Are top-dollar HDB flats worth it?

By Lin Zhiqin / The Edge Property | November 27, 2015 3:00 PM SGT
The number of HDB resale transactions that crossed the $900,000 mark surged from 16 last year to 72 between January and October this year. The average transacted price rose from $913,500 last year to $944,966 this year, even as the HDB resale price index fell 9.9% from its peak in 2Q2013 to 3Q2015. Disregarding the transactions at Pinnacle@Duxton, which have accounted for 48 of such transactions thus far this year and one last year, transactions still grew by nine units since last year to 24, while the average price rose from $914,400 to $921,542.
Are these HDB flats that bucked the downtrend worth the top dollar paid? A closer look at the priciest HDB resale flat in three different locations shows that these buyers might be getting a bigger bang for their buck in terms of space and location.
Limited supply
One factor contributing to the price uptrend in the top segment of the resale HDB market could be low availability. For instance, no five-room flats at Toa Payoh Sapphire and Strathmore Green are currently listed for sale on although there are33 flats listed for sale at Pinnacle@Duxton.
In general, the supply of resale HDB flats with good locations in mature towns is very low as evidenced by the 17 listings for five-room flats within 1km of Toa Payoh MRT. Thesis likely due to the reluctance of the owners to part with their homes. In comparison, there were 105 five-room flats listed for sale within 1km of Punggol MRT and 218 within1km of Sengkang MRT, both of which are non-mature towns.
On the other hand, the supply of resale condominiums and apartments is relatively abundant, with 197 listings within 1km of Toa Payoh MRT, 154 listings in the vicinity of Pinnacle@Duxton and 75 listings near Strathmore Green.
Limited substitutes
A 1,151 sq ft five-room flat sold in April at 1G Cantonment Road, Pinnacle@Duxton, holds the record for the most expensive resale HDB flat at $1.06 million. At a similar price point, the only alternative among nearby private apartments and condominiums would be 560 to 689 sq ft one-bedroom units — about half the size of the HDB flat — at Icon. For a private home close to 1,151 sq ft in size, a buyer would have to fork out $1.61 million or $1,427psf on average in District 2 this year. This includes transactions at older 99-year leasehold developments such as Spottiswoode Park.
After the Pinnacle@Duxton, the next most expensive resale HDB unit was a five-room 1,270 sq ft flat at 62A Strathmore Avenue, Strathmore Green, which was transacted at $958,000 in September. There have been two transactions this year at a similar price point at nearby private development Alexis, again involving small units of 549 and 603 sq ft. Meanwhile, transacted prices for private homes similar in size to 1,270 sq ft in District 3 this year averaged $1.76 million or $1,434 psf.
A five-room 1,334 sq ft HDB flat at 154 Lorong 2 Toa Payoh, Toa Payoh Sapphire, fetched $955,000in August, a record high in the town.
There are only three private developments located within 500m of Toa Payoh Sapphire — Oleander Towers, Trellis Towers and Trevista, all of which are located further away from Toa Payoh MRT station and Toa Payoh Central. Based on this year’s caveat data, a buyer with a similar budget would only be able to afford 710 to 861 sq ft two-bedroom units at Oleander Towers and Trellis Towers and a one-bedroom 689 sq ft unit at Trevista. In District 12 this year, the average transacted price for private homes around 1,334 sq ft in size is $1.46million or $1,118 psf.
Beyond reach
Based on an 80% loan of the purchase price over 25 years and 3.5% interest per annum, the mortgage for condos in the vicinity of Pinnacle@ Duxton would be $6,456 per month. This is $2,211 higher than the $4,245 monthly mortgage for the resale HDB flat. The mortgage would be $3,212 higher for condos around Strathmore Green and $2,031 higher for condos around Toa Payoh Sapphire than the most expensive transaction for an HDB resale flat. At the same time, the required down payment would increase by between $101,400 and $160,400 for buyers who opt for private homes over the HDB flat (see table below).
At least $2,000 more in monthly mortgage for condos
Resale HDB price
Average condo price
HDB mortgage
Private mortgage
Difference in downpayment
Difference in mortgage
Strathmore Green
Toa Payoh Sapphire


Average condo price based on resale transactions of similar-sized private non-landed homes within the same district Mortgage based on 80% LTV and 25-year loan at 3.5% interest per annum
Down payment based on 20% of purchase price

Source: URA, The Edge Property

Potential rental yield higher for resale HDB flats
Although certain prerequisites must be met for the purchase of resale HDB flats and there are more conditions to be fulfilled before they can be sublet, a comparison of gross rental yield based on current prices and rents shows that these top-dollar HDB flats generally outshine their similarly priced private counterparts.
Based on rental and resale contracts for five-room HDB flats at 1G Cantonment Road this year, the average monthly rent of $3,750 works out to a gross rental yield of 4.6%. In comparison, the resale prices of the seven similarly priced units at Icon translate into a gross rental yield of 4.1%.
The monthly rent for the two HDB flats rented out this year at 62A Strathmore Avenue averaged $3,100 while the four resale transactions averaged $925,250, translating into a gross rental yield of 4.0%. In comparison, the monthly rent for similarly priced units at Alexis is $2,942, translating into a 3.8% gross rental yield.
There were three rental contracts at 154 Lorong 2 Toa Payoh this year, with monthly rent averaging $3,016. Against the two resale transactions averaging $932,500, this translates into a gross rental yield of 3.8%. The average monthly rent for similarly priced units at Oleander Towers is $3,105, which translates into a gross yield of 3.9%. At Trellis Towers and Trevista, the monthly rent for units at the price point of the resale HDB averaged $3,050 and $2,957, while the gross yield averaged 3.6% and 3.8% respectively.
With a good mix of size, location and an affordable price compared with private homes, as well as scarcity, it is no wonder that buyers are snapping up these top-dollar public housing.
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This article appeared in The Edge Property Pullout, Issue 705 (November 30, 2015) of The Edge Singapore.