What’s a home buyer to do, in a time of rising prices across the board and Covid-19? The answer may lie in older resale flats.

While lease decay is an issue, these flats also tend to be larger, more affordable, and located in generally more convenient mature locations. If you’re willing to trade some remaining lease for comfort and convenience, these are the HDB towns to look into (along with how much you might pay):

Older HDB flats by price and location

Median resale flat and $PSF sorted by four room flat quantum (Source: HDB).

Details to note

• Parts of Geylang might offer the best overall value
• Old Jurong West flats are among the most affordable housing
• Older flats might be the most affordable way to stay in Bishan
• Woodlands is unlikely to stay at its current prices
• Non-PLH, Central Area flats are likely to see a pick up

1. Parts of Geylang might offer the best overall value

To be clear, units closer to the Paya Lebar area may be higher in price than the average on the list; but overall, they’re still good value.

The areas near Paya Lebar have benefitted tremendously from the growth of Paya Lebar Quarter (PLQ). This is a new commercial hub, with malls like the Paya Lebar Square and SingPost, and a good number of Grade A office spaces.

Another plus point is that Geylang is one of the better-connected HDB towns. The four MRT stations — Aljunied, Paya Lebar, Eunos, and Kembangan — means that most flats here will have MRT access.

Despite all this, you'll note that Geylang has some of the cheapest old flats on average, with four-room units going at $468 psf, and five-room units going at just $480 psf.

That said, many parts of Geylang, especially those where you find older flats, are heavily built up. Road noise, close spacing between blocks, and lack of greenery make the area less palatable to family buyers.

2. Old Jurong West flats are among the most affordable housing

At $398 psf, Jurong West may have some of the most affordable four-room units anywhere. This isn’t a new discovery, and Jurong West has been affordable for some time.

To some degree, this is because Jurong West suffers in contrast to Jurong East, which is Singapore’s designated 'second CBD'. The amenities here are frankly not on par with its fancier neighbour, and the main highlight is probably the presence of NTU.

Jurong West is actually quite underrated as a family area. It’s one of the less congested HDB towns, and there’s good proximity to family recreation areas like the Science Centre, Singapore Discovery Centre, Snow City, etc.

3. Older flats might be the most affordable way to stay in Bishan

Bishan is known for high resale flat prices, and in fact holds the record for the priciest resale flat at $1.36 million, as of 2021. To most home buyers, and especially first-timers, prices here are way beyond budget.

So it’s interesting to see that, if you’re happy to swallow the lease decay, the quantum for a four-room unit can be as low as $388,000.

It is also possible that prices in places like Bishan will climb, however, thanks to the new Prime Housing Location (PLH) model. Flats under the PLH scheme have a Subsidy Recover (SR) and a 10-year MOP — but flats in Bishan are not subject to the same requirements.

Buyers are like to realise Bishan area flats are just as convenient as the two recent PLH launches, without similar drawbacks.

However, a valid counterargument would be that, for buyers purchasing very old flats, there’s probably no interest in a shorter MOP or SR anyway (as most people who buy 40- to 50-year-old flats are intending to live out their days in it.

In any case, if you want to live in Bishan but don’t want to pay crazy prices, you may be able to do so by accepting a shorter remaining lease.

4. Woodlands is unlikely to stay at its current prices

Woodlands still looks affordable right now at $323 psf, for four-room flats; but this is likely to change soon.

Woodlands is the designated regional hub of the north, and will feature a waterfront district that’s also within a food and agri-tech hub. This will make it the key commercial hub in the area, much like we saw in the transformation of Jurong East.

Even with advanced lease decay, it’s likely that old flat prices will go up with mounting demand. Woodlands is a strong family location with a lot of green space; and the emergence of educational institutes, along with commercial office space, is going to hold strong appeal.

For those who are serious about living in Woodlands, it may be worth making your move before the upgrades get fully factored into the pricing.

5. Non-PLH, Central Area flats are likely to see a pick up

This is in a similar vein to what we said about Bishan. For those looking in the Central Area, you may find older flats that skirt the edges of PLH zones.

Homebuyers are almost certain to compare these to new PLH flats. Despite their advanced lease decay, these older flats have no SR and a shorter MOP, and have the advantage of already being built (a major consideration during Covid-19, due to construction delays).

Sellers of these flats are almost certainly not ignorant of the fact; and if they are, their realtors will be quick to inform them. As such, we expect that sellers in these areas will start to raise their asking price and push for better Cash Over Valuation (COV); and we have doubts that the current prices will stay down in the year ahead.

READ ALSO: HDB's Proximity Housing Grant (PHG) for resale flats: All you need to know

Overall, older flats seem to provide an affordable in-road, into areas that first-time homebuyers would normally be priced out of. But before rushing for these desirable locations, think over your future aspirations — a young couple buying an older flat must expect that a decade or two down the road, depreciation could mean they lack the sale proceeds for asset progression.

If you want to buy an older flat, but still expect to upgrade to a condo later, it’s best to try and make the jump soon after your MOP. Don’t hold on to it for too long, lest your future buyer ends up facing financing issues.

This article was first published in Stackedhomes.