Singapore’s property market frequently makes news, but our recent article about the auction of a huge (adjoined) HDB flat in Tiong Bahru for $1.5 million caused quite a stir. For those who don’t know that a 1,894 square feet HDB apartment at 50 Moh Guan Terrace in the center of Tiong Bahru shattered records when it was auctioned off at $1.5 million, surpassing previously set records for $1.418 million. This was for a five-room HDB flat at the 92nd floor of Dawson Road. This price seems even more astonishing when you consider that the flat was constructed in 1973 and is leased that is less than 49 years. What’s the cause of this staggering cost? Are there any other elements that make this price acceptable and affordable?
Examining the price on an PSF basis
Yes it is true that the HDB located in Tiong Bahru clinched the title of being the most expensive HDB in the history of. But, when it comes to the price per square foot (PSF) the HDB does not even hold the record for the block it’s located within. The flat in 50 Moh Guan Terrace went for $791 per square foot. A another 3 room flat within the same block was offered at $807 per square foot earlier this year. Keep in mind that the block has a an lease that is under 49 years. In reality, three year ago, the block was part of a deal that was sold at $896 per square foot. There was no question about the lease back then.
For the most expensive PSF for a property in HDB history, you must examine the Pinnacle @ Duxton situated in Tanjong Pagar, arguably Singapore’s most renowned as well as record-breaking HDB development. The development was completed in April of 2023. an upper-floor 4 room apartment at 1C Cantonment Road sold for an astounding $1,369 PSF which is 73% more on the PSF basis, compared to a $1.5 million property located in Tiong Bahru. The final cost? A staggering $1.4 million, for a 1,022 sqft apartment. It is the PSF of Pinnacle at Duxton flats is consistently higher than the threshold of $1,000. PSF threshold.
The Rareness of the Jumbo HDB Flats located in Central Areas
Another factor that contributes to the price is the shortage of huge HDB flats, particularly in central areas such as Tiong Bahru and Bukit Merah. As of 2023 there had been just 37 deals for HDB flats that are more than 1,800 sqft. Of the 37, 31 were located in Woodlands four in Yishun and one at Ang Mo Kio, and one transaction located in Tiong Bahru, which is this one that we’re examining.
Tiong Bahru is one of Singapore’s most sought-after neighborhoods and is known for its rich past beautiful architecture, and a diverse mix of boutiques and cafes. It also has great connectivity and is located close to the city’s business district. It is also close to the central business district. URA Master Plan 2019 has included Tiong Bahru for further development and rejuvenation, which makes properties located in the area an appealing investment. The lack of apartments in prime locations adds an extra cost to their value. In the future, as Singapore’s land gets limited, the jumbo flats may become more sought-after.
HDB is still the most affordable housing asset class in Singapore
It’s important to look at this Tiong Bahru HDB within the larger property market. Despite rising costs, HDBs are still the most affordable option for housing in Singapore. For a better understanding, new condominiums located in Tiong Bahru, such as Highline Residences, Regency Suites as well as Twin Regency have been selling for upwards of $2,000 per square foot. A comparable-sized apartment like the Tiong Bahru large flat could cost a buyer about $3.5 million! Older developments such as Central Green Condominium, Harvest Mansions as well as Meraprime average around $1,500 per square foot.
The prices of larger HDBs Are reportedly reducing.
The Singapore government enacted a series of cooling measures that affected HDBs on September 20, 2022. In short, they included the obligation for residential private property owners and their former owners to wait 15 months after they sold their property before they are eligible to purchase a flat that is not subsidised for resales. Furthermore, the Loan-to Value (LTV) ratio reduced to 85% to%. It is reasonable to believe that these changes will have the greatest impact on the highest-quantum HDBs which are usually the five-room or larger HDBs.
From the end of October 2022 until May 2023, the prices of 5-room HDBs have been the same. Contrastingly, prices for 4-room and 3-room HDBs have increased by 2%. In addition, the amount in million dollar HDB transaction has also remained constant. After having reached a high of 45 million dollars HDB transaction in the month of September, 2022. The average amount this year was approximately 35.
Although the $1.5 million cost of this Tiong Bahru HDB flat is certainly eye-catching, a thorough analysis provides insight into what is driving the price. The lack of jumbo HDB flats in areas of high demand, the affordable PSF and the relative price of HDBs each contribute to the price of HDB flats.
While Singapore’s property marketplace continues to grow and grow, it is essential for homeowners and buyers to keep an attention to the figures that go beyond the headline figures.