Buy a brand-new landed house or buy an old house and rebuild? Which is better in Singapore?

The biggest advantage is obvious: convenience.

The house is already standing. The structure is new. The kitchen and bathrooms are completed. The windows and doors are installed. The air-conditioning is installed.

You don’t have to go through design, authority submissions, demolition and 18 to 24 months of construction. You can collect the keys and start preparing to move in.

But there is one cost that buyers sometimes underestimate.

Your purchase price is not your final move-in cost.

A brand-new landed house may be completed, but that doesn’t necessarily mean your spending stops when you collect the keys.

You may still need carpentry, wardrobes, loose furniture, light fittings, curtains and blinds, appliances, minor touch-ups and some personalisation.

Depending on what has already been provided by the developer and your own expectations, I would personally buffer at least another S$200,000 after buying a new landed house.

Can it be less? Of course. It depends entirely on the individual and what is already included in the house.

But if I’m doing my financial planning before buying, I would rather have that buffer available than assume I’m moving into a completely finished home without spending anything else.

So a S$6.5 million new landed house may realistically become:

Purchase price: S$6.5m
Move-in works and furnishing buffer: S$200k
Total: approximately S$6.7m

And a S$6.8 million house can quickly become approximately S$7 million before you are truly settled in.

That changes the comparison.

This is where I start looking beyond whether the house is new.

A developer-built house can be beautiful. But was it designed for your family?

There may be six bedrooms when you only need four. The master bedroom may not be as large as you want. There may be a swimming pool you don’t particularly care about.

The kitchen may not suit the way your family cooks. You may prefer a large entertainment area instead of another bedroom. The developer may also have spent heavily on finishes and features that aren’t particularly important to you.

There is nothing wrong with that. That’s simply the nature of buying a completed house.

You are buying somebody else’s interpretation of what a good landed home should be.

And if I’m paying S$6 million or S$7 million for a new house and immediately changing the kitchen, wardrobes, bathrooms and other parts of the house after collecting the keys, then I need to ask myself how much value I’m getting from paying the new-house premium.

Now let’s look at the other option.

Suppose I buy an older inter-terrace sitting on approximately 1,700 sqft of land for S$4.5 million. The house might be 30 or 40 years old. The kitchen might be outdated. The bathrooms might need to go. The layout might not suit my family.

But if I’ve already decided to rebuild, most of that doesn’t matter to me.

I’m looking at something else. Is the land good? Is the location right? What can I build on it? What are the site constraints? Does the total cost make sense?

Once I’ve decided that the existing house is coming down, I’m not really buying the house anymore.

I’m buying the land and its redevelopment potential.

Now add the rebuild cost.

Let’s say I set aside approximately S$1.8 million for the rebuild.

Older inter-terrace: S$4.5m
Rebuild: S$1.8m
Property plus construction: approximately S$6.3m

There will still be rental and financing costs during the 18 to 24 month rebuilding period, and those should be taken into consideration.

I would keep stamp duty out of this headline comparison because it applies to both purchases. In fact, all else being equal, the higher purchase price of the brand-new property would result in a higher Buyer’s Stamp Duty.

For this comparison, I want to concentrate on the cost of acquiring the property and getting the house ready for my family.

Now I’m no longer comparing an old S$4.5 million house against a S$6.5 million new house. I’m comparing the finished home against the finished home.

That is the comparison that matters.

This is where rebuilding becomes interesting.

I’m not simply getting a new house. I’m getting the opportunity to design the house around how my family actually lives.

I decide how many bedrooms we actually need. How large should the master bedroom and bathroom be? Do we need a lift? How much storage does the family really use?

Maybe I want a balcony and larger windows and doors to bring more light into the house. Maybe I would rather sacrifice one bedroom and create a much larger entertainment area instead.

These are decisions I get to make based on how my family actually lives, rather than adapting our lifestyle around a house that somebody else designed.

And importantly, I get to decide where the construction budget is spent.

I’m not trying to build the biggest house possible. I want to build the right house for my family.

Buying the land today and completing the house two years later

There is another part of this equation that I think is important.

If I buy the older property today for S$4.5 million, I have locked in the land at today’s price. I then spend the next 18 to 24 months rebuilding.

When the house is finally completed, the relevant comparison is no longer simply what a new house cost when I bought the land two years earlier.

The question becomes: what is a comparable newly completed inter-terrace on similar land in the same location selling for when my house is completed?

If comparable newly completed houses are selling around S$6.5 million to S$7 million at that point, I can compare that against my own total cost.

There is no guarantee that property prices will increase during those two years. But the principle is important.

You are buying the land at today’s price and creating the finished house for the market two years later. That is part of the rebuild equation.

I don’t want this article to sound like buying old and rebuilding is automatically the better decision. It isn’t.

There is a very real price to rebuilding. And I’m not only talking about the S$1.8 million construction cost.

You need somewhere to live for 18 to 24 months.

If you’re demolishing and rebuilding the house, your family needs somewhere else to stay. Realistically, I would prepare for at least 18 to 24 months.

That means renting another property, moving your family out, moving your belongings, living somewhere temporary, then moving everything again when the new house is completed.

The rental cost itself can be substantial. But there is also the inconvenience.

Your children’s routine may change. Your travelling time may change. Your family has to live in a temporary home for almost two years. That needs to be included in the decision.

Then there are hundreds of decisions.

Building your own home sounds exciting. It is. But it is also a lot of work.

Layouts, materials, windows, doors, tiles, sanitary fittings, carpentry, lighting, electrical points, air-conditioning, kitchen appliances, colours and hundreds of small details eventually need to be decided.

This is also where I think who you choose to manage the rebuild makes a huge difference.

A homeowner shouldn’t necessarily have to personally coordinate every architect, engineer, designer, supplier and contractor involved in the house.

Especially for busy professionals, I actually think the better arrangement is the opposite. Tell us clearly how your family wants to live, what matters to you and what doesn’t. Then let the right team manage the hundreds of decisions needed to get you there.

That’s one reason I’ve always believed strongly in the design-and-build approach.

The homeowner still makes the important decisions: how many bedrooms do we need? How do we want the kitchen to work? What matters to us in the master suite? Where are we prepared to spend more?

But once those priorities are clear, somebody still needs to translate them into drawings, coordinate the consultants, control the budget, resolve the technical details and make sure everything eventually gets built properly.

For some homeowners, being involved in every detail is part of the enjoyment. For others, especially those with demanding careers and businesses, that’s the last thing they want.

They don’t want another full-time job. They want someone they trust to build their house.

That can make the rebuilding experience very different.

This is where buyers need to be careful.

You cannot simply calculate:

S$4.5m purchase price + S$1.8m rebuild = S$6.3m

and conclude that you’ve found a bargain.

Before I buy, I want to understand the property properly.

• Where are the sewer lines?
• What are the drainage requirements?
• What is the existing electrical supply?
• Does it require upgrading?
• Is piling required?
• Are there retaining wall issues?
• Are there significant level differences?
• What are the planning constraints?
• What setbacks affect the design?