Buying your first home is a big decision. Very often, the biggest decision one has to make. And sometimes, we are forced to choose. For each of us, the set of choices will vary. For some of us, the decision will be between going for an older resale flat with a good location vs a new condo with a less than ideal location. One thing remains true, every buyer needs to enter the market fully informed of any risks they choose to take.
As a young adult, I have had to choose between paying a premium for Private Apartments or choose to purchase a much older resale HDB, if i wanted to live in the Balestier / Whampoa area near to my parents. It was also surprising that $700+ thousand would afford only a small shoebox apartment in the same area. To balance between work and family, location was key.
Here’s some of the other analyses we think are worth highlighting in the wake of Minister Lawrence Wong’s comments.
Looking back at the HDB transactions in the last 3 years, only 1% of transactions were for units older than 50 years old.
For the flats with less than 50 years on the lease, the units transacted were primarily for 3 main estates, Queenstown, Geylang and Toa Payoh.
And so, we took a closer look at the price trends for the 3 mature estates and discovered that people are paying less for an older flat vs a new flat but – hey prices do not decline that much more beyond the 20 – 30 year mark. Does this mean people are relatively insensitive to the age of a flat?
Of course, we do note that price levels for an old yet reasonable sized unit in Toa Payoh, Geylang and Queenstown were still fairly affordable averaging around the $500psf mark.
For some of those buyers, it would have been about SERS, though they are likely to view it differently from now on. For others, it was the idea of having a well sized home in an ideal location at an affordable price point. Whatever it is, we think its important that every buyer goes into the market fully informed of all risks, including the structural and financial implications of older flats.