Martin Lee @ Sg
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Are HDB Prices Going Up or Down?

When I opened up the newspapers today, I saw the headline “HDB Flat Buyers Pay Less Cash Upfront” screaming at me on the front page. I got pretty annoyed about the article after I finished reading it.

That same headline could have been rewritten as “HDB Resale Flat Prices Continue to Rise“, and it would have fit the original article just as well. In fact I think it fits it even better.

The article states that the median cash-over-valuation (COV) prices in many popular estates have gone down. This is due to the increase in the market valuation of the flats.

With valuations going up, the COV is coming down and this makes it more affordable”, someone was quoted as saying.

How misleading.

Granted, the lower COV means that buyers need to fork out less cash upfront. However, they are going to pay more for their flat and this is going to make them financially worse off in the long run.

Able to fork out the upfront cash does not equate to being able to afford a flat.

If I tell you that you can buy a Porsche for no money down compared to paying a 10% deposit previously, does that make it any bit more affordable for you? Whether you can afford it or not will also depend on whether you can service the monthly installments.

There was an example given in the article about a five-room flat in Bukit Batok.

In the fourth quarter of last year, the median valuation was $389k, the median COV was $41k and the median price was $430k.

Barely 6 months later, the valuation is $420k, the COV is $30k and the price is $450k.

This is an increase of 20k or about 4.7% of the flat’s price in less than half a year.

If you read the entire article, you will realise that the author, Jessica Cheam, is trying to paint an optimistic picture about the affordability of HDB flats – despite the increase in their prices.With rampant inflation, the national newspaper is probably trying to do its part to reassure the public. Seriously, I think they can do much better than this.

Ironically, another section of the newspaper shows the cost of three HDB resale flats in the Holland area.

The 3-room was going for $378k, the 4-room for $465k and the 5-room for $680k.

The (rapidly) rising property prices is a real cause of concern.

If left unchecked, how are the lower income families going to be able to afford basic housing for themselves?

Leave a Comment:

alice says 11 years ago

lion investor,

one question to ponder is how gahment doing the valuation?
I was reading articles sometimes ago saying the valuation was done by independent valuer considering the recent transaction price (=valuation + COV).

In the fourth quarter of last year, the median valuation was $389k, the median COV was $41k and the median price was $430k.

Barely 6 months later, the valuation is $420k, the COV is $30k and the price is $450k. [\quote]

based on the above given data, it seems like a positive feedback loop for the median price to continue go up and up. Unless the seller is willing to sell at below valuation with no COV, there seems like HDB price hardly will come down.

    lioninvestor says 11 years ago

    Hi Alice,

    Yes, you are right. If COV continues to maintain even after prices are revalued upwards, the prices will keep on going up.

    But one fine day, buyers will run out of COV to pay.

Grant says 11 years ago


What is the ‘gahmen’? Is this an abbreviation for something?

    lioninvestor says 11 years ago

    Hi Grant,

    Gahmen = Government

Danny says 12 years ago

As of the moment, it appears that there isn’t, which is why the gahmen is developing smaller flats.

I do wonder though… how much responsibilities the individual and families need to bear for housing before turning to the gahmen and expect a low cost housing option.

I do some volunteer work and have come across cases where an elderly person is in need of $ and shelter. Upon questioning, empirically, about 2/3 of them have children who aren’t making that much and are living in small flats so they ‘cannot’ house their own parents.

My mom was 1 of 8 kids, all 8 kids had to share 1 room. People back then were more frugal and lived more simple lives, now it seems that their own room, computer, ipod, handphone are a birth right and taking care of the poor and the elderly is the business of the gahmen.

    lioninvestor says 12 years ago

    A new 2-room BTO flat in Seng Kang now costs about $90k. Five years ago, a 4-room could be bought for $130k.

    Things are getting smaller, and more expensive.

      danny says 12 years ago

      Seriously man. I was looking at flats from Pinnacle @ Duxton. It costs about $450k for a big 5 room 3 years ago now it’s 550k+! But taking a longer view of prices, its definitely cyclical. In a couple years from now, I suspect the price index graph of 2006 – 2011 will look similar to 1996 – 2001.

      It seems that private property is taking a bit slow down, IMO, it will be a matter of time before hdb follows suit. Waiting for a couple years for prices to settle down before we buy a flat.

        Intheknow says 11 years ago

        i think a 5 room at duxton at 550k is a steal.

          lioninvestor says 11 years ago

          If the prediction of some property analysts (from yesterday’s newspaper) that prices might hit $700k comes true, then of course $550k would be a steal!

Danny says 12 years ago

I do agree the objective of the article has not been accomplished.

HDB prices have gone up, even with direct purchase from Gahmen. But since the over construction of the late 90s, I think the Gahmen is operating on a more needs based model (BTO) and as a taxpayer, I think the HDB is being prudent.

As a HDB seeker (1st time) I am nonetheless irritated that new flats costs more. (A few years ago, a EA in Jurong was ~$270k, now, the same EA is ~$330k, or 22% over ~2 years only). For better or worse, the HDB prices are still varying with the market, albeit less volatile. However, I do understand that HDB cannot operate on a myopic time scale and have to think long term.

I’m grateful that at least in Singapore there is the option to BTO or Design Built and Buy available for the masses. In other countries, the gahmen let you live in the slum or on the streets.

    lioninvestor says 12 years ago

    Hi Danny,

    The question is, do we have enough affordable housing to cater for those people earning 2k or less a month?

    kiiri says 12 years ago

    pls do not compare with “other countries”.which countries are you refering to?cambodia/zambia?take a look at australia..i mean anywhere in australia/new zealand/canada.for $250 000, one could get a landed house with land bigger than any executive apartment.
    the income divide is getting massive in singapore and the moderately rich are getting a little too greedy and forgetting about needs and emphasizing on wants.
    if this model does not change, singapore will be one sad place to live in.already it is…so negative wherever you go : in a cab,in a coffee shop…everyone is complaining.not good for an upbringing for a child.

      danny says 12 years ago

      Why not compare to other countries? When comparing gahmen performance, some level of comparison of certain benchmarks is fair. I’m was from California USA, working in the biotech industry requires me to stay around San Francisco or San Diego where the jobs are. I can get a cheap house on a huge plot of land out in the country and drive 3 hours to work, but that has it’s own set of problems.

      Housing prices there were astronomical during the boom years, now the bust years are providing some relief. The gahmen didn’t help young families like mine do anything, although they were happy to tax about 33% of my income. Here, I have an option to purchase a flat with my Singaporean wife, and get subsidies while paying less than half the tax rate of the US.

      Australia for example, has an income tax rate of about 25% for my income range. I never lived there so can’t accurately comment on the situation.

      So I think Singapore has quite a good gahmen and much to be satisfied about. So yes, kiiri you are right, a handful of Singaporeans do like to complain about stuff, especially online!

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