If you have friends or family members around you contemplating getting a Build-To-Order (BTO) flat, you most likely have heard a grouse or two about how the flats are getting smaller but more expensive.
Buying a resale flat may come up sometime during the conversation.
But beware, if you consider taking the option associated with fewer government grants and higher prices due to “market rates”, you may end up shelling out more than you expected.
One two-room Housing Development Board (HDB) flat sold for a record-breaking, eyebrow-raising $585,000.
Here is more information about this recent sale.
2-Room HDB Flat Sold for More Than Half a Million Dollars
Earlier this Thursday, property website 99.co reported that a two-room HDB flat sold for a record $585,000.
The flat was located in Tiong Bahru. More precisely, within the first to third floor of Block 43 Moh Guan Terrace.
With housing and rental prices soaring in this market, a high price for an HDB resale flat is nothing surprising.
What surprised people was how the flat managed to command a high selling price despite only having about 48.5 years left on its lease.
For those unaware, the value of one’s HDB flat may decrease if the number of years left on the lease (typically 99 years when one buys a newly-built HDB flat).
The reason is that it is more challenging to get financing for HDB flats with short leases, and you may have to be cash-rich to afford the house.
HDB loans, for example, require that the remaining lease of the flat cover the youngest owner up to age 95 for a full loan grant to be approved at the full 80% Loan-to-Value (LTV) limit.
If not, the loan from HDB will be pro-rated from 80%, so the buyer potentially has to fork out more cash.
HDB Flat Was Bigger Than a Typical 2-Room HDB Flat
Despite all these barriers, the HDB flat could have commanded such a high price for its ample space.
99.co looked at the HDB resale price portal and analysed that the flat in question had a floor area of about 721 sqft, just a mere 20 sqft smaller than a three-room HDB BTO flat these days (around 743 sqft).
This older flat meant that it was much bigger than a new two-room Flexi flat, typically between 409 sqft and 517 sqft.
Therefore, the new owners may have viewed this purchase as a three-room HDB flat rather than a two-room.
There was also some speculation that the site may be chosen for the Selective En bloc Redevelopment Scheme (SERS) project, which could have contributed to the enthusiasm for the flat.
The SERS programme grants the homeowners a fresh 99-year lease in a new location if the existing HDB undergoes en bloc.
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