If there’s something different between my parents’ generation and mine, it’ll be the prices of the Housing Development Board (HDB) flats.
I would always remember how HDB flats came with a 5-figure price tag back then, and wonder how amazing it would be if it could be the same now.
Why did our flats increase ten-fold in prices, but not our paychecks?
Over the years, HDB flats have evolved from being just a place to stay to become an investment asset.
After seeing the allure of the profits from property sales, many may have considered scouring for flats that could potentially fetch high prices.
With million-dollar HDB flats making up 0.3% of total resale transactions this year, making good money off your flat sales still seemed like a possibility.
In fact, the number of million-dollar flats has increased by over 30 times over the past 8 years.
For most Singaporeans, getting an HDB BTO or resale flat would be one of the major steps in the #adulting journey.
Over the years, many would look to sell their first homes to upgrade their spaces.
HDB Resale Flats That Have Been Sold for Over $1 Million
The first-ever HDB flat that was sold for more than $1 million was a 1,615 sq ft executive apartment at Blk 149 Mei Ling Street at Queenstown.
It broke history in the HDB resale history and spearheaded the million-dollar HDB club.
Since then, many other HDB flats managed to sell at a 7-figure price tag.
Here are some units that have been sold at such prices over the past few months:
| Apartment | Flat Type | Remaining Lease | Resale Price |
|---|---|---|---|
| 148 Mei Ling St | Executive | 74 years | $1,000,000 to $1,030,000 |
| Clementi Towers | 5R | 91 years | $1,000,000 to $1,040,000 |
| 9B & 10A Boon Tiong Rd | 4R & 5R | 94 years | $1,008,000 to $1,140,000 |
| The Peak @ Toa Payoh | 5R DBSS | 91 years | $1,008,888 to $1,038,000 |
| SkyTerrace @ Dawson | 5R Premium | 95 years | $1,010,000 to $1,038,000 |
| 99B Lor 2 Toa Payoh | Executive | 72 years | $1,025,000 |
| Pinnacle @ Duxton | 5R | 89 years | $1,030,000 to $1,232,000 |
| 608 Ang Mo Kio Ave 5 | Adjoined | 59 years | $1,030,000 |
| Natura Loft @ Bishan | 5R DBSS | 90 years | $1,050,000 to $1,082,000 |
| City View @ Boon Keng | 5R DBSS | 90 years | $1,040,000 |
| 50 Commonwealth Dr | 5R | 94 years | $1,100,000 to $1,150,000 |
Do you observe some trends among these apartments?
Are There Really Buyers Willing To Pay for Million-Dollar HDB Resale Flats?
Some of us might be wondering – who are these people who are willing to purchase these flats?
And why are the prices for resale flats still going strong despite the recession, where the demand for resale flats have decreased slightly?
According to Propnex’s CEO, some of these buyers are individuals who are looking to downsize from a private property to an HDB flat.
Many of them are in their early to mid-40s and are willing to fork out a premium to stay at a desirable location close to the city centre.
While these units are more expensive than their HDB counterparts, it is considered a fraction of the prices of private properties in similar regions.
With a longer completion for newer BTO launches, resale flats are still seeing a healthy demand as well.
In addition, buyers are now more willing to spend more on their houses if these units are able to tick all the right boxes of their housing checklists.
Can My HDB Flat Potentially Be a Million-Dollar Flat?
It might be impossible to specifically pinpoint which factors would constitute a million-dollar HDB sale.
However, there are a few common factors which would usually contribute to the price tag of these highly-priced HDB units.
Location
Not sure whether you’ve heard this mantra of property agents when they talk about home value:
Location, location, location.
Location is one of, if not, the most important factor in a million-dollar sale.
As expected, most of these million-dollar flats are located within mature estates, close to the city centre.
Besides being close to the city centre, these flats are usually close to amenities such as MRT stations, shopping centres or schools.
Areas such as Queenstown, Bukit Merah, Ang Mo Kio are commonly seen as ‘hot’ locations with units having a higher possibility of a good sales price.
In addition, flats in these popular locations are usually limited in supply as there is usually limited space for new developments.
With a mismatch in demand and supply, this could possibly drive up its price even more.
It is important to note that while most of these high-value flats are in mature estates, this does not automatically translate to all mature estates being able to produce top-dollar flats.
Therefore, it is important to look at the track records of specific locations to determine its value and make long-term decisions.
Type of HDB Flat
Many of such million-dollar flats are not your regular 2-, 3- or 4-room flats.
As we can see from the table above, most of these flats are spacious – being 5-room, executive apartments, or even adjoined units.
That is understandable given that beyond these prime locations, another selling point of such flats is how spacious they are as compared to their counterparts.
This is especially so as newer flats are starting to get smaller in size.
And getting more room in a space-constraint country in Singapore definitely comes with a hefty premium.
Age of Flat
Newer flats typically have a higher chance at scoring a better price.
This is unsurprising given how the age of the flat usually plays a key role in a property’s valuation.
Given that our HDB flats are on a 99-year lease, it is likely for flats to witness a large drop in value towards the end of the lease.
Also, when your property has less than 60 years lease left, it gets harder to sell because CPF usage is restricted and bank loans are tightened.
According to CPF, for HDB flats or properties with leases of less than 60 years, the following rules will apply:
- No CPF can be used if the remaining lease of the property is less than 30 years
- A property owner can only use his or her CPF for property if his or her age plus the remaining lease of the property is at least 80 years
- The maximum amount of CPF that can be used is determined by this formula:
Based on past transactions, the properties that have been fetching million-dollar prices usually are units that have a long lease (more than 80 years) left.
Supply of Flats
Now that we’ve seen how newer flats are more huat in the prices, another thing to note would be the supply of flats that are available at any point in time.
According to the Singapore Business Review, the number of flats that will reach their 5-year minimum occupation period (MOP) in 2020 would be about 20,000 HDB units.
And why would this matter?
If there is a higher supply of flats that are going to the resale market, this gives buyers an upper hand as there would be more room for negotiation due to an increase in the availability of choices.
This would drive the prices down, and this is especially so for areas with flats reaching their MOP at approximately the same period.
Which means a lot would also depend on your location as well.
However, if your flat type is unique, this poses less as a risk as there is undeniably lesser competition for your flat type.
Properties of the HDB flat
There are a few other common properties of million-dollar HDB flats.
One of the factors that bring the prices up would be the view that the unit offers.
One of such popular views would be the city view – where these units are able to provide a view overlooking areas like Marina Bay Sands, the Singapore River, and even National Day fireworks.
This view is commonly termed as the ‘million-dollar view.’
Which also meant that units of higher levels would usually fetch higher prices due to its ability to offer unobstructed views.
By purely looking at the numbers, many of these million-dollar flats were situated above the 20th floor.
Does It Make Sense To Fork Out This Amount of Money for an HDB Flat?
So, say you’re someone who might be interested to get one of such flats as a potential investment.
To perhaps… see it grow from $1 million to… $2 million.
Would this make sense?
Will a $1 million HDB flat… or a $1 million private condo would be more worth it?
When you are considering between these two choices, there are a few things you might wish to consider.
One of which would be the amount of loan you will be able to get from the bank.
For private properties, there is the Total Debt Servicing Ratio (TDSR) which essentially enforces a limit on your debt repayments by pegging it to 60% of your monthly income.
As for HDB apartments, there is a Mortgage Servicing Ratio (MSR) which is pegged to 30% of your monthly income.
This would mean that for the same cost, there is more upfront cash required to pay for your HDB apartment.
In addition, while HDB flats have been hitting the million-dollar mark since 2012, the increase in prices over the past 8 years have not been significant for flats like these.
This means that if you’re interested to get such a flat for investment purposes, the growth might be a little slower than what you might’ve liked.
Closing Thoughts
Like it or not, million-dollar HDB flats are here to stay.
If you’re someone who aims to flip some HDB apartments to fund your retirement lifestyle, perhaps it’ll be worth it to keep a lookout for such potential properties.
Would YOU spend a million dollars on a HDB flat?
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