When Is It Smart to Downgrade From Your Current Home?

“Downgrading” from your current flat doesn’t have to mean moving into a smaller home. Nowadays, downgrading can be as simple as relocating to a different area with a lower property value. For example, if you’re living in a District 10 apartment that’s valued at $2,200 per square foot, you can downgrade to a larger condo in a non-mature estate for about $1,200 per square foot or less.

But when is it a good idea to downgrade from your flat?

Here are several:


When You’re Thinking About Reinvestment

If you see your home as an asset, you’re keeping up with the capital appreciation level of your home. But if you spot investment opportunities that outpace your home’s appreciation growth, you may want to free up capital to pursue those investments by downgrading.

The good news is that if your investment pans out, you can get enough return to upgrade to an even better home than your first – but if your investments don’t turn out so well, at least you’ll still have a home.


When You Don’t Use Your Amenities

It’s nice to have great amenities near your home that raise your property’s value. Living within walking distance of an MRT station, mall, or coffee shop is a huge convenience too – if you use them.

But if you don’t use the amenities close to you, then your home’s biggest advantage is lost.

But these amenities will be valuable for other buyers and will command a premium. A high resale, coupled with downgrading to a lower priced location means you’ll have enough profit to use on things like first-class furnishings or renovations.


When You Want More Living Space

Living in “prime” areas does have its benefits, but unless you live in a landed property, space probably isn’t one of them – especially if you plan on having a family. If you need more living space so your family won’t live in cramped conditions, you should consider downgrading to a property in a less expensive area.

Chances are your high priced apartment in the city will be more than enough to get you a larger home, especially in a non-mature estate.


When Household Maintenance Is Too Much to Handle

Owning an empty home after your children have married and moved out means home maintenance will fall to you and your spouse. And if you’re living in a large home such as a semi-detached resale flat, that means spending lots of time on cleaning and upkeep.

Not only that, larger homes typically have larger utility bills than smaller ones and require more repairman visits as well. So by downgrading, you’ll be able to save yourself both time and money by living in a smaller flat.


When School Placement Is a Problem

You may have bought your first home because it’s close to a prestigious school you want your child to attend, but what if he/she doesn’t get in? Getting school placement in another area isn’t as bad as you think – especially if it’s in a cheaper district.

All you have to do is raise the COV of your flat for other parents who want to buy your home because it’s close to that same school and you can move to a bigger flat in the area where your child received placement.