Uncovering ‘undervalued’ BTO flats: 26 HDB cities with the most important BTO-resale worth gaps

With the present housing scarcity, consumers are caught between an extended await BTO flats or sky-high resale flat costs. On high of that, a latest rule tweak signifies that backing out at flat choice – if you happen to don’t like what’s obtainable, it relegates you to second-timer standing.

So if you’re caught in a bind on whether or not to go for a resale HDB, a technique that may assistance is to take a look at the value gaps between BTO and resale flats in numerous estates. This might enable you resolve whether or not it’s price ready for a brand new flat, or whether or not it’s best to simply exit and hunt within the resale market.

That mentioned, we’d prefer to caveat this by saying that you shouldn’t simply have a look at the numbers and comply with them blindly. For some estates, there could also be huge variances as a result of differing ages of the older HDB flats.

Notice: For the next, we used common BTO costs throughout numerous initiatives, for every of the flat varieties. We then in contrast them to the common costs of resale flats in the identical space, between September 2022 to March 2023.

It’s all concerning the worth of 4 to 5 years

What’s the impression of the “worth premium” for resale flats? Aside from availability (some mature estates haven’t seen BTO flats in a few years), what you’re paying for is a shorter wait time. Additionally, relying on the house, you may not even need to spend a cent on renovating (so long as the model is to your style).

A resale flat may be moved into instantly, however it’s additionally a extra tempting prospect for aspiring upgraders. As a result of the Minimal Occupancy Interval (MOP) begins from the important thing assortment, a BTO flat will solely go up on the open market after 9 to 10 years. A resale flat, nevertheless, ensures you’ll be able to promote in 5 years. 

It’s a easy sufficient idea – however once you get all the way down to particulars, choosing a resale flat could also be extra cheap in some estates than in others: 

3 Room BTO

4 Room BTO

5 Room BTO

Some factors to notice from the above

• Geylang is the one property the place the common BTO worth may very well be greater
• For 3-room flats, the value hole in some estates is sort of negligible
• Households selecting Ang Mo Kio could wish to take into account skipping the poll
• Upkeep and renovation are outdoors the info 
• 5-Room flats at Bukit Batok have the most important disparity with BTO costs

1. Geylang is the one property the place the common BTO worth may very well be greater

It’s unsure why that is the case, however it’s nothing to do with the Crimson Mild Space; Geylang as an property encompasses far more than simply that concentrated spot. It’s additionally fascinating as a result of Geylang advantages immensely from the latest growth of the Paya Lebar Quarter (PLQ) close by, and it’s one of many extra central estates. 

Reasonably, we’d attribute this to easy lease decay. Most of the 3-room flat transactions got here from older blocks, with a few of them relationship again about 40 years. Geylang can be a moderately outdated property, with many blocks having leases that date again to the ‘80s. 

This represents a possibility for youthful {couples} and small households, who’re intent on upgrading after MOP. Geylang supplies good entry to the town space, and when you have a brief holding interval then the lease decay is a smaller concern. 

As an apart, it’s well-known that Geylang might not be preferred by those that desire low-density areas. It is a closely built-up city, with notably much less inexperienced area than many different estates. 

2. For 3-room flats, the value hole in some estates is sort of negligible

Apart from Geylang, it’s possible you’ll have an interest to know that some mature estates – together with Queenstown, Kallang/Whampoa, and Toa Payoh – have very moderately priced 3-room flats. We recorded a spot of round $60,000 or underneath in these areas. 

The reason being once more doubtless on account of lease decay, with many 3-room flats in these locations relationship again to the ‘80s. This pattern runs opposite to massive 5-room counterparts although, the place costs in such outdated estates usually tend to set document highs. 

This goes to point out that, if you happen to’re keen to accept rather less area, you may the truth is have the ability to afford a resale flat in a mature city. 

ALSO READ: How are BTO flats priced? HDB provides the breakdown

3. Households selecting Ang Mo Kio could wish to take into account skipping the poll

For each 4 and 5-room flats, the value hole between BTO flats and resale flats was not as big as anticipated ($40,471 and $41,437 respectively). 

We’d hazard that, for many residence consumers, this greater quantity for resale flats is sort of negligible; particularly if it could shave off the 4 to five-year development interval. 

This being mentioned, some realtors warned us that Ang Mo Kio is a big space, and costs are a bit tougher to generalise. One realtor famous that costs may be considerably greater within the environment of the Lentor MRT space.

Nonetheless, if your required residence falls inside this property, there’s no hurt in checking resale costs earlier than you be a part of the BTO queue. 

4. Upkeep and renovation are outdoors the info

One of many issues we will’t present on the tables as a result of it varies for every unit is the price of renovation or upkeep work. With 40+year-old flats, for instance, you’d need to count on greater prices when it comes to renovation. 

(And if the present proprietor hasn’t taken excellent care of the unit, even a five-year-old flat can find yourself costing steep renovation charges). 

A BTO flat is all the time in a ready-to-move-in situation; and the Inside Designer doesn’t have to do a lot hacking, alternative of broken outdated flooring, and so on. That is one different issue to think about when contemplating between the BTO queue and simply getting a resale unit. 

5. 5-Room flats at Bukit Batok have the most important disparity with BTO costs

Surprisingly, 5-room flats at Bukit Batok have a mean worth of $743,744 – the second highest on our listing. That is as a result of latest MOP of Skyline I & II @ Bukit Batok which noticed many models transacting for $700K+ on decrease flooring, and as much as $900K+ on greater flooring. One specific unit on a really excessive ground went for $935,000!

Whereas it’s an oversimplification to check common BTO costs with resale costs given Skyline’s fairly first rate location, its present market efficiency hints strongly at vital income for individuals who secured a BTO in Bukit Batok – near round $300K.

This text was first printed in Stackedhomes.