Nov 13, 2009

PR Buys HDB Flat for $653,000

This is the story of how young Singaporeans are being squeezed out of the housing market. The PRs are squeezing them out. One account does not tell the whole story, of course, but you know who has the full figures, don't you. And that's why you will also never know the full story.
ST Nov 12, 2009
Record $653,000 for flat
By Jessica Cheam

A FOUR-ROOM Queenstown HDB flat has sold for $653,000, setting a new record for price per sq ft (psf), amid continuing red-hot demand for resale flats.

The buyers, a male Indonesian permanent resident and a Singaporean woman, could have bought a condominium unit in an outlying area for the price.

But they were won over by the location, just five minutes walk from Queenstown MRT station, and on the top, 40th floor of the block, with unblocked views of greenery from all windows.

The four-year-old 969sqft unit at Forfar Heights, Strathmore Avenue, sold for $68,000 above valuation - a level determined by an independent valuer.

This works out to $674 psf, smashing the previous record of $609 psf, achieved in January last year, by about 10per cent.

This may be an unusually high price but resale prices have been moving up.
This isn't a bad purchase, by the way. It all depends on the seller's individual needs and circumstances, but I can easily see how it could make sense to some people, to fork out $653,000 for a 4-room HDB flat.

Firstly, the flat is very nicely renovated (the Straits Times has photos) and looks as classy as a new condo. Secondly, on a psf basis, the flat is still cheaper than many condos. Thirdly, it is really quite close to an MRT station and a HDB hub of coffeeshops, supermarkets, clinics etc.

Next, there is the issue of privacy and facilities. People are generally prepared to pay more for condos, because of the quiet, privacy and the facilities. On the other hand, a HDB flat on the 40th floor is going to be quite peaceful and private anyway; very cool and breezy if you open the windows; and the view would be absolutely spectacular.

As for facilities, the odd thing is that many condo residents end up not using the facilities very much anyway. This is one assessment that buyers need to make for themselves. It's all very well to live in a condo with a big swimming pool, two tennis courts and a gym. On the other hand, if no one in your family is actually interested in swimming or playing tennis or working out in the gym, then effectively you're paying extra money for nothing. In that case, you might as well buy a HDB flat.

57 comments:

Anonymous said...

Looking at the bigger picture, it's more a Global Liquidity Flood issue. The Chinese and other 'richer-than-S'poreans' foreigners are also flooding other free markets besides S'pore eg Hong Kong. Locals in HK are also crying foul over escalating residential property prices, wreaked allegedly by Chinese buyers.

If you're S'porean and you are not crazy to buy at such lofty price, you dun lose out. On the other hand, if you are that S'porean who sold that piece of expensive property, you gain massively.

The Peranakan Dude said...

You know the saying "there's one born every minute". I don't care if he could afford to pay or not, a sucker's a sucker whichever way you look at it.

Anonymous said...

I agree to the point that it depends on individual needs. But most people don't see it that way and as long as the new record is achieve, it gives more room for the others to follow.

They will think "hey if they can sell for 653k for a 4 room, i should be selling at least 500k for mine / buying at 500k is ok."

the biggest group that suffers are genuine buyers who are looking for just a roof, they will have to bear a heavier loan with longer period and much more interest.

I am lucky to be one of those who bought their flats much earlier and fully paid up. But i can still feel the pain of those who need a home.

Btw ST fails to mention 1 important thing, what is the COV?

Joseph said...

Mr Wang,

You seem to have an issue with PRs with Singaporean spouses buying HDB flats. Could you qualify that?

Anonymous said...

I think it is a sensible buy (though the article did not says how far in the 99 years it is).

For me the choice is even more reduced:
I cannot buy a HDB (single PR)
I don't want facilities (single PR)

Anonymous said...

Ya, I think most of the residents in condos do not use the facilities. I have always wonder why the developers do not want to build flats with no fancy facilities. I for one wants one without facilities so that I do not have to pay so much maintenance fees.

Mr Wang Says So said...

"If you're S'porean and you are not crazy to buy at such lofty price, you dun lose out"


If you are Singaporean and you really need a place to stay, then you do lose out.

Mr Wang Says So said...

"You know the saying "there's one born every minute". I don't care if he could afford to pay or not, a sucker's a sucker whichever way you look at it."

Whether he is a sucker or not remains to be seen. If the government continues to flood the island with foreigners, then in another 3 or 4 years time, who knows? Perhaps that 4-room flat will be worth $800,000.

Mr Wang Says So said...

"Btw ST fails to mention 1 important thing, what is the COV?"

$68,000.

Mr Wang Says So said...

"You seem to have an issue with PRs with Singaporean spouses buying HDB flats. Could you qualify that?"


In what way? Perhaps I should have added that a 21-year PR can buy a HDB resale flat, if he marries a Singaporean.

In contrast, two joint singles who are citizens (eg two Singaporean sisters, or two Singaporean brothers) cannot buy a HDB resale flat, unless both are at least 35 years old.

Anonymous said...

Mr Wang says:
"If you are Singaporean and you really need a place to stay, then you do lose out."


If you are S'porean, and you really need a place to stay, there are plenty of choices around...! You dun really need to stay at Queensway and pay that kinda sucker price. This kind of Queensway type of price craziness in not seen in "lesser" estate, really!

The original owner of that Queensway flat and many 1st hand owners of that area hit jackpot, kinda like enbloc development. No point sourgraping...!

Mr Wang Says So said...

I'm not "sourgraping". I just made a few hundred thousand dollars profit selling my own HDB flat. See earlier post.

Queenstown, by the way, never struck me as a popular estate. Toa Payoh; Bishan; Tampines; Marine Parade - these are the popular ones.

SG Girl Next Door said...

Most average Singaporeans are 'asset rich' (cos they own HDB flats). However, the HDB flat belongs to you only when it is fully paid up. Buy what you can afford.

I am grateful my family allows me to stay with them because I can't even afford a resale 2-room HDB flat. Sigh..

Anonymous said...

All of you can curse the PR for jack up the HDB price, causing the citizen can't afford the HDB flat.

On the other hand, the citizen who sold the unit is gaining huge profit. Blame the greedy citizen who sold the flat at high price too.

If you are the owner of the Queenstown unit, will you spare a thought for other citizen too?

Mr Wang Says So said...

Nope. It's not the responsibility of the individual flat owner to care for the housing problems of the general population.

However, it IS the responsibility of the Singapore government to care for the housing problems of the general population.

The question is - is the S'pore govt succeeding in managing these problems?

Anonymous said...

As always, this cyclical problem will eventually be cured by a combination of market forces and govt intervention in S'pore....let's not fret too much and get ahead of ourselves.

Of course, there will be plenty of gripes (cannot afford lah, high costs lah, blah, blah, blah same type of complaints repeated at or close to the peak of cycle), but it will only be temporary until market crashes. By then, it's a another type of complaint related to job security will be rehashed again.

If you're savvy (like Mr Wang who made a couple of hundred selling his flat, and this Queestown guy),
follow the smart money. Sell your overpriced HDB flats in this market and wait out. Buy back when it crashes. Meantime, rent.

SandwichClassSingaporean said...

"On the other hand, if you are that S'porean who sold that piece of expensive property, you gain massively."

Not necessarily. Unless you already own two properties (guess what sort of income class that makes you?), you still need to consume accommodation.

Sell high, buy high, unless you are giving up something (emigrating, moving out to a "lesser" estate, or smaller flat that you're also paying more for)

Anonymous said...

Mr Wang,

The oft quoted "80% household stays in HDB flats" mantra is already ingrained. Objectively, do you not think the govt is quite successful in managing the problem for the majority of S'poreans?

Also, I think next year is going to be election year. Count on the govt to dangle carrots to entice potential 1st time home owners....!

My greater fear is whether we are tipping into a high inflation environment brought about by too much money printed by govts globally & concertedly, which is unprecedented.

Anonymous said...

"Whether he is a sucker or not remains to be seen. If the government continues to flood the island with foreigners, then in another 3 or 4 years time, who knows? Perhaps that 4-room flat will be worth $800,000."

Unfortunately, some are still not able to see the mechanics.

Our country is marketing stability and is churning out lots of private housing and there are plenty of well-to-do foreigners anytime from the world at large over the average singaporean to create the excess demand, hence spiraling the price upward - and making this country a very congested space.

Anonymous said...

"Looking at the bigger picture, it's more a Global Liquidity Flood issue. The Chinese and other 'richer-than-S'poreans' foreigners are also flooding other free markets besides S'pore eg Hong Kong."



This is the nub. We are too small unlike other markets. Public housing cannot be left to pure free market forces. If the government does not intervene in public goods, then how do Singaporeans stand any chance against global liquidity? When current generations of flat owners who bought their flats at previous prices cash out, what will happen to younger generations of Singaporeans? They will simply be priced out of housing in their own country.

Add in other issues like National Service, you get a simmering discontent waiting to burst.

Anonymous said...

"My greater fear is whether we are tipping into a high inflation environment brought about by too much money printed by govts globally & concertedly, which is unprecedented."

Your fear is also on a lot of peoples' mind. Just do not know how it is going to play out in our country as it is unpredictable.

However when it hits, a lot of average locals will be in for a big shock.

It appears that we are trying to get foreign exchange out of private housing by attracting foreigners here to make up the demand number.

Anonymous said...

What are we doing our NS and reservist duties for?

To defend our right to service $650k housing loans for 4-room HDB flats?

Anonymous said...

It was reported the seller of this 4 room flat bought another HDB at a further location Jurong East - possibly a larger unit at half the price. The leftover of $350k can be saved for his future retirement or to pursue his other interest. Wise choice. There is no need to stay in Queenstown - by moving out 3 MRT stations away, he pocketed $350k.

Anonymous said...

To Anonymous Nov 13, 2009 8:55 PM

"What are we doing our NS and reservist duties for? To defend our right to service $650k housing loans for 4-room HDB flats? "

To defend this PR's newly acquired $650k 4-room HDB flats?

Anonymous said...

Is this Indonesian PR a millionaire in his home town, someone whom wont flinch splurging on indulgent. It would be interesting to find out the source of his wealth; also HDB's monthly family income cap of $8-9k applicable to his person or not?

Just curious.

Chee Wai Lee said...

Anon 10:18 PM -

The 8k salary cap only applies to new HDB flats. This guy bought from the resale market.

Anonymous said...

"It was reported the seller of this 4 room flat bought another HDB at a further location Jurong East - possibly a larger unit at half the price. ... Wise choice. There is no need to stay in Queenstown - by moving out 3 MRT stations away, he pocketed $350k."

1. Jurong isn't only 3 MRT stations away from Queenstown, and the flats near the MRT station aren't cheap

2. Do you not see the escalation of this? Queenstown used to be the cheap suburb/outskirts. If this goes on there won't BE any cheap outskirts left.

Anonymous said...

"I'm not "sourgraping". I just made a few hundred thousand dollars profit selling my own HDB flat. See earlier post."

"Nope. It's not the responsibility of the individual flat owner to care for the housing problems of the general population."

Mr. Wang,

What a convenient critique. True, it is the Government's responsibility to house its citizens, not yours nor mine.

But I cannot help thinking about the hypocrisy of this post: You chastise this PR for shelling out crazy money, thus inflating property prices. But it's oh-so-fine for you to have made a handsome profit from the same market.

What drivel.

Anonymous said...

I can see a certain anon sourgraping, haha.

Anonymous said...

It is the full responsibility of the govt to manage affordability of housing. After all, the govt has full control over net immigrant inflow, land sales and number of new HDB flats.

This govt has been negligent by allowing net immigrant inflow to far exceed housing supply for at least 5 years.

As citizens, we have to show our displeasure through our votes.

Anonymous said...

"It was reported the seller of this 4 room flat bought another HDB at a further location Jurong East - possibly a larger unit at half the price. The leftover of $350k can be saved for his future retirement or to pursue his other interest. Wise choice. There is no need to stay in Queenstown - by moving out 3 MRT stations away, he pocketed $350k."

Your figures are totally wrong.
Jurong East 4-room are now $350k. And we are talking about 1km away from the MRT station, and a 25-year old flat.

I would say the BUYER, not the seller made a wise choice. In the long run, he would save more money from not wasting time and money commuting for work and play. And we have not talked about the intangible benefits.

Anonymous said...

The beauty of staying in a condo is that it keeps the garbage out.

How many of you have heard of loansharks splashing paint on doors in a condo?

How about robbery or assault cases in condo void deck?

So far, the main problem with staying in condos are en-bloc sales, if you are against selling your flat.

$653k for HDB flat not really worth it, especially when it does not keep out the trash. But maybe staying on the 40th floor might help a bit.

Anonymous said...

Next year is probably election year. Let's see whether there's gonna be more opposition election or simply business as usual.

Anonymous said...

Japan and US have been through the asset bubble and it did not end well. During the bubble phase, families take on more debt than they can afford for shelters. When the bubble bursts, many find themselves owing more debt than the asset is worth.

Here is a practical suggestion. If it is cheaper to rent than own, go for rental. There is nothing wrong with rental. You don't want to be the bagholder when the bubble bursts.

For people who get "rich" in the bubble, the wealth can perhaps be used towards education or even emigration.

-ben said...

Well, if the downtrodden are in need of cash, there are other avenues:

"1st potential payout heartening"

Meanwhile, propaganda machine is out to convince people it's perfectly all right to donate one of your kidneys and still live long:

Oldest living organ donor

Not a surprise since they have proven you can live long with only part of your earnings (CPF), and part of your time (NS / ICT).

A young, newly married couple is likely have 2 spare kidneys lying around somewhere, yes?

Opportunities. Opportunities. This is entrepreneurship that they hawk about all day in the papers.

Anonymous said...

Mr Wang,here are my thoughts & opinions:-

1)For the Indo PR dude who bought the price @ a record breaking price,the seller must be in seventh heaven

2)The reason why the article was written is plain simple,to tell S'poreans indirectly money talks,money walks,money mocks,money flocks,its always about material things,think about it Mr Wang,if you were in the seller's shoes,you needed the money or simply wanted to make a profit out for it

3)Selling the flat @ such a price has no loss for the seller,he can always downgrade to a 2 or 3 room flat depending on his/her needs

4)Its just business Mr Wang,its nothing personal

5)Typical S'poreans are pathetic,the MIW is running the show,if only the public can wake up from their slumber & take action when the next GE comes into the picture

6)The other option or alternative we S'poreans have is to migrate to other parts of the world,its a global village,uprooting our home to a new haven aint easy,but worth the sacrifice

7)Singapore is a sinking ship,we will end up like the Roman Empire,demolished & crumbled under a rubble of corruption,gambling,other forms of addiction...start planning for your family Mr Wang,you still have time.

James Michael Parthi

Anonymous said...

To the Anon who thinks the seller is stupid and the buyer is clever as Queenstown is the best location.

If A Jurong East flat is $350k, he still pocketed $300k to pursue his other interest in life - be it fast cars, a good education for his children, lesser financial burden, exploring the world, start his own business etc. Jurong or even Clementi might have better facilities and amenities than Queenstown - it's actually quite a dead town with a couple of churches and police station with most of the facilities in demolition for more HDB/condos. To each his own and we should not say that the seller made a stupid choice by selling such a "prime" location HDB. Singapore is a small country and bear in mind Jurong will be the next CBD in time to come. He might be just trading out an asset that might be fully valued to another asset that is still undervalued - while still staying in an established town with lots of facilities and amenities. I recall lots of people laugh 15 years ago when people say "let's invest in Pudong" in Shanghai or Canary Wharf in London. Look who's laughing now?

Anonymous said...

Mr Wang,
I am not necessarily supporting HDB / PAP etc. here, but objectively speaking, I do not think public housing in Singapore is overpriced. As a Singaporean who has lived abroad for a large part of my adult life, compared to most developed nations, HDB prices in Singapore are not really exorbitant. But they have risen substantially -- yes that is undeniable.

Lin Sia said...

"However, it IS the responsibility of the Singapore government to care for the housing problems of the general population.

The question is - is the S'pore govt succeeding in managing these problems?" - mr wang

first all, all the surplus flats built in the past years in the ulu areas like punggol/sengkang and jurong west/boon lay areas have all been snapped up. singaporeans cannot be choosy over the locations because of the jack-up prices and hence have taken up ownership of these flats.

all current new flats are all BTO (with existing pent-up demand) and Design&build. prices are matching the resale market, with the D&B flats going higher than condos. again, a sure profit for HDB.

but I don understand why HDB is still incurring huge losses based on the recent report...

anyway, looking at the policy, is the general population the govt is taking care of or only the lower income singaporeans with household income less than $8K.

higher than that, we can only buy from resale market or condos, which is what exactly the PRs are entitled to...

Anonymous said...

Anon@3:15AM,

As a rule, one should not spend more than a third of his income on mortgage payment. Given the prevalence of using CPF, which is really income, for part of mortgage payment, a borrower may actually spend more than a third of his total income on shelter. You will have to look at the data to assess affordability.
Also, if housing prices have increased substantially while wages stagnated, your premise that housing is not overpriced is likely incorrect.

Anonymous said...

Soon there will be many many millionairs in Singapore. And in no time the whole nation can be put up for sales to the highest bidders. We have lost our identity as a nation with so many foreigners .

SMS said...

Hi,

"Whether he is a sucker or not remains to be seen. If the government continues to flood the island with foreigners, then in another 3 or 4 years time, who knows? Perhaps that 4-room flat will be worth $800,000."

This PR chap must have thought that he could sell it later for $1 million Singapore dollars. The agenda
1) continue to raise the price of HDB flats and lock your money up for good.

2) with the cap in CPF contribution to the first $3000 is as good as saying "you better ask your father to also pay for your flat using his CPF"

A very smart move.

Anonymous said...

HDB through the years have enriched the buyers of their flats when their the asset appreciated by huge margins. To any one looking at the statistics, buying a new flat, and selling it five years down the road yields big bucks. I think the HDB realised this over the years, and have steadily increased the price of new flats. This is what he means by affordability. It doesnt care whether you cannot afford it, as long as another buyer is willing to pay up, that is the market.

Having said that, I feel for the younger generation who can ill afford the resale flats and compete with hot money flowing in from the region. As for the new flats, the 8K cap is not in synch. Younger singaporeans are caught between a rock and a hard place.

Anonymous said...

Mr Wang has just displayed the typical hypocritical Singaporean mentality -- expect the government to provide everything on the cheap, but make a killing when you can without considering the repercussions.

No wonder the government treats you guys like dirt.

I wish the government would solve the problem of high prices by building exclusive HDB estates for PRs.

Anonymous said...

For goodness sakes, Mr Wang is only one person. He is not a market force onto himself.

Unlike our ministers, he isn't even paid two million dollars a year to solve Singaporeans' housing woes.

Anonymous said...

What is rational and right for the individual may not be healthy for the collective in the long run or the aggregate.

It doesn't necessarily mean that the individual household is being particularly selfish or unreasonable. That's how market forces work.

That said, those that regulate the market should find ways to cushion this and be clear about their objectives. Mixing up housing (basic human right) with asset inflation (wealth creation) is a bad idea.

Imagine if you speculated on water, and instead of supplying drinking water through our taps, you exported it to the highest bidder....

Anonymous said...

singaporean has made hundreds of thousands of profit from HDB sales and they kept quiet (while counting money). the moment when foreigners buy the resale flat and push up the resale price, they complain. where is the logic?

look at any other country in the world, which one help majority of the citizen accumulate so much of wealth?

Mr Wang Says So said...

LOL, I'm not complaining for myself.

This blog is mostly about Singapore-related issues. From time to time, I may write about the difficulties faced in this country by the unemployed; the gays; the NSFs; the working mothers; the patients in need of organ transplants etc.

To write about these issues, I don't personally need to be unemployed, gay, NSF, a working mother, or in need of an organ.

Similarly I could blog about young Singaporeans having difficulty buying a home. It doesn't mean that I have to be young myself, or that I must be having difficulty buying a home.

Anonymous said...

"I wish the government would solve the problem of high prices by building exclusive HDB estates for PRs."

This is not needed. You can choose freely over whichever estates you like since there is no restrictions (or rather the same restrictions also apply to Singaporeans). What do you still need 'exclusive' in this case?

Yes, of course we are not complaining if we can profit from it. The thing is even without the influx of foreigners, the prices of properties will still go up, but not at the expense of squeezing out the young singaporeans looking to own a home in their own homeland...

Anonymous said...

mr wang:

my comment was not directed at u. however, i cant imagine the ppl now asking the government to control more and more part of our life...

Anonymous said...

"look at any other country in the world, which one help majority of the citizen accumulate so much of wealth?"

You mean, Malaysia/Indonesia (if you are the right ethnicity and well connected), Japan, China, the US (if you are lucky, the Nordic states, Australia (esp in recent years) and just about any other advanced economy?

Or do you mean the paper value of the roof over your head that you'd have to give up in order to encash?

Anonymous said...

"LOL, I'm not complaining for myself."

Of course not...who wouldn't want an extra couple of hundred grand in their account :)

I felt your blog post was hypocritical because it approaches the story from the repercussion angle, not from the perspective of the seller. The focus is on how such sales are squeezing out young Singaporeans. It doesn't celebrate the fact that a Singaporean made 653K on a flat bought for 260K. That's 400K from an Indonesian's pocket into a Singaporean's pocket. How can you not celebrate it?

And you admit to having made a killing by selling your flat. So you have also played a role in squeezing the young Singaporeans out of the housing market. Who are you shedding tears for?

"To write about these issues, I don't personally need to be unemployed, gay, NSF, a working mother, or in need of an organ."

Of course not. You are free to write whatever you want. It's your blog. But you can't expect people to not call BS when they see a preach-practice mismatch.

"Similarly I could blog about young Singaporeans having difficulty buying a home."

But you are one of the many who's causing the difficulty. Don't you see the hypocrisy of it? Or ar you going to conveniently blame the govt for it?

Anyway, thanks for the space, and I admire your honesty in at least admitting that you have in your own small way contributed to the current mess.

Anonymous said...

"This is not needed. You can choose freely over whichever estates you like..."

Sure can. But it's additional competition for the Singaporeans. Look at it this way: with fewer PRs in the fray, Singaporean-owned flats will become cheaper and young Singaporeans won't feel squeezed out.

And if PRs can buy and sell only from other PRs, it would create a subsystem that would leave Singaporeans completely unaffected.

"Yes, of course we are not complaining if we can profit from it."

Finally there is something Singaporeans won't complain about.

"The thing is even without the influx of foreigners, the prices of properties will still go up.."

Unlikely. Why do you think the govt has been giving PR so freely the past few years?

Mr Wang Says So said...

LOL, but I didn't sell my flat to PRs.

lobo said...

Anon: however, i cant imagine the ppl now asking the government to control more and more part of our life...

I wouldn't exactly say regulating HDB flats to be citizen-centric to be 'controlling' of our lives.

I WOULD say only only married couple to buy new flats to be controlling our lives.

Basically, govt intervention does not necessarily result in restricting our choices.

james said...

This is a really huge amount as
a flat is prices this much. But
it may be a bigger flat and
fully furnished.
flats for rent london

Anonymous said...

Not sure if it is true.
A PR colleague mentioned that single PR can buy resale HDB with their mom, or another PR sibling. No 35 year old min age like Singaporean Single.

If it is true, then aren't we short-changed ?

There are also many cases of PR after buying HDB, return to their own country and rent out their HDB for additional income. This should be stopped.