ANALYSIS: Which HDB towns will benefit upgraders?

By Elizabeth Choong

/ EdgeProp Singapore |

June 22, 2023 7:25 PM SGT

Clementi Stadium and Swimming Complex (Samuel Isaac Chua/EdgeProp Singapore)

SINGAPORE (EDGEPROP) – In this article, we examine the difference in the average unit price for three, four, and five-room HDB flats in the same town to determine which HDB town has the largest or smallest price difference between the different flat types.

The price difference is important to homeowners who are looking to move to a larger or smaller flat in the same town. Couples who need more space for their expanding family will prefer towns where the unit price difference is skewed in favour of smaller flats, while empty nesters will prefer the opposite.

Methodology

EdgeProp Market Trends was used to obtain the average unit prices for the different HDB flat types in each HDB town. The current average unit price is based on resale transactions that took place this year.

The price difference is calculated as the percentage difference between the average unit prices of different flat types. For example, a price difference of 5% for a three and four-room flat would mean that the three-room flat has an average unit price that is 5% higher than its four-room counterpart. On the flip side, a difference of -10% for a four and five-room flat would mean that the smaller flat has a unit price that is 10% lower than the larger flat.

Central region

It is noteworthy that Central Area is the only HDB town where five-room flats have an average price of over $1,000 psf. Additionally, Central Area has the highest unit price for four-room flats, while Bukit Merah has three-room flats with the highest unit price.

Another significant observation is that the average unit prices for three-room flats in all HDB towns in the central region are lower than those of four-room flats in the same town by 4.5% to 29.7%. This makes three-room flats even more affordable for owners of four-room flats in the central region who plan to downsize to a three-room flat in the same town.

Among the HDB towns in the central region, Queenstown has the largest price gap between three and four-room flats, favouring four-room flats. The average unit price for three-room flats in Queenstown is 29.7% lower than their four-room counterparts. This means that owners of a three-room flat would need to have more funds in their bank account before they can upgrade to a four-room flat if they choose to remain in Queenstown. However, empty-nesters who sell their four-room flat in Queenstown will have ample funds to finance their purchase of a three-room flat in the same town.

The significant price gap may be attributed to a much stronger price appreciation for four-room flats in Queenstown compared to their three-room counterparts. Three-room flats in Queenstown have experienced a mere 9% growth since 2014, while four-room and five-room flats witnessed a growth of 25% and 19% respectively during the same period.

In contrast, homeowners of a four-room flat in Bukit Merah require the least amount of savings if they wish to upgrade to a five-room flat. This is because the price gap between the two flat types is the largest in favour of four-room flats compared to other HDB towns in the central region.

The average unit price for five-room flats in Bukit Merah is 14% lower than their four-room counterparts. This could be attributed to the fact that five-room flats in Bukit Merah have experienced the slowest price growth of 16% since 2014, in comparison to a growth of 25% and 22% for four and three-room flats, respectively.

East region

Among the towns in the east region, Bedok is the only town where the average unit price for three-room flats is lower than that of four-room flats in the same town, making it easier for empty-nesters to downsize.

This could be attributed to the fact that three-room flats are the most common flat type in Bedok, accounting for 38.2% of all HDB flats in the town. The abundant supply of three-room flats in Bedok suggests that buyers may have more bargaining power compared to sellers.

Moreover, the four-room flats in Bedok have the highest average price of $572 psf among the towns in the east region, which could be attributed to a strong price appreciation. Four-room flats in Bedok have experienced a growth of 26% since 2014, in comparison to a growth of 13% for three-room flats and 22% for five-room flats.

Interestingly, Pasir Ris has the lowest unit price for four and five-room flats but the highest unit price for three-room flats among all towns in the east region. This could be attributed to Pasir Ris having only 490 three-room flats.

As a result, buyers who are seeking to purchase a three-room flat in the east region might want to avoid Pasir Ris. However, buyers looking for a four or five-room flat in the east region should definitely consider Pasir Ris.

West region

Among the towns in the west region, upgraders should find it the easiest financially to move from a smaller flat to a larger flat in Choa Chu Kang. This is because the average unit price for three-room flats in the town is 13.7% higher than their four-room counterparts, which are, in turn, 1.7% higher than five-room flats.

There are only 2,462 three-room flats in Choa Chu Kang, significantly fewer compared to 23,465 four-room flats and 15,952 five-room flats in the same town. The scarcity of three-room flats gives sellers more bargaining power, resulting in a boost in prices.

In contrast, owners of smaller flats in Clementi might want to consider another town if they wish to upgrade to a larger flat. The average unit price for three-room flats in Clementi is 9.5% lower than that of their four-room counterparts, and the average unit price for four-room flats in the same town is 4.3% lower than that of five-room flats.

The price difference could be attributed to the disparity in the number of the different flat types in Clementi. There are 9,397 four-room flats and 3,364 five-room flats in Clementi, compared to 12,082 three-room flats in the same town.

Furthermore, the average price for three-room flats in Clementi has grown by 26% since 2014, which is a slower pace compared to the 30% growth for four-room flats and the 29% growth for five-room flats.

North region

Yishun is the only town in the north region where the average unit price for five-room flats is higher than that of their four-room counterparts.

There are 4,230 four-room flats in Yishun that will reach their minimum occupation period (MOP) in November, but there are no five-room flats in Yishun that will reach MOP this year. The significant number of four-room flats becoming available for sale later this year could have had a dampening effect on current resale prices.

The four-room flats that will reach MOP later this year include 2,820 flats in Blossom Spring @ Yishun along Yishun Avenue 6 and 1,410 flats in Meadow Spring @ Yishun along Yishun Street 43.

On the other hand, Woodlands is the only town in the north region that has five-room flats have reached or will reach their MOP this year. Last month, 5,067 five-room flats in Marsiling Greenview along Woodlands Street 13 and 353 five-room flats in Woodlands Pasture I along Woodlands Rise obtained MOP.

Owners of four-room flats in Woodlands are likely to find it financially easier to upgrade to a five-room flat because the average unit price for four-room flats is 2.8% higher than that of five-room flats. Moreover, the average price for both types of flats has grown in tandem. Four-room flats in Woodlands have grown by 30% since 2014, in line with the 33% growth for five-room flats.

North-east region

Among the towns in the north-east region, homeowners in Ang Mo Kio will face the heaviest financial burden when upgrading from a three-room to a four-room flat. The average unit price for three-room flats is 19.1% lower than that of four-room flats.

It is also notable that four-room flats in Ang Mo Kio have the highest average unit price among the towns in the north-east region, while the average unit price for three-room flats is the second lowest.

The price difference could be attributed to the disparity in the supply of both flat types. Three-room flats make up 51.9% of all HDB flats in Ang Mo Kio, while four-room flats account for only 31.2%. As a result, sellers of three-room flats have less bargaining power in the resale market.

Furthermore, the average price for three-room flats in Ang Mo Kio has only grown by 15% since 2014, which is significantly lower than the growth of 35% observed for four-room flats.

In contrast, Hougang is the only town in the north-east region where the average unit price for five-room flats is higher than that of four-room flats. This can be attributed to the fact that 48.7% of the HDB flats in Hougang are four-room flats, while only 20% are five-room flats.

Since 2014, the average price for five-room flats in Hougang has grown at a faster pace of 27% compared to a growth of 21% for four-room flats. Therefore, empty-nesters in Hougang who are looking to downsize from a five-room flat to a four-room flat should be able to do so with ease.

In summary

Unsurprisingly, HDB resale flats in the central region are the most expensive. However, it is notable that three-room flats in the region have lower unit prices compared to their four-room counterparts, which benefits empty-nesters looking to downsize from a four-room flat to a three-room flat.

Among the towns in the central region, Central Area, Queenstown, and Toa Payoh all have three-room flats with average unit prices that are more than 20% lower than their four-room counterparts.

Homebuyers looking to upgrade from four-room to five-room flats should look to the central and northeast regions because the price gap for four- and five-room flats in these two regions is larger than the overall price difference in Singapore between the two flat types. Among the towns in the northeast region, Sengkang and Ang Mo Kio have the largest price gap between four and five-room flats, while Bukit Merah and Queenstown top the charts for the central region.

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