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OK, so what's next? $1.1 million?

The Straits Times
www.straitstimes.com
Published on Sep 13, 2012
The $1M HDB flat
17-year-old HDB executive flat in Queenstown sets record resale price

By Daryl Chin & Goh Shi Ting

A HOUSING Board flat has hit the $1 million mark for the first time, surpassing the previous record that was set only last week.

The sale of the high-floor executive apartment, at Block 149 Mei Ling Street in Queenstown, has turned a few heads, with a cash over valuation (COV) of $195,000.

The 17-year-old unit, with a floor area of 1,615 sq ft, has an unblocked view of Queenstown stadium and is close to food centres, supermarkets and Queenstown MRT station. The buyers and sellers are both Singaporean couples.

"It was love at first sight for them," said Dennis Wee Group agent Irene Ho who represented the sellers. The buyers previously owned a private property.

After the flat was put on the market in June, Ms Ho received more than 50 bids.

"But from the very beginning, the sellers had already set their sights on a price of $1 million. The deal was struck once that price was met," she said. The price works out to be about $620 per square foot.

Yesterday, both buyers and sellers met at the HDB Hub in Toa Payoh for staff to vet documents and do eligibility checks. The sale is slated to be wrapped up in two months.

Property analysts The Straits Times spoke to said such high prices, although rare, could soon become the norm when other coveted units - such as those at Pinnacle@Duxton - enter the resale market.

Last Saturday, National Development Minister Khaw Boon Wan set out to reassure Singaporeans and urged them not to be "traumatised" by the price at which the Queenstown flat changed hands.

There will always be "units with fantastic views that fetch fantastic prices". He said: "More important is the larger picture."

Mr Khaw added: "Are prices affordable generally for most units? I think we have largely achieved that in the last few months with the pricing of the new Build-To-Order flats."

The previous benchmark was set last week when an executive maisonette in Bishan fetched $980,000, inclusive of a COV of $200,000.

PropNex CEO Mohamed Ismail said: "Although a new milestone has been set, when you look at the upward movement in property prices and taking inflation into account, a $1 million price tag for a flat, perhaps unimaginable 10 years ago, might be common for sought-after flats now."

Dennis Wee Group spokesman Lee Sze Teck was more circumspect and said prices are generally affordable for most new flats.

"It all boils down to the buyers. Prices will skyrocket as long as they find something they like and are willing to put a premium on it," said Mr Lee, pointing out that the overall median COV is still about $30,000.
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the new normal.

The article mention the new owner previously a private property. My guess is they have reap substantial profits from their previous private property so didnt mind the high price.

My Jurong HDB flat carpark i notice quite a lot of luxury cars, big size BMW, Volvo, Mercedes.., i am guessing these pp sold off their private and either rent or bought a flat here.

(13-09-2012, 01:54 PM)Bibi Wrote: [ -> ]The article mention the new owner previously a private property. My guess is they have reap substantial profits from their previous private property so didnt mind the high price.

My Jurong HDB flat carpark i notice quite a lot of luxury cars, big size BMW, Volvo, Mercedes.., i am guessing these pp sold off their private and either rent or bought a flat here.

Actually, this is how the cycle of higher and higher prices continues. Someone who has cashed out of his expensive private property at a good price now "downgrades" to an HDB and pushes up prices of public housing. All the while, the person may never actually be richer (technically), in the sense that unless you pay off your loan on your primary residence, I don't consider that to be a much better quality of life.

Then there are the people who "upgrade", going from HDB to private property. Cashing out of an expensive HDB and taking up another loan on the new property, and using the proceeds from the sale as downpayment. And the cycle continues - everyone continues to be in debt.

So something's got to give somehow, someday. Question is not "Will the party end", it's a matter of "When will the party end"?

And as for the cars, I suspect something strange about people in HDB is that they may all be taking up loans for their cars; it's the ultra-rich people living in bungalows that truly own their cars (then again, one may argue it's on a ten-year "lease" cos of the COE!).

Very true, Music Whiz. The Housing Market in the USA was also on the rise from 1970 all the way till 2005. That's 35 years of rising prices and after awhile, people take it for granted that house prices will only rise and not fall. Market prices move in cycles - I just hope people who are buying houses for investment purposes can take heed.

(13-09-2012, 02:45 PM)serjing Wrote: [ -> ]Very true, Music Whiz. The Housing Market in the USA was also on the rise from 1970 all the way till 2005. That's 35 years of rising prices and after awhile, people take it for granted that house prices will only rise and not fall. Market prices move in cycles - I just hope people who are buying houses for investment purposes can take heed.

I think it is not whether you buy for investment or buy for own residence that matters. It is whether you overstretch your own finances that matters. In fact investors risk losing money, but the owner-occupiers risk losing the roof over their heads. So investors are relatively safer (all other things being equal)

No offense, just sharing my view.

(13-09-2012, 02:13 PM)Musicwhiz Wrote: [ -> ]And as for the cars, I suspect something strange about people in HDB is that they may all be taking up loans for their cars; it's the ultra-rich people living in bungalows that truly own their cars (then again, one may argue it's on a ten-year "lease" cos of the COE!).

You are right all hdb pp take up loan for their cars. The reason being if you show hand, the price of the car is more than if you apply for a loan even with interest considered. So when I bought my car 7 years back which costs 44k with Coe of 10k included, I was forced to apply for a one year loan as it's cheaper. Sounds crazy right?

I think it should not come as a surprise.
Bigger flats which are very near town, near MRT are around transacted at >$800K.
The same sized condo will cost more than 2.X times more around the same area.
Money's getting smaller and resale flats are overpriced.

In PSF wise, I think it was a pretty decent deal. I recently bought my 4 room mid level BTO from HDB (still in construction) at bukit merah area that is very close to mrt cost 570psf. So i would not get much premium based on 620psf despite that I bought from government.

I think we should be calm and not traumatised by the million dollar transaction..........until we find out exactly how resale market price is feed into the pricing of new BTO flats. Will it happen that one day, some hardworking civil servant may notice people are enjoying too much market subsidy in housing and do the obvious? Because doing nothing is akin to raiding our reserves, so goes the logic.

Incidentally, the Fed announced more QEs a few hours ago. The Fed reported that the easing ...."should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."
On hindsight, investment in properties was the correct move over the past few years. Alas, my last (and only) property transaction was > a decade ago.