$1m properties: HDB versus condo
We will dissect both products and demonstrate why the HDB apartment cost as much as some condo.
PHOTO: Unsplash
PUBLISHED ONJune 28, 2022 8:19 AMByOng Zi Jian Fiona Ling
News of one million dollar HDB flats is popping up more frequently in Singapore.
This begs the question, why spend one million dollars on a HDB apartment when with that money, you can break into the condo lifestyle?
Is it really a wise choice? And what's driving this craze?
Well, there are several reasons and they may change your perspective on why some people will consider buying a million-dollar HDB flat instead of a condo.
Location of one-million properties in Singapore
HDB Apartments
| Location | Size | Rooms | Price ($) | Price per Square Foot (psf) ($) | Distance from MRT | Region |
|---|---|---|---|---|---|---|
| 455B Ang Mo Kio Street 44 | 1216sqft | Four-room HDB | 1,250,000 | 1,027.96 | 690m | Rest of Central Region (RCR) |
| 79C Toa Payoh Central | 1194sqft | Five-room HDB | 1,050,000 | 879.40 | 280m | RCR |
| 219 Bishan Street 23 | 1572sqft | Five-room Executive Maisonette HDB | 1,100,000 | 699.75 | 720m | RCR |
| 53 Havelock Road | 1227sqft | Four-room HDB | 1,100,000 | 896.50 | 380m | RCR |
| Pasir Ris One | 1130sqft | Four-room HDB | 1,000,000 | 884.96 | 190m | Outside Central Region (OCR) |
| 807 Woodlands Street 81 | 2034sqft | Five-room Jumbo HDB | 1,080,000 | 530.97 | 570m | OCR |
From the table above, we can see that two prominent features of million-dollar HDB are that they are either close to the city centre (RCR) or they are large apartments like Jumbo HDBs, Executive Apartment (EA) or Executive Maisonette (EM).
Some listings are also very close to the MRT stations as well.
Condominium
| Location | Size | Rooms | Price ($) | Price per Square Foot (psf) ($) | Distance from MRT | Region |
|---|---|---|---|---|---|---|
| Symphony Suites — Yishun | 893sqft | Four-room | 1,080,000 | 1,209.41 | — | OCR |
| Phoenix Residences — Phoenix | 721sqft | Three-room | 1,086,938 | 1,507.54 | 410m | OCR |
| D'Nest — Pasir Ris | 926sqft | Three-room | 1,150,000 | 1,241.90 | 510m | OCR |
| Rivervale Crest — Hougang/Punggol | 1216sqft | Four-room | 1,080,000 | 888.16 | 200m | OCR |
| RV Suites — Tanglin/Holland | 603sqft | Two-room | 1,099,000 | 1,822.55 | 430m | Core Central Region (CCR) |
| La Casa — Woodlands | 1,216sqft | Four-room | 1,180,000 | 970.39 | 720m | OCR |
Condominiums at the million-dollar price point are relatively smaller than the similarly priced HDB counterparts.
What we noticed is that they are usually at OCRs and the one CCR on the list is measly in size as a tradeoff.
Which property type is the better investment?
Properties are considered a form of assets that individuals can buy with a guaranteed return in most cases.
There are always sayings about how buying private property is always better than HDB in terms of investment. But is that true?
Condominium
| Year | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|
| Y-o-Y Growth ($) | — | 112,890 | -3,590 | 58,839 | 19,140 | 3,062 |
| Percentage change | — | 14per cent | -0.39 per cent | 6.0 per cent | 2.0 per cent | 0.30 per cent |
We see that condominiums that are currently worth around one million dollars have seen an increase of 23.26 per cent over a five year period from 2017 till now.
HDB
| Year | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|
| Y-o-Y Change ($) | — | 25 | -25,995 | -21,705 | 70,825 | 47,285 |
| Percentage Change | — | 0.0039 per cent | -4.11 per cent | -3.58 per cent | 12 per cent | 7.0 per cent |
We see that areas with HDB flats worth around one million dollars have seen an increase of 11.13 per cent over a five year period from 2017 till now.
The data source is a comparison of the average median prices in the area, which is not fully indicative of those million-dollar flats.
However, it is still within reason to estimate that the increase in value is still lesser than that of similarly priced condominiums.
Beyond that conclusion, when buying a HDB flat, there is a minimum occupancy period of five years and 10 years for HDB flats in prime locations.
With the various cooling measures in place periodically, HDB flats are less tuned to be investment options. This is supported by the fact that HDB flats are public housing and are not supposed to be an investment option.
So why would someone buy a million dollar HDB apartment?
Price: Upfront and maintenance cost
Cost is an important factor as it is just easier to find a HDB apartment that is more affordable. With the condominium, the process of buying will be more difficult and sellers are often unwilling to let go at a good price.
Furthermore, there is a maintenance fee, which can be quite costly for some individuals to bear, considering the usage amount. Some may not have the habit of swimming or barbecuing ever so often, resulting in the fee being underutilised.
If you do not own a car, it will also be another underutilised benefit as there is a complimentary parking slot for each unit.
For a HDB flat, you can buy a season parking pass, which will run you $80 to $110. Non-car owners will definitely benefit from staying in HDB flats.
Home insurance for a condo is also more expensive than that of a similar HDB flat.
HDB Loan or bank loan?
With a HDB flat you can get a HDB loan for the resale flat. This opens up more financing options as compared to the condo where you are limited to just the bank loans.
The loan-to-value (LTV) ratio for HDB loans is higher, at up to 85 per cent as compared to bank loans which mostly offers up to 75 per cent.
ALSO READ: Million-dollar HDB home: What's the hype all about?
With the issue of rising interest rates and worries of rising home loans, perhaps some may find the option of financing a HDB more attractive.
Space
By going for a HDB apartment instead of a condominium, you can get a much bigger house.
The list of condominiums mentioned above is on average less than 1000sqft, while the HDB flats listed are above 1000sqft.
If you are willing to live at OCR, you can find large HDB flats that are 1500sqft and above. This is suitable for people who have large families or need extra space.
Convenience
At this price, you will be able to find HDB flats at RCR, which is on average, less than 20 to 30 mins away from town. If you are working or frequent central region, this is a very big advantage.
Furthermore, being in RCR means that you are located relatively centrally and can reach any part of Singapore with a shorter travelling time.
The condominiums at this price are mostly located at OCR. This means that travelling time will be longer if you are travelling outside your region.
There is one CCR condominium on the list. However, the size of the condominium is 600sqft, which is around half or less than an equivalent HDB flat. This may not be the most conducive housing option for most.
Upgrade or downgrade path
If you bought a condo and wish to switch to a HDB flat, this move will have some obstacles. You will have to sell off your condo and wait 30 months before you can apply for a HDB flat.
On the flip side, switching from HDB to a condo is a much easier process, without the need to wait for the 30 months to be up.
Housing Grants
First-time buyers of resale flats can receive grants of $50,000 CPF Housing Grant for a four-rooms or smaller flat and $40,000 CPF Housing Grant for a five-room or larger flat.
Those who are living near their parents or married children can apply for the Proximity Housing Grant of up to $30,000.
When should you consider a condo?
There are some benefits of getting a condo at this price if you can deal with the smaller size and inconvenient location.
Some couples may be earning more than the income ceiling for a housing grant. Under the revised income ceiling, household income cannot exceed S$14,000 to receive a grant.
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This may result in them turning towards private properties like a condominium for a better deal.
Privacy and security is perhaps the biggest selling point of a condominium. There will be a security check-in and the areas will be gated as well.
Having no disturbance from sales agents and the ability to let your young children go to the playground alone without worry is a big plus for many.
There are also larger "non-chargeable spaces" like balconies, first floor exclusives — private enclosed spaces (PES).
Amenities like swimming pools, gyms, and barbeque areas are also a plus for the individuals who frequent these facilities.
Conclusion
With these advantages and disadvantages spelt out, there is a strong selling point for the one million dollar HDB flat.
The HDB flat will be for the individual concerned about size and convenience, while the condo attracts affluent individuals who want a quiet and convenient lifestyle.
This article was first published in ValueChampion.