Despite the cooling residential market, it has become harder for HDB homeowners to switch to a private condo due to the widening price gap between these types of properties, according to media reports citing two studies.
In Q1 2011, a research by Goldman Sachs revealed the price difference between an HDB flat and private property reached $490 psf, which was a historic high back then. That means a 1,000 sq ft condo was more expensive than a similarly-sized HDB resale flat by $490,000. For actual comparisons, a five-room HDB flat is slightly bigger than that.
Now, another study by a real estate portal shows the median price gap between HDB flats and private properties in the secondary market has widened further to $524 psf in Q2 2014 compared to just $383 psf in Q1 2011. But the price disparity for new private units is even larger at $753 psf from $556 psf previously.
Notably, the recent study looked at the prices of HDB five-room flats and condos in the city fringe to represent a typical upgrade.
“It does mean that private housing for HDB upgraders is becoming more unaffordable,” noted Nicholas Mak, Research Head at SLP International.
Nevertheless, homebuyers should not be alarmed, said R’ST Research director Ong Kah Seng. “I think it is not a major concern now because in the years of 2010 to the first half of 2013, there were ample HDB upgraders… Many HDB upgraders have already fulfilled their dreams of upgrading.”
Those eyeing affordable private properties may also purchase an Executive Condominium (EC), which is a type of public housing, but they become fully private after a decade, added Chris International Director Chris Koh.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
