It is becoming harder than ever for Housing Board upgraders to make the leap to private property, despite softening prices.
The price gap between an HDB flat and one in a private condo has widened, hampering those who rely on resale proceeds to fund their new home – not least in the light of tougher home loan curbs.
A 2011 Goldman Sachs study found that the price gap in the first quarter of that year was $490 per sq ft, a record then. That means a 1,000 sq ft condominium unit would have cost $490,000 more than a resale HDB flat with the same floor area.
A five-room HDB flat is slightly larger than 1,000 sq ft.
New figures from the Singapore Real Estate Exchange suggest the gap has only widened since.
Their calculations put the gap in median resale prices at $383 per sq ft in the first quarter of 2011 but that had shot up to to $524 per sq ft by the second quarter of this year.
The gap is even wider for new private units, having risen from $556 per sq ft to $753 per sq ft.
These calculations were based on prices of HDB five-room flats and condominiums outside the central region, to reflect the typical upgrade.
“It does mean that private housing for HDB upgraders is becoming more unaffordable,” said SLP International Property Consultants research head Nicholas Mak.
But the growing gap is unsurprising, given the different trends in private and public property, said experts.
The Urban Redevelopment Authority’s resale price index shows that values of non-landed private property outside the central region have risen by 17.3 per cent overall since the first quarter of 2011.
The HDB’s resale price index rose only about 12 per cent over the same period.
Several rounds of government cooling measures have begun to bite, and both markets are now on a decline. But public housing prices have been falling faster – contributing to the widening gap.
HDB prices started falling after the second quarter of last year, and have dropped 5.3 per cent since then. The private property index started falling from the third quarter, and has lost 3 per cent since.
R’ST Research director Ong Kah Seng does not see this as cause for alarm: “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.”
Executive condominiums, which are bought as public housing but become fully private after 10 years, could also bridge the gap, as they are cheaper than private units, said Chris International director Chris Koh.
Mr Jedric Goh, 34, is willing to be even more flexible as he tests market interest for his five-room flat in Serangoon.
In this market, going private would be “quite tough”, so he is not limiting his options that way.
“I’m looking at location instead of the type of property,” said Mr Goh, who works in the finance industry.