A 5-Room HDB flat in Queenstown has been sold for $1.1 million in June setting a new record or such flats sold outside the Pinnacle @ Duxton housing project. The 5-room HDB flat, a resale unit at Block 18C of Holland Drive is located between the 37th and 39th floors. The 5-Room HDB flat has floor area of 1,259 sq ft and has a remaining lease of 93 years. The HDB block was built under the Selective En bloc Redevelopment Scheme.
The record breaking sale of the 5-Room HDB flat follows the prediction of leading analysts and property agents who suggested that more record-breaking HDB flat sales will follow.
The experts made the prediction after an executive apartment at Mei Ling Street with a balance lease of 76 years was sold for $1.08 million.
The flat at Mei Ling Street was unique in that it was close to Queenstown MRT station and Anchorpoint mall, and was a higher floor unit featuring 1,615 sq ft. It was sold for about $669 psf on the built-up area.
The sellers of the Mei Ling Street HDB flat , who have been staying at the flat for 23 years since 1995, engaged ERA Realty property agent Mohamed Ameen to broker the sale. Speaking to reporters, Ameen revealed that the unit had been listed with an asking price of $1.1 million for less than two weeks, and attracted over five groups of buyers for viewing during this time.
The Mei Ling Street HDB flat was eventually sold to a Singaporean woman who previously stayed at a private property and was looking to downgrade. Ameen shared, “The buyer was willing to pay a premium for the unit due to its large size and proximity to an MRT station.”
There are several unique selling points that helped fetch top dollar for the Mei Ling Street HDB flat.
For one, the size of the flat was notable – a 5-room HDB flat at premium HDB property, the Pinnacle@Duxton in Tanjong Pagar, is only 1,141 sq ft large. Ameen added that executive apartments are also only available in limited supply and that this raises the appeal of the Queenstown flat, making it more sought after.
According to Ameen, this will heighten demand for executive apartments and executive mansionettes this year as the en bloc fever will cause owners of en bloc properties to seek sizeable replacement homes.
Pointing out data from HDB, Ameen shared that there have been 10 resale flat deals of more than $1 million that concluded in the first few months of 2018: two of these resale flats are at Meiling Street, seven at Pinnacle@Duxton, and one at City View @ Boon Keng which is a Design, Build and Sell Scheme development. These sales are more significant than the three-million dollar deals at the Pinnacle@Duxton recorded in the first quarter of 2017.
Ameen suggested that this would lead to more record-breaking prices for resale properties in the near future, particularly in the Queenstown area given that HDB flats in the Dawson estate close by will hit their five-year minimum occupation period two years from now, in 2020.
Ameen said, ‘the high-floor flats there offer beautiful unblocked views, and we can expect to see transactions breaching the million-dollar mark.” His expectations match that of PropNex Realty CEO Ismail Gafoor’s who said that given the ongoing en bloc fever, HDB resale prices could climb by 1 per cent this year.
This would reverse the decline of resale flat prices, which were slipping after hitting a peak in 2013, caused by measures introduced by the Government to cool the public housing market. Such measures include the restriction of HDB mortgage loan terms to a maximum of 25 years and the Mortgage Servicing Ratio cap of 30 per ycent.
Paul Ho, chief mortgage consultant at icompareloan.com, said, “as more and more condominiums make new benchmarks, HDB estates surrounding and around premium condo estates that has risen in value will see a higher upside.”
He added: “Those around Tanjong Pagar, Queensway, Kallang, Orchard, River Valley and Newton may see more and more prices transacted above 1m. Unfortunately a 1m hdb property is going to become more and more common.”
The sale of the 5-Room HDB flat comes amidst HDB resale flat prices falling by 0.8 per cent, from 132.6 in 4th Quarter 2017 to 131.6 in 1st Quarter 2018.
The median resale prices of HDB flats continue to drop even as the public housing developer announces the release of thousands of new Build-To-Order (BTO) flats.
The median resale prices in the various towns tabulated by HDB for the 1st Quarter of 2018 indicated that HDB resale flats in the Central region and Queenstown commanded top prices. 4-room HDB resale flats in Central region commanded a median resale price of $850,000, while flats in Queenstown commanded a median price of $722,500. At $650,000 and $640,000, the median resale prices in the estates of Bukit Merah and Clementi came in at third and fourth highest respectively.
Median resale prices of 4-room HDB flats in several estates came in at the $500,000 range. These flats include those in the estates of Bishan, Geylang, Kallang/Whampoa and Toa Payoh. 4-room HDB resale flats in Choa Chu Kang and Woodlands commanded the lowest median resale prices at $331,000 and $330,000 respectively.
The drop in the median resale prices of HDB flats outside the central region continues as the public voice their disappointment at such depreciation. In early April, a letter published in the Straits Times claimed that the promise of owning a 99-year-leasehold HDB flat as an investment for old age is no longer valid today. The letter writer said that “many seniors who want to downgrade to Built-To-Order studio apartments for the elderly are in a fix as they are unable to sell their old flats”, and that many such seniors “stand to lose their deposits on their new flat if they cannot sell their old flat.”
In expressing his disappointment in the price drop of HDB resale flats, the letter writer said: “Most of them were hoping to downgrade and live on the profits from selling their flats but have become disillusioned.”
Adding “The Government needs to step in to manage this problem and not just leave things to market forces.”
Some analysts suggest that the falling resale prices of HDB flats can only be bailed by a “wall of money”. But Mr Ho thinks that “owners are sitting on stagnant equity in the form of their HDB house that is fully paid up or mostly paid up.”
“A sizable number of HDB flat lessees may buy 2 condos if they sold their HDB flat,” Mr Ho said.
“Those that don’t want to buy 2 condos, may instead opt to buy 1 condo, or simply buy another HDB flat. But the effect is the freeing up of equity which can be used for a child’s University education or simply to buy a retirement plan so as to retire better,” he added.
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