SINGAPORE: A Housing Development Board (HDB) flat in Sengkang has sold for a cool $928,000 in an HDB resale price surge. The 1206 square foot flat located at Block 216C Compassvale Drive was essentially sold for an eye-watering $770 per square foot.
This is not the first time a flat in the area has fetched nearly $1 million in the HDB resale price surge. Last November, a similar-sized unit in neighbouring block 216A was also sold for $928,000.
The two flats were part of the Compassvale Mast build-to-order (BTO) development, which was introduced in November 2012. The five-room flats included in this project were priced between $421,000 and $499,000.
The owners of both flats sold their flats after completing the five-year Minimum Occupation Period and made a profit of $429,000 to $507,000.
This trend comes as property analysts predict resale prices soaring even higher after the Government announced a higher housing grant for certain buyers during Budget 2023. It is expected that sellers of smaller flats will hike prices even further as the buyers of this group of flats will receive the most grants.
Finance Minister Lawrence Wong and HDB resale price surge
Deputy Prime Minister and Finance Minister Lawrence Wong announced during his Budget speech that the grant for first-time families purchasing two to four-room HDB resale flats has been raised to a maximum of $80,000, up from $50,000.
Similarly, those who buy larger units with five rooms or more can now receive a grant of $50,000, up from $40,000.
For singles purchasing four-room or smaller units, the grant has been raised to a maximum of $40,000, up from $25,000. Those who buy five-room units can receive a grant of $25,000, raised from $20,000.
As a result, buyers can choose between a smaller loan and reduced monthly mortgage payments or expand their options when looking for a resale flat with an increased budget.
Demand will inevitably rise, and sellers may take the opportunity to raise prices, according to industry figures like OrangeTee & Tie senior vice-president of research and analytics Christine Sun and Dr Tan Tee Khoon, Singapore country manager of PropertyGuru, who spoke to the national broadsheet.
The Ministry of National Development, however, has cautioned that sellers who raise their asking prices “might run the risk of pricing themselves out of the market as buyers remain price-conscious, given the high interest rates and uncertainties in the global economy”.
Echoing this sentiment, Ms Sun advised sellers to consider that buyers are dealing with rising expenses in various areas. She also highlighted that the HDB’s boost in BTO flat availability might reduce the demand for resale flats.
Professor Sing Tien Foo, who holds the provost’s chair professorship in real estate at the National University of Singapore, pointed out that the grant is deposited into the buyer’s CPF account and cannot be used to balance out any increase in prices beyond the market value of a flat.
He told the Straits Times, “Since the grant cannot be used to pay for the cash-over-valuation (COV) caused by the seller raising the price above valuation, sellers cannot increase prices indiscriminately to cream off the additional grant.”
Instead, Prof Sing said, the updated grant allows buyers to decide between a BTO flat and the HDB resale market, providing them greater flexibility.
Read also:
Guide to New Measures to Help First-Timer Families Buy HDB Flat – Singapore News
HDB February 2023 BTO Launch Review: Affordable Developments