Just yesterday, it’s reported that a 49-year-old terrace house was sold for S$1.268 million. It broke the record for the highest resale price for an HDB unit, which was set just less than a year ago. Previously the record was at S$1.258 million for a five-room flat at Pinnacle@Duxton last September.
But is it really worth the price?
Paid higher than the market price
Looking at the past transactions of other HDB terrace houses in the area over the past five years, the average price has been hovering around S$700,000 to S$900,000. So the buyer may actually have paid an extra S$300,000 to S$500,000.
But this is a corner unit we’re talking about.
Here’s the thing. This terrace house is a corner unit with a floor area of 2,217 sq ft. Corner units also generally have a bigger floor area.
Last year in July, a corner unit of 1,356 sq ft at the nearby Jalan Mamor was sold for S$880,000. And in 2018, another corner unit of 2,551 sq ft in the area was sold for a record S$1.185 million.
Prices have also been increasing in the area
What got people confused about the price paid is that this house is pretty old, with only 50 years of remaining lease. Usually we hear about people paying a million dollars for flats that are five to 10 years old, but not this old.
In fact, the terrace houses in this area were built in the 1950s by the Singapore Improvement Trust (SIT), so they’re basically at least 60 years old. (Their leases were renewed in 1972 when HDB took over, hence the remaining lease of 50 years.)
On the other hand, despite its old age, prices have been increasing by 18.25% over the past five years.
And given the demand for more space over the past one year, we can expect more sellers putting up a higher asking price, and buyers actually willing to pay a higher premium.
A case in point is this unit. Marketed via PropertyLim Brothers on 9 May, this unit had an initial asking price of S$1,218,000. What followed was a high number of enquiries from potential buyers, because, within a week, it’s sold for S$50,000 higher than the asking price.
A good option to live in landed property
Yes, this terrace house may not have its own garage. If the owner does have a car, they have to park it at the nearby public car park a few minutes walk away.
But for those who have been living in a landed property, or have always aspired to live in one, paying S$1.268 million is actually a steal. In comparison, private landed properties with a 99-year lease generally have an average price of S$2.5 million to S$3.4 million over the past five years.
S$250k spent on renovation
After the seller bought the unit around 10 years ago, they’d spent S$250,000 on renovation. Among the changes done include remodelling it to have four bedrooms, two bathrooms and a kitchen with a wet and dry area. So the buyer may not even need to do much renovation.
SERS potential?
Most of the public housing in this area is pretty old. Beside the cluster of terrace houses here is a group of HDB blocks called Whampoa Gardens, which were built in 1972. And across Jalan Bahagia is Rajah Court, which was built in 1984.
Given the age of the area, there’s actually some SERS potential here. Plus, the whole area of terrace houses here is big enough for a new BTO. So if these houses are selected for SERS, the buyer could potentially earn a windfall.
Keen on living in a HDB terrace house? As of writing, there are five listings in the same area with a lower starting price of S$830,000 to S$990,000.
Would you pay S$1.268 million for a terrace house with 50 years of lease left? Let us know in the comments section below.
If you found this article helpful, 99.co recommends HDB terrace flats: What they are and where to find them and Paying $1.1 million for a 43-year-old Tiong Bahru HDB flat is a genius move. Here’s why.
Looking for a property to buy or rent? Find your dream home on Singapore’s largest property portal 99.co! If you have an interesting property-related story to share with us, drop us a message here – we’ll review it and get back to you.
The post Here’s why paying S$1.268 million for a 49-year-old HDB terrace house is worth it appeared first on 99.co.
