Despite friends’ dissuasion, journalist buys Choa Chu Kang HDB penthouse at whopping $755,000.
YES, I paid $100,000 in cash-over-valuation (COV) for my HDB flat. No, I did not mistakenly add an extra zero to that figure.
“Gila” (crazy in Malay), said one friend. Totally exorbitant, chided another.
But I have only one question: How much would you pay for the home of your dreams?
I don’t just mean a flat which looks impressive and sits in a prime location.
I mean a real home – one where you imagine you’ll watch your children grow up in and where you’ll spend your twilight years. A home for keeps.
This was why I felt it was worth paying $755,000 for the four-bedroom executive maisonette in Choa Chu Kang, even though I feel that property prices have hit ridiculously high levels.
The 12-year-old flat has 87 years left on its 99-year lease.
Resale prices for HDB flats rose for the eighth straight quarter from April to June, surging 4.1 per cent from the previous quarter.
The median COV also hit a record high of $30,000.
COV is the amount a buyer must pay the seller in cash over the HDB’s valuation of the flat. It is not covered by a bank loan.
Typically, the agreed price for a resale flat includes a cash premium on top of the official valuation determined by an HDB panel of independent professional valuers.
The Business Times reported last month that the median COV for executive flats and five-roomers in hot areas, such as Bishan, was $70,500 and $52,500 respectively.
Sure, the amount I paid was more than that. But it wasn’t an impulse buy.
My wife and I considered many things before choosing this flat and finally signing on the dotted line.
Firstly, we needed more space – more than our current three-bedroom condominium.
Growing family
With an infant son and plans to have another child soon, we imagined a flat with a bedroom for each of them, as well as an additional room for our elderly parents one day.
So we hit the market with only five-room flats or executive flats in mind.
Secondly, we needed a place near my parents’ home as we both work full-time and my parents would be baby-sitting our children most of the day.
Finally, we needed a place near an MRT station and close to amenities such as a supermarket, food courts and schools.
So with these pre-requisites, our choices were certainly narrow.
It was during a month’s worth of searching that we chanced upon what would be our new home – an executive maisonette in the north-west of Singapore.
It is large (almost twice the size of our current place) with four decent-sized bedrooms and is less than two minutes’ walk to the MRT station.
My friends asked: You sure you want to pay so much?
“It’s just a HDB flat. Not private some more, you know,” said one with a tone of scepticism.
True. And we also have to factor in an estimated $30,000 for renovations.
Plus, we’ll be paying $1,600 to the bank every month for the next 35 years.
But the minute I laid eyes on this place, I saw value in my purchase.
This is an HDB penthouse – one of only 12 units in the area.
Only five areas in Singapore – Bishan, Strathmore Avenue in Queenstown, Pasir Ris, Hougang and Choa Chu Kang – have such units.
In Strathmore Avenue, there are only four rooftop penthouses and in Bishan, there are 50 such units.
Earlier this year, a penthouse at Bishan Street 24 was sold for $900,000, making it the most expensive HDB flat to change hands in Singapore at the time.
My new home is part of a design-and-build estate, with covered walkways leading to the MRT station and a basement carpark with a lift that takes you straight up to your flat.
I especially like the grounds – a basketball court, playground and lush greenery with no cars, where I can imagine watching my children play safely.
As for the flat itself, it boasts a living room with a high two-storey ceiling and a roof garden.
Still, it wasn’t just about value in terms of dollars and cents.
To me, the whole point of searching for a home is just that.
It’s a place to live in, a place to relax when I come home from work and a place to spend time with my family. Not for investment or to make a quick buck.
If you assess the place in those terms, it more than justifies the numerous zeroes on the cheque.
And in the months before this when my housing agent shuttled me from flat to flat for viewings, one thing became clear.
COV prices are currently sky-high. Many of the five-room units we viewed were asking for COV ranging from $40,000 to $65,000.
Shelling out another $30,000 seemed a worthy sacrifice.
So what happens when the property market cools and prices start dropping? Will I regret how much I have put into my newhome? The answer is no.
I certainly don’t plan to sell. Not even if someone dangles a $150,000 COV offer.
That’s because I’ve found my dream home, where one day you’ll find me relaxing in my roof garden, sipping a home-made teh tarik and watching the world go by from my 12th-floor perch.
By then, I hope I won’t even remember how much of a hole I’d burnt in my pocket.
Experts: Not practical to pay so much for HDB flat
HOME buyers should scout around carefully and do their sums before they decide to pay high cash-over-valuation (COV) premiums for a HDB resale flat.
When told of Mr Zaihan Mohd Yusof’s HDB penthouse purchase of $755,000, at $100,000 COV, two experts felt it should not be the model for most people.
Mr Roy Varghese, foundation adviser and director at Ipac Financial Planning Singapore, said: “It’s not just a matter of affordability. Even if you are flushed with cash, that’s still absolutely crazy.”
He pointed out that there is “a big difference between the resale value of private and public housing”.
“Private housing will appreciate in the long run while public housing is more like a decent roof over your head,” said Mr Varghese.
It all comes down to doing your homework properly, he said.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that sufficient time should be invested on house-hunting.
“Now with the Internet, it’s even easier to check out figures across the island for comparison,” he said.
Mr Mak said it’s also important not to buy on impulse.
He said: “Most of us work hard to have a better life – so if he’s satisfied, then it may be a sound reason.
“But getting the legwork – yes, it means lots of walking around and viewing – done is vital. Do it until you’re really sure.”
Mr Mak cited figures from the second-quarter statistics which show the COV for an executive flat in Choa Chu Kang at $30,500.
“The buyer could have tried to bargain for a lower premium, but it sounds like he is very attached to the unit,” said Mr Mak.
“And when emotion is involved in the process of decision-making, it’s harder.”
A fair number of Singaporeans see buying property as a form of investment, said Mr Mak.
“So it’s necessary to ask yourself, will you be able to hold on to it if the prices start to fall?”, he said.
“In investing in a home, a buyer should consider if it’s for needs, use and enjoyment of him and his family.
“It looks like this is the case for your colleague.”
Yet, to cough up so much cash for public housing does not seem practical, he added.
“The total sum he’s paying can buy a typical three-room 99-year-lease condo unit in a suburban part of Singapore.”
Less money left for HDB renovation
MORE Housing Board resale flat buyers are having to forgo lavish renovations as the property market heats up.
Said Ms Rebecca Wong, deputy editor of Home & Decor: “In the last two years, it was the condominium renovation market that was booming.
“The high COV meant that HDB resale buyers didn’t have much money left to splurge on renovations.”
High COVs have also narrowed the price gap between resale HDB flats and condominiums, pushing many prospective buyers towards the latter, added Ms Wong.
Mr Jeffrey Lin, 36, managing director of Free Space Intent, who’s been in the business for 11 years, said that most high-end renovations are done for owners of private homes nowadays.
“About two years ago, 60 per cent of clients who spent six-digits on renovations live in condos and landed property and 40 per cent in HDB.
“Now, 70 per cent of my high-end renovation clients live in private property and 30 per cent in HDB,” he said.
Mr Lin heard “feedback” from his HDB clients that their flats were costly and they had little left for renovation.
“Perhaps some of the others feel they may as well get a condo instead, causing the shift in demographic,” said Mr Lin.
Mr Jaesonn Tan, of Baroque D.zign, said HDB renovations typically cost between $30,000 and $50,000. A $100,000 project would be considered high-end.
The median cash-over-valuation (COV) in the second quarter this year was $30,000.
But five-room flats in the central zone had a COV premium of $89,000 – the highest across all flat types and towns. Bukit Timah five-room flats were next with a median COV of $80,000.
It is worth noting, however, that there were fewer than 20 resale transactions for these areas and flat types, so the figures “may not be representative”, HDB said.
HDB also offered a total of 13,500 new flats last year and said it is ready to supply more flats this year if there is sustained demand.
Source : New Paper – 29 Aug 2010