Million Dollar HDBs. Why Do They Even Exist?

Million Dollar HDBs. Are They A Paradox?

The million-dollar HDB is a paradox. By right, a HDB flat is supposed to be a means of affordable housing for most Singaporeans. However, accumulating a million dollars is not exactly an easy feat. With the growing emergence of million-dollar HDBs, it does raise several eyebrows. Is the government really doing a good job of maintaining affordable housing in Singapore? If so, why do these million-dollar HDBs exist in the first place? Well, as someone who has transacted a million-dollar HDB, I am here to share with you some interesting facts about them.

Only A Small Percentage Of HDBs Will Fetch A Million Dollars

First, you must understand that only a tiny percentage of HDBs are sold above a million dollars. In a recent article, Straits Times reported that there were 82 of such units sold in 2020. Comparing this number with only 64 units transacted in 2019, million-dollar HDBs seem like a growing trend. The jump is almost 30% and does seem like a cause of concern. However, if you were to put things into perspective, there were 23,336 resale HDBs sold in 2020.

Million Dollar HDBs Are Really Quite Rare. Source: Square Foot Research

In terms of percentage, million-dollar HDBs only account for 0.351% of all resale units transacted. If you were to add in brand new BTO offerings from HDB, this percentage goes even lower.

Inflation, Increasing Costs, Higher Costs of Goods

Due to increasing costs, it would not be uncommon to see the number of million-dollar HDBs increase over time. As our purchasing power drops, we would need more money to buy the same thing in the future. Inflation is also the main reason it is no longer possible to buy HDBs at the good old prices of $20,000. Today’s BTO launches in mature estates (Bishan, Bidadari) already command prices from $600k to $700k. How much do you think these flats will be transacted 10 years down the road?

HDB BTO November 2020 Prices. Source:

Million Dollar HDBs Match Valuations

Another reason why these flats are transacted at such prices is that HDB supports the valuation. Now, most people instinctively will tell you that purchasing HDBs at such prices is a dumb decision and simply not worth it. With this price tag, wouldn’t it be more worthwhile to purchase a private property instead? Well, I believe there is a reason why HDB supports this valuation, and it has got to do with the intrinsic value of the property. Although HDB flats are used primarily for consumption purposes, some owners have a secondary property, and they use their HDB to generate rental income.

Let us take the example of the Natura Loft unit I transacted. HDB gave a valuation of $1.1mil, and rentals for the high floors can fetch a rental of $3200. The gross yield works out to be around 3.5% which is far better than some condos in today’s market. So, the question is this. Which one is more worth it? The million-dollar HDB? Or the nearby condo? Well, there is no correct answer. You must bring numbers to the analysis. Numbers are never biased, and you will need to study them to arrive at a better conclusion.

The Intrinsic Value Of The Property Is Higher Dependent On The Rental Income. Source: SRX

Location Matters

In addition to the bank valuation, there are also a few reasons why buyers are willing to pay a premium. If you were to study where these HDBs are located, they all would share similar attributes. These HDBs are usually newly MOP and located in very mature districts. If you are a resale home buyer looking for housing options, your choices may be limited. The first option is to choose a rather old resale flat with limited years on the lease. Of course, flats like these are always affordable, but they may not retain value over the years. When you want to sell them in the future, they may not fetch a higher price than what you paid for. On the other hand, you may go for those newly MOP flats with a longer lease term. However, there is always a rather limited supply of these units. When more buyers decide to focus on them, prices will tend to climb faster.

Unique Points

Other than location, most million-dollar HDBs have a distinguishing feature other HDBs do not have. Due to the intensification of land usage, these million-dollar HDBs are always very tall. And because of the building height, those on the higher floors will get an incredible view of their surroundings. Views in real estate always add value to the property. However, the value which you can assign to nice views is a bit tricky to assess. Some people cannot be bothered with a nice view because their habits involved activities within the house. Then, you have others searching for this holy grail that is so scarce to find in Singapore. This intangible benefit will usually fetch a price that is 20% or even higher than prevailing market prices.

Spectacular Views Of A Million Dollar HDB.

Views aside, some million-dollar HDBs sold are superbly renovated. These days it is not uncommon for some owners to splurge $200k to renovate a flat. The new owners may appreciate this renovation and pay a higher price for the property. Simply because there is no downtime to move in and all they need to do is bring their luggage. Nicely renovated houses are also one of the reasons why these million-dollar HDBs come about.

Why It Is Always Very Important To Understand The Rationale Behind Why Things Happen

The reason why I wrote this article is simple. The Straits Times had posted a piece on million-dollar HDBs on Facebook, and there were several rather interesting comments. Hence, I decided to write a more in-depth analysis of why such flats exist. After all, I had the experience of transacting such units. I believe it is crucial to focus on why certain things happen and not jump to conclusions. This philosophy is the same way how we help our clients with their real estate needs. If you need someone to assist you in doing in-depth research, do speak with us, and we will be happy to assist you.

Article contributed by Jerry Wong.

Jerry Wong is a realtor with Propnex Realty. He loves coffee, cookies and condos and has been in real estate for ten years. Most importantly, he loves connecting people to properties and gets enormous satisfaction when they acquire their dream home. Or making well-informed decisions that see their assets grow. Book a video call appointment and Jerry will share with you the following.

  1. How certain factors affect real estate prices. Why some condos can make a million dollars while others can lose that same million.
  2. Why timing is not the most important thing. Because some people can buy the same condo at the same time, but one end up making $100k to $200k while the other suffers losses of the same amount!
  3. Understanding your requirements and craft a solution for your real estate needs. Be it in asset progression, tax planning, financial calculations, rentals, sales, etc.

You can also subscribe to our Facebook page and receive the latest real estate updates in Singapore!

Other In Depth Analysis

What Happened To Buying Properties With Little Or No Money Down?

I am sure you have come across ads from social media where gurus preach about how you can buy properties...
Read More

How Accurate Are Analysts in Predicting the Future Of Singapore’s Property Market?

I am sure that you have come across articles in mainstream media featuring analysts giving their views on the property...
Read More

Paying the Additional Buyer’s Stamp Duty (ABSD). Is It Worth It?

With the effects of the Coronavirus confining people to their homes, personal space suddenly becomes one of the most important...
Read More

Leave a Reply

Your email address will not be published.