Stories of HDB resale flats selling for over S$1 million have seemingly become more frequent in the headlines over the last few months.
Just in April 2024 alone, 68 units resold for at least a million. The most expensive one was a 5-room maisonette at Block 139B Lorong 1A Toa Payoh, which went for a whopping S$1.438 million.
However, an incongruence in sentiments emerged in a recent Answers.sg poll. Over half of the respondents said that they would only pay a maximum of S$600,000 for a 5-room resale flat in Central Singapore.
An expert MS News spoke to disclosed that, these days, the average price of one such unit stands between S$839,000 and S$922,000, depending on the age of the house.
He also highlighted that despite the heavy media coverage, million-dollar flats are not the norm, and with some compromise, people can still purchase their dream homes at a more affordable price.
An Answers.sg poll recently revealed that, out of 1,556 respondents, about 51% said they would pay S$600,000 or less for a 5-room resale flat in Singapore’s Central region, which includes areas such as Kallang, Geylang, and Toa Payoh.
On the other hand, 49% of respondents are open to paying higher prices.
These figures also mean that about three-quarters of respondents expect to pay up to S$900,000 for such units, with only a handful expecting to surpass that amount.
Only 15% of respondents would fork out a million dollars or more for 5-room Central flats.
30-year-old account executive Amelia Wong, who purchased a 5-room resale flat in Punggol with her husband in 2023, shared their home buying experience with MS News.
Source: NParks, for illustration purposes only.
While the couple were willing to pay slightly higher than S$600,000 for a home in a good location, their budget was around S$750,000.
“Ideally, we’d want somewhere central, and even if it was not possible, perhaps somewhere near an MRT station would be good.”
When setting a budget for the house, they also had other things to consider, such as the age of the flat. As they have plans to upgrade to a condominium in the future, Ms Wong explained that they could not choose a flat that is too old so as to not hinder their chances of selling the unit.
However, the budget also meant that they were unable to afford Central units, such as in Ang Mo Kio or Kebun Baru.
Ms Wong elaborated: “Prices for these units were way out of our reach. They were easily above S$800,000 for one that’s not even near the MRT station, which would’ve eaten into the budget we’ve set aside for renovation and furniture.”
Eventually, the couple settled for the Punggol house for S$780,000, and they closed the deal in the fourth quarter of 2023.
“The price was a little higher than expected, but since we have a view of a nice canal, and a neighbourhood mall opposite, we felt it was a place we could call home in the end. The flat we bought has also just passed the minimum occupancy period (MOP), which means it’s relatively new, looks well-maintained and in good condition.”
According to the Housing Board’s regulations, the MOP is the time period that a homeowner is required to physically occupy their flat before they can sell it on the open market.
A flat’s MOP can range from five to 20 years, depending on the purchase mode, flat type, and date of flat application.
While Ms Wong was willing to pay a slightly higher price for the connectivity and location, a 36-year-old music educator who only wishes to go by her first name Jaymie said that she would not pay more than S$600,000 for the convenience of a flat in the Central region.
Her current 4-room resale flat, also in the North-East region, provides all the convenience her young family of four needs, she said.
Source: Wikimedia Commons, for illustration purposes only.
She added: “The location is good, and it’s walking distance to the neighbourhood mall, LRT station, schools, and preschools – everything we need is here.”
Ms Jaymie finalised the purchase of her flat for S$436,000 back in July 2020, shortly after giving birth to her first child.
This flat in the North-East was her first home purchase, as she lived in rental units before settling down.
She made it a point to emphasise that housing prices four years ago largely differ from the current state of affairs.
That being said, her experience while shopping for houses was that units in Central were still generally more expensive than the North-East at that point in time.
When asked whether she would have spent more than S$600,000 for a bigger 5-room unit in the former area, Ms Jaymie’s answer was a firm “No.”
“Our current place was within our budget of around S$400,000 to S$450,000, and we had no intention of going over that range. My husband and I figured it was better to save the difference, so that we can spend the money on our family savings and our children’s education,” she said.
To gain more insight into the discrepancies between the people’s sentiments and the headline-making million dollar flats, MS News reached out to Lim Yong Hock, Key Executive Officer (KEO) of Propnex Realty for further information.
Source: PropertyGuru Malaysia
Based on his understanding, in addition to the Central Business District (CBD), the Central region stretches as far as the following areas:
According to Mr Lim, there were 429 5-room flats transacted in 2023 in this region, with the average selling price being S$922,000.
“Even if I were to only look at older flats that were built before the year 2000, the average price would still be about S$839,000.”
The average price of houses in this area saw an increase in 2023 as there were more flats going for S$1 million and above, he said.
As such, Mr Lim believes there are only two viable options for those who have a budget of S$600,000 to get a flat in the area.
The first option would be to consider much older 5-room flats which have a remaining lease of 40 to 50 years or less.
The next option would be to consider looking for smaller flats which are 4-room or below.
“These are the compromises that buyers may have to look into if they want to get a house in a central location with a budget of S$600,000. Otherwise, they might wish to look at other areas, too,” he added.
Although Mr Lim “strongly disagrees” that million-dollar flats are a buying trend, he would not be surprised if it becomes more common.
This is especially so as more newer flats that have just reached their MOPs in central locations begin to hit the resale market.
Source: night86mare on Flickr, for illustration purposes only.
The PropNex KEO explained that most buyers who would pay over S$1 million for a flat are typically people who are downgrading after selling their private condominiums or landed properties.
“Landed properties these days are easily worth S$3 million to S$4 million. With more cash on hand, these buyers can easily afford a larger, well-renovated HDB flat in a good area worth S$1.2 million or S$ 1.3 million.”
With regards to the prevalence of million-dollar flats in Singapore, Mr Lim pointed out that, out of about 26,000 HDB flat transactions last year, only 467 of them crossed the S$1 million mark.
“The million-dollar transactions is barely about 2% of all the HDB transactions – I wouldn’t say that it’s a lot,” he said.
“Obviously, the media would cover the 2% because the news is more ‘juicy’. The media will always focus on the million-dollar, record-breaking sales. But, I want to highlight that there are more than 1.2 million flats in Singapore – the buyers definitely will have the option to choose flats that are more affordable and within their budgets from the remaining 98%.”
One point of concern people should pay attention to, besides the price, is the decaying lease of an HDB flat.
“As the years go by, there will be people who bought a 30- to 40-year-old flat wanting to sell after staying in it for five to 10 years. Of course there have been flats sold that are less than 50 years old, but it becomes much less attractive to potential buyers, and they are sensible enough to not offer a high price for these units,” he expressed.
Mr Lim therefore urges buyers to not limit themselves to young flats in the Central region: “Work within your means and budgets, and look for flats that are affordable to your own capacities.”
“Please do not rush to pay a higher price when everyone is paying a high price. At the end of the day, the buyers are the ones who have to bear the decision.”
Have news you must share? Get in touch with us via email at news@mustsharenews.com.
Featured image adapted from Desmond Lee on Facebook, for illustration purposes only.
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