Shocked over $1.5 million HDB Let’s put things into perspectives

HDB resale prices in Singapore hit an all-time record in 2022

HDBs are the most affordable housing option in Singapore, but that didn’t stop a 1,894 sqft HDB flat at 50 Moh Guan Terrace in Tiong Bahru from shattering records when it was recently sold for $1.5 million. This figure seems all the more remarkable when you consider the flat was completed in 1973 and has a lease of less than 49 years remaining. What could be the factors which make this price more palatable and reasonable?

In terms of price per square foot (PSF), the HDB in Tiong Bahru does not hold the record for the block it is situated in. An earlier transaction this year was sold for $807 PSF, whereas even three years ago a flat at the same block was sold for $896 PSF.

For the highest PSF in HDB history, one must look at Pinnacle @ Duxton in Tanjong Pagar. In April 2023, a high-floor 4-room flat at 1C Cantonment Road sold for an astonishing $1,369 PSF, a 73% higher on a PSF basis compared to the $1.5 million flat in Tiong Bahru.

The scarcity of jumbo HDB flats, especially in central areas like Tiong Bahru and Bukit Merah, is another contributing factor to the price. In 2023, there have been a mere 37 transactions for HDBs exceeding 1,800 sqft. Out of these, 31 were in Woodlands, 4 in Yishun, 1 in Ang Mo Kio, and the singular one in Tiong Bahru.

Tiong Bahru is one of Singapore’s most coveted neighborhoods, with its rich history, charming architecture, and its excellent connectivity to the central business district. Additionally, the URA Master Plan 2019 has also earmarked Tiong Bahru for further development and rejuvenation. The rarity of such flats in prime locations adds a premium to their price.

Nevertheless, HDBs remain the most economical housing option in Singapore. New condos in Tiong Bahru such as Highline Residences, Regency Suites, and Twin Regency are transacting upwards of $2,000 PSF. A similar-sized condo to the Tiong Bahru jumbo flat would cost around $3.5 million!

To further moderate the HDB prices, the Singapore government implemented a set of measures in September 2022. These included a requirement for private residential property owners and ex-owners to wait for 15 months after selling their property before being eligible to buy a non-subsidized resale flat. Additionally, the Loan-to-Value (LTV) ratio was lowered from 85% to 80%.

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Average resale prices of 5-room HDBs have remained flat since October 2022, whereas prices of 3-room and 4-room HDBs have appreciated 2%. Moreover, the number of million-dollar HDB transactions has remained stable around 35 in the past 6 months.

The $1.5 million tag on the Tiong Bahru HDB flat might seem shocking, but it’s more palatable and reasonable when viewed within the broader property market landscape. The rarity of jumbo HDB flats in prime locations, the relatively reasonable PSF and the comparative affordability of HDBs, all contribute to shaping prices.