Downsizing your home in Singapore is something you may have to consider at one point in your homebuying journey. Perhaps you started with a BTO flat and upgraded to a larger private property, but now have an unexpected expense to pay for. Or you’re a senior whose kids have all moved out and empty nest syndrome is hitting you hard.
Whichever the case, selling a larger property and moving to a smaller one is not always a bad thing–in fact, ‘rightsizing’ can be a strategic move. In this article, we’ll touch on the lifestyle and financial considerations to make, and how you can make a seamless transition into your new place.
Why should you downsize your home?
- If you’re having trouble maintaining your home
- If you need the cash for an unexpected expense
- If you want to create a financial cushion for retirement
- If you do not enjoy living in a large home anymore
Effectively, there are two main motivations for considering downsizing: financial and/or lifestyle reasons. We’ll elaborate more below.
When should I downsize my home?
There is no ‘best’ time to downsize your home. But for many, downsizing their home usually takes place when their adult children have moved out. Additionally, cleaning and upkeeping a larger home with fewer occupants may be too cumbersome, especially as you enter your golden years.
For those living in a landed home, downsizing to a single-storied home or non-landed private property may make sense. Not only is it easier to maintain, but also fewer stairs could improve accessibility in your old age.
Downsizing your home could also be part of retirement planning. Assessing your assets before you retire includes taking stock of your living arrangements. If most of your equity is tied up in property, downsizing to a smaller home can be a smart financial move. Aside from freeing up cash, you will likely pay less home insurance premiums, have less property tax, and lower your home maintenance costs and utility bills.
Other reasons to downsize include experiencing a change in income, having to pay for an unexpected expense, and wanting to have cash for other investments.
How do I start downsizing my home?
When downsizing your home, you want to maximise profit and minimise costs. You also want to ensure you’re making a move that makes sense for you. From selling your current home to moving into your new one, here are 6 steps on how to downsize your home.
1. Know when is the best time to sell
The first step is to sell your property. The trick to timing the market right is part observation and part luck.
Currently, property prices are at an all-time high; it is a seller’s market. However, there are signs of price resistance and price growth has slowed significantly. Over the past few years, the Singapore government has also stepped in with a slew of measures to curb foreign appetite, boost supply, and help first-time homebuyers get onto the property ladder.
The question has since shifted from “Will property prices come down?” to “When will property prices come down?” But no matter the state of the property market, there will always be genuine buyers in need of a home.
Many agents and buyers are holidaying overseas in December. Singapore sees many observe the Lunar New Year; so sales might be slow during this period due to celebration, preparation, and rest. Some may be ‘pantang’ to do renovation work or move into their house during the seventh lunar month.
Hence, you’ll notice demand dips during the year-end, Chinese New Year, and the Hungry Ghost Festival periods. If your potential buyers and property agents are unavailable, trying to sell your home during these lull periods may not be the wisest choice.
2. Price your home reasonably
As a seller, you want to list a high, but reasonable asking price. To do that, you need to know how much your ex-neighbours have sold their homes for.
If you’re selling off an HDB flat, you can view the resale flat prices of properties in your area on the HDB website. For private property owners, you can look at past private residential property transactions on the URA website. Alternatively, you can look up property listings on sites like PropertyGuru to check out past transaction data and how much other people are selling their properties for.
Usually, there is a slight disparity between the listing and actual transaction prices. Knowing the difference will give you a better gauge of how much buyers are willing to pay. With this information, you will know how to price your home accurately.
3. Consider selling your home without a property agent
If you’re trying to maximise your profit, you could consider trying to sell your home without a property agent. A seller’s agent usually takes a 2% commission for HDB flats and a 2 to 4% commission for private properties.
The downside to this DIY approach is you will have to find buyers, advertise, take care of the paperwork, and negotiate prices. Engaging the services of a property agent can save you time and streamline the selling process.
4. Clean & stage your home
You want your home to look as good as possible on online listings and during house viewings. The goal is to have a blank slate so potential buyers can imagine themselves living in your property. You want your home to look as bright and spacious as possible.
Clean up, declutter, and repair any damaged items. You could even give your home a fresh coat of paint Simultaneously, begin packing and putting boxes and bigger items in storage. Once the space is cleared, clean and stage your home. Rearrange furniture, buy some fresh flowers, press your sheets, and style your bookshelves–you want to present your home in the best possible light.
Once that’s done, it’s time to find the right buyer. Then, do the necessary paperwork and pay the relevant fees and taxes that come with selling a house.
5. Assess your lifestyle & financial needs
Before you begin searching for your new home, you should assess your lifestyle needs to know what kind of home is suited for you. Consider this in terms of space, connectivity to transportation networks, access to greenery, being close to family, etc.
Then, take stock of your finances. You want to know how much loan you can get and how much monthly mortgage repayments you can make comfortably.
If you’re moving due to financial difficulties, then you’ll want to go for the most economical property. Those who have no children can consider short-lease 2-room Flexi flats. Alternatively, older 3-room flats in estates further away from the CBD could be affordable options. When financing your home, seek out a loan that finds a good balance between long-term interest costs and your cash flow requirements.
For financially comfortable retirees, you have more leeway to spend on a living space. Likewise, you might want to choose a home loan with a shorter loan tenure and pay off your mortgage as early as possible.
If you’re someone who is used to having a large garden, either move close to a park or another property with a balcony where you could build a small outdoor garden. Moving into a luxury studio apartment in the heart of the city would not be compatible if you desire easy access to green spaces in your backyard.
Questions to ask:
- What is my current lifestyle like?
- How do I envision my future lifestyle to be? How long do I intend to live this way?
- What are my non-negotiables? How can I find a compromise with my wants?
- What is my budget for my new home?
- How can I finance my new property?
6. Begin your new home search
Once you’ve come up with a list, you can begin narrowing down the type of property you want and which locations to look in. At this point, you should be aware of the various housing options.
Retirees downsizing from a larger to smaller HDB flat (3-room or smaller) should also know about the Silver Housing Bonus. You can receive up to a $30,000 cash bonus if you meet the eligibility criteria. The less mobile can think about right-sizing to Community Care apartments. The joint offering by MND, MOH, and HDB integrates senior-friendly housing with care services.
Another thing to take note: if you’re downsizing from a private property to an HDB resale flat, know there is a 15-month waitout period (for non-subsidised resale flats). If you intend to use HDB grants and subsidies, there is a 30-month wait-out period. The only exception to this rule is if you’re aged 55 and older and are buying a four-room or smaller resale HDB flat.
All that’s left to do is attend viewings, find a new home, and pay the relevant fees and taxes to purchase it.
How to downsize your home in Singapore
As with any property purchase decision, downsizing your home should be done with careful consideration. Do your research, budget well, and ensure you can comfortably finance your next home. And at any point you feel unsure, speak to a professional about the property market and how you can achieve your financial goals.
Whether your move was prompted by a financial change or a desire for a simpler existence, we hope this article has been useful for you! Here are some articles to kickstart your new home search:
For more housing guides:
- Ultimate guide to mortgages in Singapore
- Co-owner vs essential occupier
- Should you rent out a room in your HDB flat or condo?
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