Buying an HDB flat – Resale or brand-new?

There are two methods through which one can buy an Housing Development Board (HDB) flat: Either purchase a new flat directly from the HDB, or a resale flat on the open market.

A new flat from HDB tends to be much cheaper than resale flats in the same area due to subsidies from the HDB.

For example, a four-room flat in the recently announced Senja Gateway development in Bukit Panjang is priced at $242,000 to $306,000, but the median resale price of a flat in Bukit Panjang in the second quarter of 2010 was $340,000.

However, there are more eligibility guidelines for new HDB flats, including citizenship, and a household income ceiling. If you qualify, it is definitely a good investment for your family.

Direct from HDB

There are four ways you can buy a new flat from the HDB:

1. Quarterly sale of three-room and smaller flats

Three- and two-room flats as well as returned studio apartments are sold on the first day of January, April, July and October.

2. Sale of balance flats

Most of these new flats are surplus units in an established estate or town offered for sale through balloting.

3. Build-To-Order (BTO)

HDB will launch a BTO site and invite applicants to book a flat. When most of the flats are booked, HDB will call a tender for the construction of the flats.

4. Design, Build & Sell Scheme (DBSS)

Plots of land are sold to private developers who are free to design and price the flats as long as they work within the rules of public housing.

If you are in a hurry for a home or picky about the location, this is the method for you.

1. Check out the listing of flats for sale in the Classified section.
2. Contact the property agent or home owner to view the flats you are interested in.
3. Get the HDB Loan Eligibility Letter or Letter of Offer from the bank.
4. Once you find a flat, make an offer and exercise the Option to Purchase.
5. Submit the resale application and wait for your First Appointment date.

While a property agent would have a good gauge of the average prices of similar flats in a particular area, you should do your own homework and be aware of market prices. Here is some general information about resale transactions you can find on HDB’s website.

HDB Resale Price Index

This index tracks the overall price movement of the HDB resale market. It is derived from resale transactions registered across various towns, flat types and models, using the fourth quarter of 1998 as the base period with an index value of 100. By comparing how it changes from one quarter to another, you can tell whether prices on the whole have moved up or down over a three-month period.

Median resale prices

This set of statistics provides the median prices for resale transactions of a particular flat type in a given town based on resale cases registered in the quarter. The prices are inclusive of Cash-Over-Valuation (COV) if the flat was sold at a price above market valuation.

Median Cash-Over-Valuation (COV)

You can find out what the quarterly median COV is for all flat types in any town. The COV is the difference between the resale price and the market value of the flat.

Individual resale transactions

At the HDB’s e-Service resale transactions site, you can do a search for the resale transacted prices based on resale applications approved in the last three months. You can search by HDB town or street name, or by price range.

– Lush home