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 a HDB 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 a 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 a 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.
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Source: SmartMoney.sg (18 Jun 2015)