Upgrading To A Bigger Condo Doesn’t Make Much Financial Sense

Mr Budget came across a recent article which resonated a lot with him.

Lizardo shared this in a recent article titled “angst of replacing home”:

“A 17th floor condo at 1292 sq ft bought 12 years ago was $501,000, and is roughly worth $950,000 now. That sounds like so wow. BUT, to get an equivalent place, the price tag appears to be $1,300,000 for a 5-year resale condo on a mid-floor, with only ~1000 sq ft!  That’s a differential of +$350,000 for a smaller space.”

One of Mr and Mrs Budget’s plan is that we will be upgrading our current condo to another new place (can be private or HDB) in the future when we have more than 1 kid. 

Our current place is 872 sqft and comes with 3 bedrooms, one of which is the master room, the other one is a guest room, and another is a small room which we double up as a study room now because it is too small to fit anything larger than a single bed.

Hence, it is not feasible for the house to accommodate more than 4 person if we were to get a helper next time.

Based on our timeline, if we were to upgrade our current place in 5 years time from the current 872 sqft to something like 1100 to 1200 sqft feet, the price of a resale condo will be at S$1,500,000 – S$2,000,000 then, and even higher for new condo projects.

Here’s the rough value estimation of the condo we are living in now:

Condo ValuePSF872 sqft1100 sqft1400 sqft
Price In 2015$895.00$780,000.00$984,500.00$1,253,000.00
Price In 2019$1,261.00$1,100,000.00$1,387,100.00$1,765,400.00
Price In 2023$1,778.00$1,550,000.00$1,955,800.00$2,489,200.00
Projected Value

Although the price of our condo would have appreciated in 4 – 5 years time, if we were to move to another condo at 1100 sqft, we will probably need to top up at least S$400,000 – S$500,000.

And finding that additional S$400,000 to S$500,000 is not something that is easy, and will affect our retirement planning in a substantial way. We can fund that via a higher loan quantum, but that will increase our debt servicing ratio. 

Bigger sized private properties are really getting very expensive, and we may be looking at public housing and renovating it into something comfortable, should the time come for us to move to a bigger place. 

Anyone has any experience in terms of housing upgrade from a smaller unit to a bigger unit? How do you work out the finances? 

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5 thoughts on “Upgrading To A Bigger Condo Doesn’t Make Much Financial Sense

  1. John Smiths

    I’m in a similar situation as you! Our current 2-bedroom apartment size is 807 sq ft and just nice for my wife, baby, confinement nanny and I. When the helper comes in and the confinement nanny leaves, should still be okay to continue living here for a while.

    But as the baby gets older and/or we have another kid, we will most likely move into a bigger apartment. So we are starting to prepare our finances now by building up our cash balance. Not invest as much because of the expected drawdown of cash for downpayment and renovation.


    1. Mr Budget

      Hi John!

      Yeah i figured we wouldnt be the only one in this situation 🙂 The question how much of a cash balance do we need to accumulate, and does it make sense to put them all into a home equity. Will have to do a more in depth financial calculation when the time draws nearer.


  2. Rokawa

    If u wan a simple reference, just work out the mthly payments u be making.
    Pretty sure most ppl will exclude Reno cost, just loaan payment.
    What is the ratio u r paying for housing as a % of your income. Is it a overextended ratio? R u comfortable with it.
    A simple judgement if it were me would be if I can afford to clear the loan quickly b4 I’m 40 yrs old, with just cpf oa, then I’m ok for it. Coz my passive income NVR account for mortgage payment, always as no debt living expenses. Why 40. It was a retirement dream. It is a retirement goal.

    In my case. I have 1 absolute most priority that takes precedence over most. Retirement.
    I still move out or upgrade to a 4 room cause my previous loan already ended abt 3 yrs ago. And new loan is abt 6 years. There will be sections of ppl who will bemoan why not utilizing supposedly cheap low interest loan or even if I or spouse die, loan will be eliminated. Fair but knowing u haf no debt is a nice feeling even when I understand the concept of using other ppl money.

    Ntuc income did have a nice video to highlight sandwich generation. Prepare yur retirement and don’t depend on yur kids. If I were a kid, I would avoid staying condo if it means parents need less money to be supported during old age. Or can provide more toys due to more disposable income or smtg like tat. More space needed? I won’t deny the need. 65 sqm felt small with a son. There is an option to get a bigger space without resorting to condo which are costier. The other factor would be minimizing travelling time to work. Very impt. Kids can just go neighbouring sch 😡 unless prefer to be near extended family neighborhood.

    I feel mortgage payment as a % of income is a fair gauge. Just a matter of determining what is the benchmark. 33%? Or use the standard benchmark of tat 10% savings and how much % for rental or so.

    And or remember the joke. U spend so much money on yur condo but yur maid enjoy the home more than u since u busy out at work haha. Or u spent so much on home n Reno to make the best home. But on yur vacation days, u go overseas.

    If moving out is all for the kids. Not for ownself, then take into account that what kids wan are also time with the parents.

    When I upgrade to 4 room, wife still maintain part time job and took account that she may not be working. Though she make so much noise, i vocally highlight tat her mortgage payment is only $52. 2 mths later, yup she resigned. 1 mth after tat she got bored. Haha


    1. Mr Budget

      Hi Rokawa,

      Thanks for sharing your thoughts! This gives us much to think about – especially the point on spending much for condo but dont really enjoy the home. Having a clear priority definitely helps too, like for u, it’s to secure your retirement. I think that definitely help frame some of our considerations when the time comes. 🙂


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