions regarding an en-bloc sale. It’s not uncommon for owners of smaller units to feel marginalised or overlooked, despite residing in the same development.
Overall, a one-bedroom condo should be considered primarily as a strategy for rental yield, as its lower price point can make it an appealing investment for rentals. On the other hand, family-sized condos are generally a more secure option if you’re aiming for resale profits, given the larger pool of potential buyers.
In terms of home ownership, one-bedroom units necessitate a level of confidence in your lifestyle circumstances; there is significantly less space to accommodate changes, such as finding a partner or expanding your family.
For further insights into the Singapore property market and its diverse housing options, follow me here. If you’re interested in a more detailed consultation, feel free to reach out here.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
What If Sellers Back Out of a Deal?
TLDR When a seller unexpectedly withdraws from a property transaction before a contract is signed, they are legally allowed to...
Read More
Top 5 : Benefits of Investing in Older vs. Newer Singapore Property Market Condos for International Buyers?
Singapore's property market has long been an attractive investment destination for international buyers, offering a stable and well-regulated environment with...
Read More
Top 5 Reasons : Why is Supply so tight for Singapore Property?
Singapore's property market has been experiencing a tight supply in recent years, leading to increased demand and rising property prices....
Read More
35 Brand New Condominiums Nearing Their ABSD Deadline 2023
TLDR The blog post discusses the looming ABSD deadline for several new launch condos in 2023, highlighting the impact on...
Read More
Top 5 Tips for First-Time Chinese Buyers Looking to Invest in Singapore Today
Top 5 Tips for First-Time Chinese Buyers Looking to Invest in Singapore Today Here are the top 5 tips for...
Read More
How Can You Prepare for Retirement in an Expensive Real Estate Market? Discover Your Options Now!
TLDR The article discusses the challenges of investing in a second property for retirement amidst Singapore's real estate market conditions....
Read More
5 Most Affordable Areas to Invest in Property in Singapore
Singapore is known for being one of the most expensive cities in the world, particularly when it comes to property...
Read More
Top 5 Most Common Red Flags To Watch Out For When Investing In Singapore Property
Investing in Singapore property has long been considered a lucrative and stable way to build wealth. However, like any investment,...
Read More
5 Reasons : Why Investing In Singapore Property Is The Best Decision I Ever Made
Investing in property is a great way to build wealth and secure a stable source of passive income. When it...
Read More
Can You Make the Leap to a Condo Upgrade in 2024?
As the Chinese New Year festivities wind down, folks are once again on the prowl for new homes, and understandably,...
Read More
Should You Make A Partial Prepayment On Your Home Loan In 2025?
TLDR Partial prepayments on home loans can lower your monthly payments and reduce long-term interest, but the decision isn’t always...
Read More
Discover the 7 Unique Attributes of Real Estate Investing
TLDR The post highlights the benefits of investing in real estate, such as high leverage, capital appreciation, income generation, usability,...
Read More
I Purchased My First Property in My Mid-20s: Avoid These Common Mistakes!
TLDR When it comes to property ownership, Charles learned valuable lessons through his journey as a youthful homeowner. From opting...
Read More
Exploring the Allure of Freehold Titles Among Singaporeans
TLDR Freehold properties remain highly attractive in Singapore due to their scarcity, lasting value, and legacy potential. Buyers are drawn...
Read More
Downsizing From A Spacious 4-Bedroom Condo To A Cozy 2-Bedder: How I Chose A Condo Over A HDB
TLDR Mdm Sim's decision to trade her four-bedroom house for a two-bedroom condo is explored, highlighting the benefits of right-sizing....
Read More
SP Utilities Guide – Quick Guide To Setting Up Utilities In Singapore For Your New Home
TLDR Setting up utilities in Singapore for a new home is hassle-free. Contact SP Services for electricity and water accounts,...
Read More
What Type of Properties Can a Permanent Resident PR Buy in Singapore?
TLDR When it comes to purchasing property in Singapore as a Permanent Resident or Foreign National, there are specific restrictions...
Read More
Top 5 Rules for Investing in Singapore’s Property Market – Expert Insights!
Investing in Singapore's property market has long been considered a lucrative and stable investment option. With its robust economy, strong...
Read More
Love Across Borders: Navigating Singapore’s Housing Choices for Mixed-Nationality Couples
TLDR Marriages between Singaporeans and foreigners now make up about 20% of all marriages, but housing options for these couples...
Read More
