Narrowing price gap between HDB resale flats in mature, non-mature estates

Victor KangJune 7, 2021

This comes as buyers are “more willing to pay for newer flats than flats with a shorter remaining lease,” said Lee Sze Teck, Director of Research at Huttons Asia.

The premium or price gap for HDB flats located in mature and non-mature estates appears to have narrowed in recent years, according to a study by Huttons Asia.

This comes as buyers are “more willing to pay for newer flats than flats with a shorter remaining lease,” said Lee Sze Teck, Director of Research at Huttons Asia.

“We believe that this trend is likely to continue in the years to come and it is possible that we will see a million-dollar flat in non-mature estate soon.”

Mature estates in Singapore include Geylang, Clementi, Bedok, Queenstown and Toa Payoh, while non-mature estates include Sengkang, Woodlands, Tengah, Hougang and Punggol.

More easily accessible and near various amenities and facilities, flats in mature estates tend to command a premium over those in non-mature estates. This is expected by sellers since they also paid a premium when they acquired their flats.

“Generally, that should be the case as buying a property is all about location. But that does not appear to be the case in recent years,” said Huttons.

“Resale prices for flats in non-mature estates have climbed more than those in mature estates, thereby narrowing the premium or price gap between mature and non-mature estates.”

Suggested read: 5 Traits That Could Make A Resale Flat More Attractive

The average prices of two-room flats in non-mature estates, for instance, fetched a premium over those in mature estates. This comes as the flats in non-mature estates “come with an average age of fewer than 10 years compared to an average age of more than 35 years in mature estates”.

“Even if your flat is in a mature estate, you will not be able to fight against a decaying lease which seems to have a greater impact,” noted Huttons.

For three-room flats, the price gap between mature estates and non-mature estates narrowed, probably due to more flats being built and sold within non-mature estates, said Huttons. That meant the average age of such flats in non-mature estates came down faster than those in mature estates.

However, the gap remained stable for four-room flats as there has been an influx of such units in both mature and non-mature estates. As such, the average ages for such flats in mature and non-mature estates began to decline around the same time.

The price gap for larger flats, on the other hand, has narrowed. This could be due to the robust demand for bigger flats since the start of the COVID-19 pandemic, which saw many people working from home. This pushed up prices in non-mature estates, even as the authorities had stopped building larger flats in recent years as family demographics changed.

“It appears that age or remaining tenure of flat plays a more important role in the value of flats in recent years rather than the location in a mature or non-mature estate,” noted Huttons.

“This is a valid concern as no one likes the thought of their home depreciating to zero as the lease runs down.”

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email: victorkang@propertyguru.com.sg

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