I’m pretty sure you are no stranger to hearing that HDB flats today are being sold at over a million dollars even it is noted that the resale market today for HDB flats has generally stabilized (since 2016).
In fact, these million dollar homes are usually DBSS flats.
They are the Design, Build and Sell Scheme flats that were introduced by the Housing & Development Board (HDB) back in 2005 offer greater choice and wider variety to meet the housing aspirations of higher income flat buyers for better design and finishes. This Design, Build and Sell Scheme was however suspended in 2011 because projects that were launched by these developers were thought to be seemingly over-priced.
So what’s so special about this DBSS HDB Flats?
In general, DBSS flats are no different to HDB flat, the owners will be required to complete a Minimum Occupation Period (MOP) too! The interesting thing is that these DBSS projects have been attracting really good buying interest in recent times. There have been record-breaking transactions and the sales volumes speak for itself. I supposed most buyers are attracted to their locations – both City View and Natura Loft are located in key areas such as Bendemeer and Bishan – offering excellent convenience and connectivity.
The high prices of DBSS flats are mainly paid for units with excellent, exceptional attributes. For Natura Loft, it is very well located in Bishan where 5-room flats are commonly sold at above $850,000. Moreover, the higher the unit is located, the higher is the transacted price.
The DBSS scheme was suspended in 2011, due to seemingly over-pricing in new projects launched by developers. However, it seems DBSS flats which have cleared the Minimum Occupation Period (MOP) have been attracting good buying interest in the resale market. How should we view such record high transactions of selected DBSS flats in the HDB resale market and what do these price trends say about DBSS flats in general?
How should we justify the high number of transactions?
It is not all bad buying these DBSS apartments. In fact, most buyers won’t fall short of benefits. It is seen as there is higher land value for these DBSS sites because of its location in mature estates and the requirement for the government to acquire older centrally located flats in order to redevelop them either through en-bloc or SERs.
There are also savvy buyers of flats in mature estates (e.g Tiong Bahru, Redhill, Bishan) that take consideration of the long term in living in these areas. Take for example, some people who buy from the HDB resale market take cues from the Selective En-Bloc Redevelopment (SERS) scheme by HDB and it seems that these people that purchase these flats, feel that eventually centrally located flats have more potential to be replaced them with a brand new HDB flat many years down the road when their flat becomes old and the the lease shortened. Highline Residences at Tiong Bahru is a private residential condominium that sits in a mature estate – even at those prices, there’s still pretty decent demand! See also: New condo launches of 2017
Ultimately, it is fine to pay more than $1 mil for a 99-year HDB flat but it has to be very much substantiated by its central locality or the project’s special attributes. In terms of price appreciation, for buyers who purchased recently the flat at above $1 mil, it is a likely scenario to resell the unit with a 8 percent price appreciation (factoring interim fluctuating market conditions), assuming they choose to resell after ten years.