SINGAPORE — A record 21 four-room Housing and Development Board (HDB) flats sold for over S$1 million on the resale market in the first quarter in an upward trend that property experts expect to continue for some time.

Some home buyers are settling for four-room flats rather than scarcer five-room flats, which they would prefer, in order to secure a home in popular areas such as Bishan, Queenstown and Duxton, the experts said. 

The 21 four-room HDB units sold in the first quarter is triple the seven units of the same type sold during the same period a year earlier, Ms Wong Siew Ying, head of research and content at PropNex Realty told TODAY on Monday (April 4).

Only six such units were sold in the first quarter of 2021, she said, citing both HDB data and that from her company as of March 31.

The figures for full-year sales of four-room HDB resale flats in recent years were:

• 2022: 38 flats

• 2021: 44 flats

• 2020: 14 flats

• 2019: 10 flats

• 2018: 9 flats

• 2017: 0 flats

WHY PRICES HAVE RISEN

Ms Wong and other property experts with whom TODAY spoke said that the trend of four-room resale flats transacting for more than S$1 million started in 2018.

Huttons Asia senior director of research Lee Sze Teck said the first million-dollar four-room HDB flat was a 96-sqm unit at the award-winning Pinnacle@Duxton, which went for S$1,028,000 in June 2018 because of its central location and commanding unblocked views.

He added that the introduction of HDB flats under the design, build and sell scheme (DBSS) in 2005 was also a factor behind the advent of million-dollar flats.

DBSS flats, he said, are not only well-located but designed by private developers and have “upmarket finishes”, compared to the usual HDB flats.

After meeting the five-year minimum occupation period (MOP), Mr Lee said many of these DBSS flats commanded higher prices than comparable flats built by the HDB.

“As resale prices climbed after Covid, more buyers turned to four-room flats in 2023 as they are more affordable,” he said.

Ms Wong said that the recent rise in four-room million-dollar HDB resale flats could have been fuelled by the 15-month wait-out period measure applying to private property sellers which was announced last September.

As the measure restricts certain private residential homeowners from buying five-room or larger flats, she said it is possible that it has diverted some of the former private homeowners, who are seniors, to buy four-room resale flats at a higher price, following the disposal of their private property.

Ms Christine Sun, Orange & Tie’s senior vice-president of research and analytics, added that more people are willing to pay over S$1 million for flats near the city centre as prices of private properties have been rising and it will cost more if they were to buy a private home in the same area.

For instance, she said the median price of a three-bedroom new private condo in the prime district can cost at least S$2.8 million, S$2.2 million on the city fringe and more than S$1.8 million in the suburban region.

The experts added that all of the million-dollar four-room HDB resale flats are located in mature estates, and mostly in Bukit Merah and the Central Area.

Property industry expert Nicholas Mak said some of the features they have in common include being conveniently located, having a popular school nearby, and being well-designed.

Home buyers hoping to snag a property in one of these popular areas, he said, may have originally been seeking a five-room flat, but were forced to settle for a four-room flat instead due to a lack of supply of the former.

While such compromises would mean sacrificing some space, Mr Mak noted that both flat types feature three bedrooms, which is sufficient for most Singaporean families.

THE OUTLOOK

In short, the experts unanimously said the sight of million-dollar four-room flats entering the resale market will be more common, with Mr Mak estimating that this will remain so for the next 10 years.

This is partly because the recent supply of Build-to-Order flats in popular areas in mature estates, as well as those in prime location housing areas, do not have five-room flats, said Mr Mak.

Huttons’ Mr Lee added that higher interest rates and economic uncertainties may also prompt some buyers to look at four-room flats instead of larger flats, which would drive up demand for such flats.

But Mr Lee said it is unlikely that this trend could have a knock-on impact on three-room flats, so he does not expect this flat type to push past S$1 million mark in the next five years.

The most expensive three-room resale flat to date was a three-room premium apartment in Upper Boon Keng Road (Kallang Trivista), which fetched S$833,000 in January this year, said Ms Wong.

Mr Mak observed that with just two bedrooms, it would not be sufficient to cater to the needs of most Singaporean families.

“If someone has a million dollar budget, they can for less than the amount buy a four- or five-room flat further away from an MRT station and so on. Why must look for a three-room flat and pay S$1 million?”

On Monday, HDB also released its flash estimate data which showed that resale prices grew at a slower pace in the first quarter.

The 0.9 per cent increase is the smallest rise in the last 10 quarters.