Where are the cheap HDB flats?

Woodlands, Jurong West units going for $200k but are small and old; also, supply is running low

Prices of resale HDB flats hit another all-time high in the third quarter, amid a growing chorus of unhappy buyers complaining that home values are rising out of their reach.

Despite the rising prices and disgruntled home-seekers, pundits say there are still affordable homes to be had - if only buyers are less choosy and look a bit harder.

Where, then, are these cheap flats to be found? 

The Sunday Times went in search of resale flats that were recently sold for up to $200,000 - which can comfortably buy a built-to-order three-room flat in new towns such as Punggol.

The good news is that resale flats for below $200,000 definitely exist.

The bad news: Almost all of them are three-room flats or smaller, at least 20 years old and often more than 30, and largely tucked away in the corners of the island such as Woodlands and Jurong West.

Even then, the number of flats that can be had for a budget of $200,000 appears to be shrinking.

In the third quarter of this year, between July and last month, fewer than 140 three-room flats were sold for $200,000 or lower, compared to more than 220 in the second quarter and more than 280 in the first quarter of this year, according to data from the HDB website.

Four-room flats below $200,000 are virtually impossible to find. Even when you up the budget to $300,000, it is slim pickings.

'In the past, you could easily get some of the four-room flats for below $250,000, whereas now, most are above $300,000,' said Mr Mohamed Ismail, chief executive of real estate agency PropNex.

ERA Asia-Pacific's associate director Eugene Lim illustrated it more starkly: In 2003, $200,000 could have bought a four-room flat in almost any area, including popular towns like Ang Mo Kio, Bedok, Serangoon or Toa Payoh, he said.

This year, $200,000 will get you only a three-room flat in Geylang, Hougang, Jurong West, Kallang, Woodlands or Yishun.

Similarly, a budget of $300,000 would have been sufficient to bag a five-room flat in most towns in 2003, said Mr Lim.

Now, the only five-room flats you can get for that amount are in Jurong West and Woodlands, he said. In mature estates such as Toa Payoh, Marine Parade, Queenstown and Clementi, $300,000 will buy only a three-room flat.

Part of the reason for this is the rising cash-over-valuation (COV) portion, which sellers of in-demand flats can ask for in cash above the property's valuation. For three-room flats in popular areas, this can go up to $50,000, while owners of flats in the outlying areas still ask for at least $10,000 in COV, said Mr Aaron Hong, a senior division director at Dennis Wee Realty.

But even excluding this, the valuations of HDB flats alone have skyrocketed in recent months.

In Tampines, the lowest valuation for a three-room flat is about $210,000 to $220,000, whereas the highest can go up to $290,000, Mr Hong said.

When you throw in the COV amount, which is a must-have in these property boom days, it is easy to see how a three-room resale flat can cross the $300,000 mark.

For the despairing, Mr Ismail has some advice: If your budget is low and you cannot afford to pay high COVs, forget resale and go for build-to-order flats, even if it means waiting a few years.

'The key is to enter the property market first, in whatever way you can,' he said. 'By getting one foot in the door, you can build a foundation and then work towards the home you really want.'

Source: Sunday Times, 4 Oct 2009