Seller beware: That million-dollar dream for your HDB flat may cost you: Opinion

Most flats are not worth $1 million. Yet, when million-dollar transactions do make the headlines, this hard truth seems lost on some home sellers.

In fact, they start jacking up the prices of their own units – regardless of whether these fit the bill. Everybody loses out in the end, including the sellers themselves.

Take my niece’s recent experience looking for a flat as an example. One of the units that initially caught her eye was a four-room flat near Eunos MRT station – a high-floor unit with an unblocked view.

The seller wanted $1 million even though similar flats in the same area were transacted for between $760,000 and $921,000.

That unit has remained unsold for at least the last three months.

Another option farther from the MRT station was listed for sale at $990,000, even though flats in that area sold for between $800,000 and $910,000.

After several rounds of negotiation, my niece and the seller agreed on a price of $960,000. But on the day of signing, the seller reneged on the deal, hoping for a better offer, only to later sell the unit to another buyer for $950,000.

Among those looking to sell their homes, the idea of selling their flats for at least $1 million has become an aspiration, especially if the unit has prized attributes such as being close to an MRT station, and on a high floor with an unblocked view.

Property agents and the authorities have said this million-dollar fixation has led to unrealistic expectations among sellers, who cling to inflated price tags, ignoring market data and advice from property agents.

Agents also said the recent reclassification of HDB Build-To-Order (BTO) flats into Standard, Prime and Plus categories has further fuelled this mindset, with some sellers hoping buyers will pay any price for their flats.

BTO projects classified as Plus or Prime have stricter resale conditions, including a 10-year minimum occupation period (MOP) and a subsidy clawback.

The reclassification has led some sellers of existing resale flats to believe that their units, which share attributes with Plus or Prime flats (such as being near MRT stations or the city centre), will command higher prices on the resale market as they do not have similar restrictions.

These sellers wait for the elusive “right” buyer, often to their detriment.

Very few million-dollar deals

Flash data released by real estate portals 99.co and SRX on Dec 4 showed that there were 944 million-dollar transactions in the first 11 months of 2024. This figure is more than double the 421 million-dollar transactions in the same period in 2023.

But digging deeper into the numbers will show that newer flats, particularly those with leases starting from 2013 onwards, have emerged as key drivers of million-dollar transactions in 2024.

Such flats accounted for at least 342 of such deals in the first 11 months of 2024, noted an HDB resale market report released by Singapore Realtors Inc (SRI) on Nov 28. Larger flats also account for a majority of this type of transaction.

Million-dollar transactions, while growing – they accounted for 4 per cent of resale transactions in November and 3.6 per cent of total deals since January – still account for a tiny minority of flats sold.

What this means is unless a flat is newer, larger or in a particularly good location, it will probably not fetch a million dollars.

In August, Minister for National Development Desmond Lee flagged the dangers of how expectations of high prices could lead the HDB resale market to become unhinged from economic fundamentals.

And when the market eventually cools, those who buy at a high price and take larger loans will be the hardest hit, he said then.

Several agents said unrealistic seller expectations are becoming increasingly common, sharing instances where sellers rejected early offers that were just below their target, only to accept lower prices after months of waiting.

One agent, speaking anonymously, described the difficulty of managing a client who insisted her four-room flat warranted a premium solely because it stood directly in front of an MRT station. The seller overlooked the fact that the flat was small, located in the suburbs and priced significantly higher than what comparable flats in the area fetched, said the agent.

This reluctance to adjust pricing has led to long waits and stalled deals, said agents.

They said it takes two or three months, on average, to transact units whose sellers start with unrealistic pricing – and this typically happens after the sellers lower their expectations.

Property agent Rick Long from Huttons said he has seen more four-room resale flats in the suburbs listed for over $900,000.

But many of these sellers are merely testing the market without any urgency to sell, said Mr Long, who had dealt with some of these sellers. Serious sellers, he cautioned, must temper their expectations and be mentally prepared that their flats could take longer to sell.

Mr Long sold an 18-year-old, five-room flat in Strathmore Avenue for $1.13 million in February, and pointed out that in that case, the unit’s appeal stemmed from its 20th-floor location and proximity to Queenstown MRT.

Huttons agent Jason Ang, who represented an owner in selling a four-room flat in Dawson Road for $1.038 million in April 2024, said it took two to three months to secure a buyer, with many initially hesitant to pay above the $1 million mark.

Ultimately, what sealed the deal was the 20th-floor flat’s 180-degree unblocked view overlooking Dempsey and Tanglin, said Mr Ang.

In November, the top resale transaction was a five-room flat at Dover Crescent in Queenstown which was resold for $1.55 million. The 124 sq m unit is located on a high floor, between the 37th and 39th storeys, with a remaining lease of just over 86 years.

Cautious buyers

Agents point out that serious buyers are increasingly cautious, unwilling to overpay amid uncertain economic conditions.

Mr Mohan Sandrasegeran, SRI’s head of research and data analytics, said the decline in the number of million-dollar resale flat transactions in November showed cautious sentiment among buyers, some of whom might be recalibrating their purchase decisions in response to the cooling measures.

He noted that 87 units sold at $1 million or more in November, down from 103 units in October, represented a 15.5 per cent month-on-month decline.

So while some sellers cling to hopes of million-dollar deals, the market has a way of bringing them back to reality.

In these situations, it is the sellers who have the most to lose since they risk losing out on potential deals.

It is worth noting that while there have been a record number of million-dollar transactions in 2024, the market shows some initial signs of cooling.

From 106 million-dollar deals in September, the number fell to 103 in October, said Mr Sandrasegeran, who expects an easing of such transactions in 2025, and thus remaining a tiny segment of the overall resale volume.

In August, HDB lowered the loan-to-value limit, or the maximum loan that home buyers can take from HDB to fund a new or resale flat purchase, from 80 per cent to 75 per cent.

The move is meant to target buyers who typically rely on higher loans to buy larger and pricier flats, which in turn drives up prices in the resale market.

What this means is that sellers need to take a good, hard look at their flat and ask themselves whether it is really worth $1 million.

Making a logical, rather than emotional, decision is crucial here. If similar flats in the area are transacting for around $800,000, holding out for $1 million may result in missed opportunities.

After four months of property hunting, my niece managed to secure a four-room flat on the city fringe – a high-floor unit with a view and over 80 years of its lease left – for under $1 million.

Her experience is a reminder that with patience, realistic expectations and some negotiation, dream homes don’t always have to come with million-dollar price tags. Seller beware.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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