SINGAPORE (EDGEPROP) – Earlier this month, a three-room HDB flat at 54 Havelock Road was sold for $768,000 ($1,034 psf). The 743-sq ft flat is located on the 15th storey. Using our analytics tool, Is it a Good Deal?, we analysed whether the buyer of this HDB flat managed to secure a bargain.

Long remaining lease and numerous nearby amenities

The three-room flat at 54 Havelock Road is located in the popular HDB town of Bukit Merah, which is within District 3. The flat is also part of Havelock View, which is within walking distance of Tiong Bahru and Havelock MRT stations, Tiong Bahru Plaza, Valley Point Shopping Centre, Beo Crescent Market, and  Havelock Road Cooked Food Centre (see Map 1).

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There are three primary schools within a 1km radius, namely Alexandra Primary School, River Valley Primary School, and Zhangde Primary School (see Screenshot 1). Other amenities within the same distance include Great World City, Great World MRT Station, Zion Riverside Food Centre, Tiong Bahru Market and Food Centre, Bukit Merah View Market and Hawker Centre, and Tiong Bahru Park.

Read also: Rental growth in 3Q2024 'short-lived'; upside capped by increased competition for tenants

The flat also has a long remaining lease of 88 years, which is a rarity for Bukit Merah, because the average remaining lease for HDB flats in the town is 62 years.

Our tool also indicated that the transacted price is in line with the average price for Havelock View but significantly above the average for District 3 (see Screenshot 2). The higher-than-average transacted price could be attributed to the flat's long remaining lease and its proximity to a variety of amenities.

More than 200 three-room flats have been sold for at least $700,000 this year

At the time of writing, 227 three-room HDB flats have been sold for at least $700,000 this year, with 65 of them located in Bukit Merah. This marks a significant increase from last year, when 131 three-room flats were sold for at least $700,000. Of the 131 flats, 59 were in Bukit Merah (see Chart 1).

However, flats in Bukit Merah account for only 28.6% of the total number of three-room flats that fetched at least $700,000 this year. This is a decrease from last year, when Bukit Merah flats represented 45% of the three-room flats sold for at least $700,000.

At the time of writing, the subject flat at 54 Havelock Road had achieved the highest price for three-room flats in that block (see Table 1). To date, it is the only flat in the block to have transacted for more than $700,000 and $1,000 psf.

However, two three-room flats in Havelock View were sold for at least $800,000 this year. In August, a flat at 57 Havelock Road, located between the 19th and 21st storeys, fetched $800,000 ($1,077 psf). Another flat at 58 Havelock Road, located between the 34th and 36th storeys, was sold for $818,000 ($1,101 psf) in May (see Map 2). Hence, the price tag of $768,000 for the subject flat is definitely not the highest for Havelock View.

Read also: Is it a Good Deal?: $1.03 million for a four-room HDB flat in District 10

Prices for three-flats in Bukit Merah higher than counterparts 

The average resale price for three-room flats ($677 psf) in Bukit Merah has been trailing behind its four-room ($857 psf) and five-room ($788 psf) counterparts since 2014 (see Chart 2). This could be attributed to the weaker price growth of three-room flats (21.3%) compared to four-room (34.7%) and five-room (31.1%) flats since 2014.

Since 2014, the average resale price for three-room flats in Bukit Merah has increased by 21.3%, which is comparable to the price growth for similar flats in the central region (23.9%) and islandwide (28.6%). Despite its weaker growth, the average resale price for three-room flats in Bukit Merah ($677 psf) remains higher than those in the central region ($642 psf) and islandwide ($598 psf) (see Chart 3).

The average resale price for three-room flats in Bukit Merah ($677 psf) is also higher than that in Queenstown ($650 psf), a nearby HDB town that is also located in the central region (see Chart 4). This could be attributed to the stronger price growth achieved by three-room flats in Bukit Merah (21.3%) since 2014, compared to their counterparts in Queenstown (17.1%).

It is notable that the transacted price of $1,034 psf for the three-room flat at 54 Havelock Road is significantly higher than the average price of $677 psf for similar flats in Bukit Merah. It is also higher than the prices in the central region ($642 psf) and islandwide ($598 psf). However, the transacted price is significantly below that of 99-year leasehold condo units of similar size in Bukit Merah ($2,194 psf).

There is also a significant price gap between the average resale price of three-room flats in Bukit Merah and that of 99-year leasehold condos in the same neighbourhood that measure 700 to 800 sq ft. The price difference has widened from $901 psf in 2014 and $1,368 psf in 2020 to $1,517 psf this year (see Chart 5). This could be attributed to the stronger price growth of 50.4% for the leasehold condos compared to 21.3% for the three-room flats.

Conclusion

Paying over $1,000 psf for a three-room HDB flat in Bukit Merah might not make sense to some, especially when the average resale price for such flats is only $677 psf. However, three-room HDB flats are the most affordable option for those keen to live in popular Bukit Merah, where the average resale price for leasehold condo units of similar size is significantly higher at $2,194 psf.

Read also: HDB resale prices rise for 18th consecutive quarter, up 2.7% q-o-q in 3Q2024

Furthermore, prices for three-room flats have increased over the years. Last year, only 131 three-room flats islandwide were sold for at least $700,000. The number has surged to 227 flats this year. This increase in one-person households could have contributed to the demand for three-room flats. One-person resident households increased from 134,800 households in 2014 to 222,700 households last year.

After the recent reclassification of Build-To-Order (BTO) flats, singles are no longer restricted by location when applying for a BTO flat. However, they are still limited to applying for only two-room BTO flats. Singles who wish to purchase a larger flat will have to turn to the resale market. The demand for three-room resale flats in a central location by singles has likely given a boost to demand and price for such flats in Bukit Merah.

To learn more about this transaction, and whether it is a good deal, click here.

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