Price premium of HDB resale flats in mature estates may shrink further: Report

Flats in mature towns tend to command a premium over those in non-mature estates. ST PHOTO: CHONG JUN LIANG

SINGAPORE (THE BUSINESS TIMES) - The price gap between Housing Board (HDB) flats in mature estates and those in non-mature estates is likely to continue to narrow in the coming years, Huttons Research said.

This comes as buyers shun decaying leases despite amenities and accessibility and as some younger estates transform to win favour with potential residents, the real estate consultancy noted in a report on Friday (June 4).

If the trend persists, "it is possible that we will see a million-dollar flat in a non-mature estate soon", said Mr Lee Sze Teck, director of research at Huttons Asia.

Last month, HDB resale prices rose more quickly in non-mature estates, climbing 12.4 per cent year on year and increasing 1.4 per cent from April, flash figures from property portal SRX showed. Mature estates, meanwhile, saw prices grow by 11.6 per cent year on year and 0.9 per cent month on month.

Singapore's mature estates include Ang Mo Kio, Bishan, Clementi, Pasir Ris, Tampines and Toa Payoh. Non-mature HDB estates include Bukit Batok, Choa Chu Kang, Jurong East, Punggol, Sengkang and Woodlands.

With a more central location as well as numerous amenities and facilities nearby, flats in mature towns tend to command a premium over those in non-mature estates. Sellers also expect this because they too had paid a premium when they first bought their flats, Huttons wrote.

Generally, that should be the case, given real estate's "location, location, location" mantra. But the differentiation between mature and non-mature estates has blurred in recent years, with average resale prices in non-mature areas climbing at a faster rate, the research team found from its analysis of price data from 2010 to last month.

One possible reason for the shrinking premium is the age or remaining land tenure of the flats that changed hands, Huttons said.

"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."

The gap narrowed for three-room and five-room flats in the past decade, partly because there was an increase in new supply of such flats being built and sold in non-mature estates. That meant the average age of these flat types moved in non-mature estates came down more quickly than in mature estates.

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