Another new record in the property market surfaced today.
A maisonette along Shunfu Road was sold in July for S$1.28 million to a Singaporean – creating a new record for a HUDC flat.
Introduced in the 1970s, for those in the middle-income bracket who could not afford private property, HUDC flats are well known to be spacious. The government stopped building them in the late 1980s.
The HUDC estate in Shunfu is undergoing privatisation at the moment.
When it comes to privatised HUDC flats, the record is S$2.3 million – the price agreed for a unit in Chancery Court in 2010.
Senior sales director at DTZ Debenham Tie Leung, Ms Sherry Tang, who helped seal the record-breaking deal in Shunfu, told inSing News she believes prices for HUDC flats can go even higher.
“HUDC properties usually have the potential to undergo en-bloc sales, so that may also drive buyers to choose an HUDC flat,” she said.
Indeed, the lure of the collective sale cannot be discounted.
She referred to the S$1.34 billion en-bloc sale of the HUDC estate in Farrer Court in 2007. Each home owner in the estate pocketed a cool S$2.1 million.
News of the Shunfu transaction comes a week after the record-breaking S$1million sale of an HDB executive maisonette at Mei Ling Street in Queenstown.
More S$1 million HDB flats in the resale market but…
Meanwhile, chief executive of real estate agency PropNex Mohamed Ismail said the Mei Ling Street HDB flat in Queenstown “paves the way for more of such properties to hit that mark”.
Flat owners at Pinnacle@Duxton might be seeking such mega prices when they eventually are able to put their property on the market, said Mr Ismail.
Property analysts point to the fact that several types of HDB flats, such as executive apartments, maisonettes and jumbo-sized flats are in limited supply.
The government no longer builds flats in such sizes. And these types of homes often attract much interest from agents reportedly being swamped with eager offers.
But such resale flat transactions are expected to be anomalies, said Mr Ong Kah Seng, director at R'ST Research, a property research agency.
He believes such homes would draw interest from only a handful of buyers as few Singaporeans would be willing to stomach sky-high prices.
Mr Ismail echoes his sentiments.
“The million dollar price is more of a psychological barrier. Buyers don't want to be the first one to have paid this price because then they might have doubts about their property purchases,” said Mr Ismail.
He added that buying property is ultimately a very personal choice and is based largely on an individual's needs, space requirements and personal aspirations.
Sky-high prices for HDB flats have been making headlines in the last few weeks.
Earlier this month, an executive maisonette in Tampines was sold for S$808,080 with a cash-over-valuation (COV) of S$168,080. COV refers to the cash amount that buyers typically pay on top of the valuation of an HDB resale flat.
Soon after, a similar apartment in Bishan topped that, setting the previous record of S$980,000 with a COV of S$200,000.
The government has been assuaging Singaporeans that public housing will remain affordable.
In a recent report by the Straits Times, National Development Minister Khaw Boon Wan responded to the issue of the price of the Queenstown home. He pointed out that there will always be “units with fantastic views that fetch fantastic prices. More important is the larger picture.”
He added that the pricing of the new Build-to-Order (BTO) flats has made prices for most units generally more affordable.
The red-hot demand for HDB homes has contributed significantly towards the sharp rise in prices and the government has progressively been rolling out more BTO flats over the last few months. In September alone, seven BTO projects were launched for sale, offering 4,191 new flats.
More new flats will lead to lower COVs, a trend that is already occurring, say market watchers.
Will private property prices rise because of the recent Queenstown flat sale?
Some have wondered if there will be trickle-down effect on the private property market.
Unlikely, say experts.
Mr Ong explained that most buyers of private property are former HDB owners upgrading to a bigger home. “Those who sell their flats to upgrade to private homes are “re-investing” in a new property and may not be willing to agree to higher asking prices for private homes.
The price difference between HDB flats and private property also means that HDB flats will always remain the more affordable option for now.
Mr Ismail illustrated this point: “Looking at the price per square foot (psf) of the Queenstown HDB flat, a buyer would have to pay $620 psf. Meanwhile a unit at a nearby private condominium is currently going for $1,250 psf, almost double what you'll pay for that HDB flat.”