Over the past week, a jumbo HDB flat listed for sale at $2.18 million at Telok Blangah has caught the attention of many Singaporeans. The asking price, which would make it the most expensive HDB flats in Singapore if sold, has been widely reported by local media, including DollarsAndSense.
However, the listing has attracted more than just media attention. It has since also prompted a rare response from the Housing & Development Board (HDB), which issued a statement addressing the asking price and announcing that it would review the HDB Conversion Scheme, which allows eligible homeowners to combine adjoining flats into a larger home.
Read Also: $2M HDB Resale Flat At Telok Blangah: 5 Factors That Contributed To Its Price Tag.
HDB Weighs In On The $2.18 Million Asking Price
One interesting aspect of HDB’s announcement is that it went beyond simply acknowledging public concerns over the listing. HDB also provided its own assessment of how much they think the jumbo flat could be worth, based on comparable transactions in the area.
According to HDB, three-room flats in the area have transacted for between $673,000 and $771,000 over the past six months. Taking the higher end of this range, two three-room flats would cost approximately $1.54 million. This is similar to the market valuation that we shared when we wrote about this flat.
HDB’s decision to publicly highlight this difference is worth noting. HDB typically does not publicly disclose its valuation of individual resale flats; instead, buyers receive a valuation after an Option to Purchase has been granted. This appears to be a way for HDB to pre-emptively caution potential buyers that if the flat were sold at its original asking price, the buyer would likely have to pay a substantial Cash Over Valuation (COV), on top of their other upfront housing costs.
Read Also: What Happens When You Buy A Property Above or Below Valuation?
HDB Is Reviewing Its Conversion Scheme
Besides commenting on the asking price, HDB also announced that it is reviewing its Conversion Scheme. The HDB Conversion Scheme allows owners of HDB flats who require more living space to purchase an adjoining flat on the resale market. This is subject to prevailing citizenship and family nucleus requirements, as well as HDB’s assessment of whether the two units can be structurally combined.
Once approved, the homeowner can buy the adjoining flat and combine both units into a larger HDB flat under one lease. The combined flat can subsequently be sold on the resale market after fulfilling a new five-year Minimum Occupation Period (MOP).
The scheme essentially allows homeowners to create larger HDB flats that are not typically available through HDB’s current new-flat offerings. For example, combining two three-room flats could create a home substantially larger than a typical five-room flat.
Jumbo flats are not new in Singapore. In 1989, HDB began combining unsold three-room and four-room flats into jumbo flats to address an oversupply of smaller units that struggled to secure buyers. These flats were found mainly in estates such as Woodlands and Yishun, with some measuring close to 200 sqm. The key difference is that HDB created and sold these jumbo flats earlier. In contrast, the Conversion Scheme allows eligible homeowners to purchase an adjoining unit and create their own larger flat, subject to HDB’s approval.
This explains how a relatively new BTO development such as Telok Blangah Parcview, completed in 2017, can have a jumbo flat even though HDB did not originally build or sell it as one.
The Demand For Bigger HDB Flats Is Not Going Away
On its own, having bigger HDB flats is not necessarily the issue. After all, we believe that larger families may require more living space, and a jumbo HDB flat could be a practical alternative for large families who cannot afford a much more expensive private property.
The bigger issue, in our view, is that HDB has not been building flats of such sizes for some time. Even five-room flats, currently among the largest standard BTO flat types at about 1,184 square feet, are not available in every new HDB development, particularly in central locations.
For example, Telok Blangah Parcview, where the $2.18 million jumbo flat is located, was launched without any five-room flats, with 4-room flats being the biggest offered at 90 square metres (around 968 square feet). Thus, homebuyers who wanted to live in the area but needed more space would have had limited options.
This brings us back to the $2.18 million asking price.
While HDB has highlighted that the asking price is significantly higher than the combined value of two comparable three-room flats in the area, the premium may also reflect the scarcity of such large homes in the location.
If HDB is not building five-room flats in certain central locations, much less jumbo flats, it should not come as a surprise that an unusually large HDB flat in Telok Blangah would end up commanding a substantial asking price.
Ultimately, whether someone is prepared to pay $2.18 million for the flat is a separate question. However, the owner’s ability to ask for such a premium highlights a basic supply-and-demand issue: when larger HDB flats are scarce in desirable locations, buyers who want both space and location may have few comparable alternatives.
Why HDB Should Consider Building Bigger Flats Again
With HDB reviewing the Conversion Scheme, one possible outcome is that HDB homeowners may no longer be allowed to combine adjoining flats to create their own jumbo units. While this could prevent unusually large HDB flats from being created and the appearance of unfairness for sellers of such jumbo flats to command a premium, it does not address the underlying demand for bigger homes.
As HDB continues to build smaller units, including two-room Flexi and three-room flats, some homeowners will inevitably want more living space as their families grow. For such families, their only option besides buying private property is to consider a large jumbo or executive flat.
Perhaps the review of the Conversion Scheme should also prompt a broader discussion about whether HDB itself should consider building larger flats again. This does not mean that every new HDB development needs jumbo flats. However, offering a limited number of larger units, including in central locations, could provide families who need more space with an alternative to buying expensive resale flats or private properties.
Otherwise, we may find ourselves in the rather ironic situation where Singapore’s first $2 million HDB flat is not one that HDB originally built, but one that a homeowner created by combining two smaller units.
Read Also: Why HDB Needs To Start Building Bigger Flats For “Large Families”
