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I don't get it - why is it always called a "Condo Dream"? Is public housing really that atrocious to live in for the status-conscious? This couple is earning combined $11,000 a month which is much higher than what the median couple earns! If they bought a cheaper resale flat ($400,000 to $500,000) instead of targeting a condominium, I am sure they would be able to save a lot more for retirement! Big Grin

Is it really called "upgrading" when you are saddled with a bigger loan which you need another half a lifetime to pay off? Huh

Thu, Jun 23, 2011
The New Paper
Couple's condo dream put on hold

Gulf between prices of HDB flats and private homes widens, putting off upgraders. -TNP

By Desmond Ng

A COUPLE'S dream of upgrading to a condominium is fading away as the gulf between the prices of HDB flats and private homes keeps widening.

Civil servant Augustine Wee and his wife are keen to upgrade from their five-room HDB flat in Ang Mo Kio to a condo unit in the same area.

But they are finding themselves priced out of the private home market.

Mr Wee, 38, is put off by the price difference between HDB and private homes.

He reckons he can sell his resale 1,300 sq ft flat, bought in 2006 for about $400,000, for just under $600,000 today.

But to upgrade to Castle Green, a 99-year condo near his present location, could cost him about a cool $1 million for a slightly bigger 1,410 sq ft unit.

Said Mr Wee: "That's a $400,000 difference just to get a condo address. The location is about the same and the size slightly bigger.

"It's crazy, I wouldn't pay so much difference just in the name of upgrading."

The price gap between mass-market private homes and HDB flats has widened to a new record, according to a recent Goldman Sachs report.

It noted that the price difference between 99-year leasehold homes in the suburbs and five-room HDB flats grew to about $490 per sq ft (psf) in the first quarter of this year, The Straits Times reported last Saturday.

This means that a 1,200 sq ft condominium unit would cost almost $600,000 more than a HDB flat of the same size.

Upgrading has always been on Mr Wee's cards. He is married to a 31-year-old marketing consultant.

Their combined monthly income is about $11,000.

Apart from the prestige, they would like to enjoy the facilities and security of a condo.

Dip in market

The couple had thought about upgrading two years ago when the property market dipped slightly due to the recession.

"But we thought it (property prices) could dip some more. Who knew that prices would go up even higher?" Mr Wee said.

"Now we will just have to make do with our flat and postpone that condo dream," he added.

According to the Goldman Sachs report, the last time the price gap was near this level was during the property boom in late 2007.

After that, the gap narrowed to about $300 psf during the recession in early 2009, before rising steadily again.

In the 10 years before 2007, the price difference hovered between $100 psf and $300 psf, the Goldman Sachs report said.

This growing price chasm between HDB flats and private homes is turning into an "insurmountable hurdle to upgrading aspirations", it added.

The report also suggested that the Government has "little choice but to ensure more affordable housing for all through the HDB and also moderate prices of private mass-end homes".

Mr Nicholas Mak, research head of property consultancy firm SLP International, said that private property prices spiked 50 per cent after early 2009 to the first quarter of this year.

HDB prices, on the other hand, grew by a more modest 25 per cent during that period.

He explained that the rate of increase for private properties is due more to increased liquidity into the property market, low interest rates and more foreigners in the last few years.

Said Mr Mak: "Most of these foreign investors or new immigrants can't buy HDB flats, so they'll buy private properties.

"And one can buy only one HDB flat, but there's no limit to the number of private properties one can buy, so the demand for HDB flats is capped."

He added that the price gulf may cause transactions for mass private homes to drop because some HDB owners find it too costly to upgrade.

Mr Mak advised upgraders not to jump into the market if they can't afford it.

Said Mr Mak: "One can wait and see. The property market moves in cycles. They (HDB upgraders) don't have to jump in at this time.

"They could also widen their search. They could look for older private properties which could be more attractively priced or smaller units, where the price quantum is not so much."

He cautioned: "But if you can't afford it, then make do with what you have now." Mr Mohamed Ismail, chief executive of real estate agency PropNex, said that though the gap has widened, some HDB flat owners can take advantage of higher HDB prices now to make the switch to an older condo which may be less expensive than a new one.

"Those who cannot afford (to upgrade) shouldn't stress themselves. They can also look at executive condos (ECs) which are usually priced lower than private condos," he advised.

ECs, which come with condo facilities but with sale restrictions similar to those for public housing, were introduced in 1995 to bridge this price gap.

This article was first published in The New Paper.
Agree with you musicwhiz, HDB flats here are very well maintained, hence I don’t see a need to upgrade unless increased earning power. I think it has to do with status, where locals tend to associate staying in condo/landed as upper class. And secondly, they have a wrong mentality of thinking such home as an asset. It could only be called an asset if it generates constant source of income. In this case, stay in condo only has unrealised gain but not considered asset until realised.