Property

Why Are Singaporeans Still Choosing a Condo Over an HDB Flat?

Peter Lin 0 Comments

condo singapore

In a world before Wi-Fi and 3G, the Singapore Dream used to involve the 5 ‘C’s. These days, however, that Dream is all over the place. On the one hand, everyone and their cat has a credit card since people are signing up at roadshows more for the freebies than the card itself. On the other hand, the costs of owning a vehicle are so high that even buying a second-hand car seems impossible. When it comes to housing, the overpriced condominium is still the dream for most. But are condos a good financial investment? Ever wondered whether you make just as much with an HDB flat when property prices go up?  

1. First, let’s look at how prices have changed over the past 3 years

(All values obtained from PropertyGuru. HDB prices are based on HDB 4A transactions within an HDB Estate. Condo prices are based on average per-square-feet prices within a District. Due to the difference in size between older and newer 4 room flats, we will compare actual sale price instead of the PSF for HDB.)

Bedok (District 16)

  2011 2014 Percentage Change
HDB $460,000 $533,000 15.87% increase
Condominium $905 psf $1,069 psf 18.12% increase

 

Tampines (District 18)

  2011 2014 Percentage Change
HDB $442,000 $457,000 3.39% increase
Condominium $775 psf $1,047 psf 25.06% increase

 

Sengkang (District 19)

  2011 2014 Percentage Change
HDB $418,000 $420,000 0.48% increase
Condominium $874 psf $1,094 psf 25.17% increase

 

Ang Mo Kio (District 20)

  2011 2014 Percentage Change
HDB $544,000 $563,000 3.49% increase
Condominium $955 psf $1,122 psf 17.49% increase

 

Jurong West (District 22)

  2011 2014 Percentage Change
HDB $394,000 $403,000 2.28% increase
Condominium $884 psf $1,032 psf 16.74% increase

 

Bukit Batok (District 23)

  2011 2014 Percentage Change
HDB $445,000 $454,000 2.02% increase
Condominium $775 psf $1,047 psf 35.10% increase

 

Woodlands (District 25)

  2011 2014 Percentage Change
HDB $374,000 $388,000 3.74% increase
Condominium $650 psf $908 psf 39.69% increase

 

Yishun (District 27)

  2011 2014 Percentage Change
HDB $390,000 $402,000 3.08% increase
Condominium $655 psf $817 psf 24.73% increase

 

The numbers speak for themselves. With the exception of one HDB estate – Bedok – which had a double digit percentage increase, all the other HDB Estates only had a 4% or less increase in the value of their homes. On the other hand, all the condominiums experienced a double digit percentage increase, and even the lowest increase was still higher than HDB’s highest increase.

Of course, we can’t ignore the fact that there will be some HDB units that go against this trend completely– typically because they are in very desirable locations. Flats sold recently in Pinnacle@Duxton, Marine Parade, Holland Road or Tiong Bahru have fetched super high prices but of course are not representative of the rest of the estates in Singapore.

 

2. What is the situation today?

Today, in 2015, we are beginning to experience most of the consequences of the cooling measures implemented over the past couple of years. The main effect is that property prices have dropped as a result of government restrictions in buying and selling.

How has this affected the prices of condominiums and HDBs? Let’s take a look at the example of two properties in District 14 that became available earlier this year.

 

3. Case Study: newly launched condominium Sims Urban Oasis

Sims Urban Oasis began sales on February 14th this year. It’s a condominium project by GuocoLand, a member of the Hong Leong Group. Selling price is between $1,295 and $1,595 per square foot, with majority of the units being 2-bedroom and 3-bedroom units. Units have a 99-year lease.

Among other amenities, Sims Urban Oasis boasts several amenities, including tennis courts, swimming pools, a gym and even an in-house childcare centre among other amenities. It is next to the PIE and located about 350 metres from Aljunied MRT.

 

4. Case Study: newly launched HDB BTO Macpherson Spring

Macpherson Spring is an HDB BTO that opened for applications in February 17th this year. Selling price is between $303 and $478 per square foot. Majority of the units are 3-room and 4-room flat and they carry a 99-year lease.

Slightly over 22% of the units are studio apartments meant for senior citizens, so they come with a 30-year lease. Amenities include a childcare centre, playgrounds, fitness corners, a café and a “nearby” minimart. It is next the PIE, next to MacPherson MRT and about 500 metres from Paya Lebar MRT.

 

5. Comparing Sims Urban Oasis and Macpherson Spring

Both are extremely convenient, location-wise. Their proximity to the Pan-Island Expressway as well as the Paya Lebar MRT Interchange for the East-West Line and Circle Line means that you’re covered, regardless of whether you prefer public or private transport. In fact, this is probably the main reason why both properties are able to charge a premium, even in this depressed market.

Since it launched in February, Sims Urban Oasis has sold 183 of the 200 units launched, according to URA. In comparison, Macpherson Spring, despite being costlier than other BTOs launched at the same time, had 2,825 applicants for the 378 4-room units.

And so……

Well, if you can afford it comfortably, the condo option in Singapore remains the more lucrative option for the moment. In this example, units are available and you should be able to see some good gains if things stay constant. But then again, things rarely stay constant with the property market and you’ll want to really consider how stretched you are when reaching out for the condo purchase.

If you do commit to a new property, make sure you compare interest rates to get the best home loan for your particular situation.

 

What are your thoughts about choosing a condo over an HDB flat? We want to hear from you.

Image Credits:
alantankenghoe

Tags: ,

Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.

  • Raymond Chiam

    you’re assuming condos to continue double digit price growth in the next 4 to 5 years?

  • Lim Yong Siah

    based on the overhang supply of private condo with the huge unsold units especially the E.C. THE MARKET should expect prices to continue to tread downward till early 2017given the tightening of foreigners LABOUR entry and and lesser PR AND CITIZENSHIP ISSUED. LOOKING AT THE PRICES TENDERED SUCCESSFULLY BY DEVELOPER SINCE EARLY THIS YEAR FOR E.C. LAND RELEASED BY GOVERNMENT IS ANOTHER INDICATION THE SELLING PRICES OF EC WILL COMING DOWN BElow THE $800.00 level. now it is good time to look for buying low in the downturn market so dont be in a hurry unless you need a roof over your head and unable to wait.

  • i am looking at residential prices to stablize by next year, and reversing the current trend. in this view, my take will be private property (likely to have a higher appreciation)

    Mike
    http://www.findproperty4u.com

  • Wendy Heng

    Better invest in condo. Higher return on rental and higher demand in market.

  • Hi Peter,

    Excellent write up backed with good solid data. Nice touch to compare areas in different locations to give a great overview of price trends!

    But here’s the thing right… HDB was never meant to be an investment asset until the fateful COV was introduced… And as they say… The rest is history.

    So the most recent cooling measures aimed at the HDB market was IMO introduced to “correct” that and make HDB what it was again – Public Housing.

    And I think in a way it makes the decision process simpler.

    Buy for that condo for investment?

    Or buy that HDB for an affordable home to set up your family for the next ten years 😉

    Keep up the good work Peter! I enjoy reading your articles.

    P.S. I’m definitely sharing this with my followers 🙂

    • Peter Lin

      Thanks Marcus for your continued support!

  • Joan Chng

    Wonder you have factor in the loan interest paid over the years and the opportunity cost if invested the difference between the cost of both properties. If these are not factored in, your comparison is too simplistic.

  • Joan Chng

    4 years is too short a time to compare. Beside this, unusual price increase of condo during this period.

  • Lee Sk John

    If the world goes into economic crisis.
    Private property will be worst hit as compared to hdb.
    There is always two side of a coin.

Keep updated with all the news!