ST : Affordable flats still available

Jan 31, 2010

Affordable flats still available

Amid sky-high prices, analysts say 'think suburban, be patient'

By Jessica Cheam

Ever since the release of the latest housing statistics last week, public housing prices have become the talk of town.

And no wonder: Figures by the Housing and Development Board (HDB) showed resale flat prices rising 3.9 per cent in the final quarter of last year, hitting yet another fresh record.

They have risen about 40 per cent from 2007 to last year, and are now some 10 per cent higher than the previous peak achieved in the fourth quarter of 1996.

For the whole of last year, resale flat prices rose 8.2 per cent.

But while disgruntled home hunters lament that resale flats are now priced out of their reach, property analysts say there are still gems to be discovered in some housing estates.

An analysis of the latest statistics by The Sunday Times shows some estates still offer flats for less than $400,000.

Four-roomers in Yishun - an established estate - turned out to be the cheapest, going by the statistics. The median resale price for the fourth quarter was $292,000 - the lowest among all estates (see table). In comparison, four-room flats in the most expensive estate, Queenstown, had a median resale price of $523,000.

Bukit Panjang, Woodlands, Jurong West and Choa Chu Kang were some other estates that offered affordable four-roomers in the low $300,000 level.

For buyers looking for five-room units, the median resale price for such homes in Woodlands at $365,000 was the most affordable, followed by flats in towns such as Bukit Panjang and Sembawang.

Executive flats in Sembawang, Yishun and Woodlands were sold at the lower range of the $400,000 level.

Chesterton Suntec International research and consultancy director Colin Tan said that 'from time to time, you see good value in some locations'.

For example, some estates have been slated for rejuvenation and upgrading such as Tampines, Yishun and Jurong. But because the plans are long term and have not materialised yet, flats in such estates remain affordable.

Buyers who are patient and buy units in such estates could see capital appreciation of their property when the rejuvenation is completed, say analysts.

But to some extent, the current prices of the more affordable flats already reflect the value that the market attaches to them, added Chesterton's Mr Tan.

The fact that these estates are not in prime locations is reflected in the prices. Those who cannot afford flats in central locations can find good alternatives in the suburban towns, he said.

One upside about living in suburban areas is that you can typically get more space for your money, he added.

PropNex chief executive Mohamed Ismail noted that other estates which remained relatively affordable included Bedok, Hougang and Jurong East.

Suburban towns may also see an appreciation in flat prices if HDB does implement a quota on the number of flats permanent residents (PRs) can buy, he said.

The HDB said recently it is considering introducing a separate ethnic quota for PRs to prevent them from forming enclaves in public housing estates - but details are not available yet.

'If there is indeed such a quota imposed and PRs are restricted from buying too many flats in a specific area, for example, central locations near an MRT station which they tend to favour, then demand for resale flats will spread more evenly throughout the island,' said Mr Ismail.

Chesterton's Mr Tan pointed out, however, that housing statistics serve only as guidelines. 'In truth, market information is imperfect and bargains can be found just about anywhere - central as well as suburban. You have to be patient to look for it,' he said.

ERA Asia-Pacific associate director Eugene Lim said: 'My advice to home buyers is, buy what you can afford. Prices are at an all-time high now, home buyers will do well to be very prudent with what they spend on.'