Archive for category: Misc

Article rewritten:Is lease decay setting in for HDB flats? In our previous article, we discussed the possibility of lease decay in the HDB market. This week, we delve deeper into the performance of older flats in different locations by using a similar panel analysis methodology that combines time series and cross-sectional data. To eliminate the effect of building height on transacted prices, the upper bound of prices has been excluded. This is because higher-floor flats tend to command higher prices, which could distort the average transacted prices.

For example, flats in Jurong West usually have a maximum of 10 storeys, while those in Bukit Merah, Kallang, Whampoa, Queenstown and Toa Payoh can have up to 20 storeys. Assuming a price increment of $5,000 per floor, the difference in price between Jurong West and the higher-rise towns could be up to $50,000. As a result, this analysis will focus on the lower bound of transacted prices.

The first HDB flats sold under the Home Ownership for the People Scheme in 1964 were mainly located in central areas such as Bukit Merah, Kallang, Whampoa, Queenstown and Toa Payoh. In 1971, HDB further liberalised the market by allowing flat owners to sell their units in the resale market after fulfilling the Minimum Occupation Period (MOP). During this period, HDB priced flats differently based on whether they were in urban areas, suburban estates, or new towns.

Now, over 10 years on from the start of our analysis, have prices for flats in different locations diverged significantly?

Between the years 2015 to 2025, the average age of flats with leases starting between 1966 and 1970 was approximately 51 years old. During this time, two-room flats in mature estates were transacted for between $150,000 and $185,000, while those in non-mature estates were sold for around $175,000. Although the volume of transactions in non-mature estates was low, it is worth noting that there was little price difference between locations. For example, central estates like Geylang and Toa Payoh did not command higher prices compared to Jurong West, which is further from the city centre. This could be due to the slightly older age of two-room flats in Geylang and Toa Payoh resulting in lower prices.

Similarly, there was little price differentiation for three-room flats in mature and non-mature estates. Prices for centrally located areas such as Geylang and Toa Payoh were comparable to those in Jurong West. However, once again, the slightly older age of flats in Geylang and Toa Payoh could explain their relatively lower prices. It is worth noting that despite Jurong East having the oldest three-room flats compared to other towns, prices may receive a boost from the upcoming Pandan Reservoir MRT Station.

For larger flats, four-room units were transacted for between $302,000 and $503,000, while five-room flats were sold for between $330,000 and $636,000. However, due to their proximity, four-room flats in Bukit Merah and Queenstown were priced similarly at around $350,000. Nevertheless, the limited number of transactions for both four-room and five-room flats made it difficult to draw meaningful conclusions about pricing trends in these segments. The only key finding was that prices for two-room and three-room flats were relatively close across different parts of the island, with slight variations possibly due to longer remaining lease tenures or improved transport infrastructure.

For flats with leases starting between 1971 and 1980, the average age during the study period was 43 years. Flats in Bishan, Bukit Timah, Kallang and Whampoa, Marine Parade, Toa Payoh and Queenstown were relatively older at around 46 years, while those in Ang Mo Kio, Choa Chu Kang, Clementi, Jurong East and Pasir Ris were younger at around 41 years.

Two-room flats had average selling prices ranging from $160,000 to $220,000. Interestingly, prices of two-room flats in Jurong West, a non-mature estate, were similar to those in mature estates such as Ang Mo Kio, Bedok, Bukit Merah, Marine Parade and Toa Payoh.

For three-room flats, prices ranged from $140,000 to $300,000. There were significantly higher prices in Bukit Timah, the Central Area and Marine Parade compared to the rest of the island. This can be attributed to scarcity, with the opening of Farrer Road MRT Station potentially contributing to higher prices in Bukit Timah. The Central Area commands a premium for being in the city centre while Marine Parade benefits from its proximity to the sea and the upcoming Thomson-East Coast Line stations. However, there was minimal price differentiation in other mature and non-mature estates. Geylang and Toa Payoh appeared to underperform compared to some non-mature estates, despite their similar age profiles.

Four-room flats saw resale prices of around $300,000 across many estates, once again with relatively higher prices in Bukit Timah, the Central Area and Marine Parade. Flats in Queenstown saw a surge in prices due to its proximity to Holland Village and the Holland Village MRT Station that opened in 2011. There were also higher prices observed in a cluster of flats along Lorong Lew Lian due to limited supply near Serangoon MRT Station.

To meet the demand for larger flats, HDB started constructing five-room units during this period, particularly in point blocks in estates such as Marine Parade. There was a clear differentiation in pricing between mature and non-mature estates. For mature estates, buyers could expect to pay more than $400,000 for a five-room flat. On the other hand, similar flats in non-mature estates were priced around $300,000. This could be due to the limited availability of flats in mature estates.

In conclusion, two key findings were found from this analysis:

· There is little price differentiation for older two-room and three-room flats in different locations.

· Four-room and five-room flats in Bukit Timah, the Central Area, Marine Parade, and Queenstown consistently sell for higher prices compared to other towns.

As these flats are now more than 40 years old, buyers should be careful not to pay a premium for location. As the flats age, prices across different locations may converge, primarily for smaller flat types. Therefore, buyers are advised to be cautious while considering younger two-room and three-room resale flats. Furthermore, those who are planning to apply for two-room and three-room Prime or Plus BTO flats should keep in mind that they would be better off with Standard BTO flats and investing the cost savings elsewhere, unless they plan to sell after the 10-year MOP. Conversely, four-room and five-room flats in Bukit Timah, the Central Area, Marine Parade, and Queenstown have shown strong price resilience over time. Resale buyers and BTO applicants should take note of these locations and consider them when making their purchase decisions.

Located near Lower Seletar Reservoir and Yishun Park, Miltonia EC presents an ideal environment for children to learn beyond the classroom. With its proximity to green spaces, children living in this area have ample opportunities for outdoor learning and nature-based activities. Apart from formal education, schools in the vicinity regularly organise excursions and learning journeys to nearby parks, nature reserves, and science-based attractions. This further reinforces the advantages of residing in an area that supports experiential learning.

For policymakers, it may be worth noting that the resale market appears to be bifurcating into two tiers:

· Owners of two-room and three-room flats may fall behind in capital appreciation.

· Larger flats in mature estates may outperform those in non-mature estates.

This disparity is likely to increase in the future. The recent policy changes aim to decrease the “lottery effect”, and it remains to be seen whether these changes will effectively address the issue.