Investing, Real Estate Investing

Hidden Costs Of Real Estate Investing In Singapore

Owning a property, especially in hot markets like Singapore, can be a lucrative investment. With so little land and so much demand, property prices tend to grow sky-high over time. This price appreciation has mainly benefited the older generations who bought their properties at fractions of what it would have cost them today.

Because of that, many of us buy properties for investment purposes hoping to make a handsome profit.

Recently, I was looking to buy a new property, not for investment, but simply because my family was growing too big for our existing house.

While embarking on this endeavour, I discovered some not-so-obvious cost incurred when buying a property.

What are the costs of buying and selling real estate? What are the costs of owning them?

These questions led me down the rabbit hole as I began digging into the various rules and regulations on real estate investing in Singapore.

Some Context On Singapore’s Housing Market

In Singapore, if you are looking to purchase a house to stay, there are two categories of housing from which to choose.

The first category of housing is government-subsidised housing, known as HDB, named after the Housing and Development Board.

The second category is private housing which are properties built and sold by private developers.

The main difference between the two is the price – HDB is much cheaper. With a lower cost, HDB, however, comes with many restrictions.

So if you do qualify for a HDB, it will save you a lot of money.

However, the flip side is, while you save a lot of money, the price appreciation of HDB properties will not increase as fast as private properties.

With that context, let us look into the various costs of buying or selling a property in Singapore.

#1 Real Estate Agent Commission

Whether you are buying or selling a property, you will have to go through an agent who will broker the deal. 

Here is a general guide of the commissions involved:

A sell-side agent, or also known as a seller agent, will help you sell your property and will charge a commission for his or her services offered, usually around 2% of the sale price.

A buy-side agent, or also known as a buyer agent, will help you buy a property and will charge a commission of 1% of the purchase price. However, this commission only applies if you are engaging a buyers’ agent when buying HDB resale flats.

For the purchase of private or landed properties, even if you had engaged a buyers’ agent, the buyers’ agent does not charge a commission, but rather, the sellers’ agent splits the commission with the buyers’ agent.

There are no general rules or regulation concerning commissions – it may vary from agent to agent.

HDB resale flatsPrivate or landed properties
Buyer agentBuyers pay 1% commissionBuyers do not pay commission. Sellers’ agent splits commission paid from the seller with the buyers’ agent.
Seller agentSellers pay 2% commissionSellers pay 2% commission

So, if you are looking to sell a house for $500,000, a 2% seller agent commission would mean that you will only get $490,000. 

If you were buying a HDB and engaged a buyer agent to purchase a property for $500,000, you will be paying $505,000 in total – $500,000 for the house and $5,000 for the agent’s commission.

Do also note that you may need to pay an additional GST (Goods & Services Tax) on top of the agent’s commission as well, usually for agents registered under larger real estate companies. 

#2 Stamp Duty

Stamp duty is a tax on buying or selling properties in Singapore. It also applies to property rental and mortgage.

When purchasing your first property, you will need to pay a Buyer’s Stamp Duty (BSD)

BSD Rates from

If you already own a property and are planning to buy a second or third, you will be required to pay Additional Buyer’s Stamp Duty (ABSD) on top of the BSD.

Singaporean citizens are required to pay ABSD of 12% for the second property and 15% for the third property.

Singapore permanent residents or foreigners will need to pay ABSD on top of BSD even if it is their first property purchase in Singapore. For permanent residents, the amount is 5% for the first property and 15% for the second. For foreigners, it is a whopping 20%.

ABSD Rates from

If you are selling a property before holding it more than 3 years, you are subjected to a Seller’s Stamp Duty (SSD).

Number of years you had held the propertySSD Rate
Less than one year12%
One to two years8%
Two to three years4%
More than 3 yearsNo SSD payable
Source from

#3 Home Loan Interests

For most of us who cannot afford paying cash, we would usually take a mortgage or a HDB housing loan. 

A home loan from HDB has a fixed interest of 2.6%. For a loan of $500,000 over 25 years, the total interest paid adds up to $180,504.26.

Even with our current low-interest-rate environment, the interests still adds up to a significant amount.

For example, a bank loan of $500,000 over 25 years with an annual interest rate of 1.8% will cost you $ 121,277.81 of total interest over the loan period. 

#4 Other Costs

In addition to interests, there are also other costs incurred when taking up home loans.

These costs include valuation reports, legal fees, home insurance, and term insurance to cover the loan amount.

At some point in the purchase, you will also need to engage a conveyancing lawyer to handle all the legal paperwork.

These are the lower cost items compared to the first three costs listed above.

#5 Cost Of Rehabbing The Property

The rule of investing is simple – buy low sell high. The same principle also applies to properties.

Sometimes, the reason for the low prices of the property is due to it being in bad condition.

You might need to renovate the property to beautify it if you intend to sell it at a higher price.

The same applies to properties for rental income – you will need to renovate and furnish it to command a higher rent.

If you intend to stay in it, you will also need to renovate, furnish and move your belongings into the house. That will also incur some costs.

Moving in and out of the house will cost you moving fees and a lot of inconveniences.

With all these hassles, I usually will not regard the house I stay in as an investment opportunity.

#6 Maintenance costs

There are also various costs associated with the upkeep of the property.

The Singapore government had put in place several cooling measures to discourage people from flipping properties within a short period.

For those who bought a new or resale HDB flat, they are required to stay in their newly-purchased house for a minimum period of five years.

For all other property types, the SSD (Sellers Stamp Duty) discourages people from selling their property within less than three years.

Hence, you will either stay in the property or rent it out because you are losing out on rental income if you leave the property vacant for a few years.

There will be wear and tear when people occupy the property, which will incur repair and maintenance costs.

#7 Property taxes

When you own a property, you are required to pay taxes for it as well.

If you stay in your property, your tax rate will be:

Source from

The Singapore government levies a higher property tax rate if you do not stay in your property. It is mainly to discourage buying residential properties for rental yield.

The non-owner-occupier residential tax rates are:

Source from

Please also note that you are required to declare and pay income tax on income from rental. So there is an additional tax levied as well.


In reaction to a hot property market, the Singapore government had put in place cooling measures.

These measures add on additional costs to discourage the practice of flipping properties, which is buying properties to resell for a profit.

Throughout the entire cycle of buying, owning, renting and selling a property, you might be incurring a lot of costs.

So, if you bought a house initially at $500,000 and sold it for $800,000, your profit may not be $300,000. After factoring all the additional costs, your total initial cost and maintenance cost might be $600,000 instead of $500,000 and your $800,000 sale might be $750,000.

On paper, real estate looks very attractive as an investment. But in practice, due to the hidden costs, your returns might be much lower than you would realise.

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