Singapore’s Million Dollar Flat: The Only Three Things You Need to Know

A million dollar HDB flat. This is it people, the end is nigh. Those of you without flats, go buy a blanket; we’ll be sleeping in longkangs by Christmas. Seriously: The news reports have been filled with so much hot air, you could fly a Zeppelin if you chuck today’s papers under it. I’m not impressed by the media coverage, and I’m going to tell you something important: The only three things you need to know about that million dollar deal.

 

House and money on a scale

Before buying, we weighed the pros and the pros.

 

The Million Dollar Flat

An executive maisonette on Mei Ling Street (Queenstown) has sold for just over $1 million. That’s the highest price so far, beating the previous record of $900,000. The flat is a 1,614 sq. ft. unit (works out to around $620 per sq. ft.) and is just opposite the MRT station.

Both buyer and seller were Singaporean, much to the dismay of Stomp commenters (who’ve lost a perfect opportunity for an anti-foreigner rant). Reports on the sale have led to worries about rising resale flat prices.

 

Lesson 1: It Will Not Be the New Norm Any Time Soon

 

Man sitting on the road and staring at cardboard boxes

Property Queues in 2020: Come early, get first choice of affordable cardboard box.

 

The people who paid $1 million for their flat are pure home buyers, in love with their flat. Their property agent specifically said it was “love at first sight” for them, and that they started on a high bid.

That isn’t the attitude of most Singaporeans. We don’t buy so high, because we want the value of our flat to rise far above its purchase price. We think of property as a cash cow, as a retirement plan, a hedge against inflation, etc. That’s the mentality that drives our housing market.

The buyers of this Queenstown aren’t on the same page. They’re not concerned whether their flat will be worth more than $1 million in a certain number of years (At least I hope not, because otherwise they have the financial acumen of a mushroom. But I’m sure they did their homework).

They simply liked the place and bought it, even if it meant a lack of profit. This sort of behaviour is not reflective of our housing market. Their purchase does not mean the average flat will cost $ 1 million any time soon. Inflation and overcrowding might take us there one day, but don’t hold your breath.

Incidentally, do you remember the Bishan Maisonette that sold for $900,000? The COV for that flat was $220,000, whereas the COV for this million dollar flat is just $195,000. This is not the most dramatic thing we’ve seen.

 

Lesson 2: Some Property “Analysts” Are Salesmen

 

Scribbles on a napkin

Sometimes, you can tell when they send you their analysis report.

 

Every time a flat sells for an abnormally high price, some property analysts will claim it reflects a new market norm.

Note that some of these interviewed analysts (no names here, Google their names from the paper) also sell property. They aren’t analysts as much as they are salesmen. And obviously, it’s in their interest to spin any existing news to encourage sales.

They’ll tell you million dollar flats will “soon” become typical. Interesting choice of word; I wonder what you’d do to your stock broker if he told you some stocks would be rising “Uhh…soon. No, I don’t even have tentative dates. That’s my detailed, expert analysis: Soon.”

“Soon” can mean next week, next year, or the next 10 years. It’s a weasel’s choice of word, and aimed at panicking the market. They want you to believe that you better buy now, or you’ll be priced out of the market.

Don’t fall for it.

 

Lesson 3: Our Media Often Inflates Property Stories

 

News stand

No more property news, sorry. Too many seizures from my buyers.

 

Yes, it’s interesting that someone paid more for their flat than Iran might for plutonium. But you can pretty much stop at that point, and realize the rest of the story is justification for a front page spread.

A high property price is interesting, but you know what makes it sensational? The fear that your flat will cost as much. The fingernail munching fright that your children will be sleeping on garbage bags. Now, that’s a story that’ll sell. So that’s the angle some news agencies will pick.

Don’t be panicked by this sort of fear-mongering. Your HDB flat is not going to cost a million dollars any time “soon”, and it’s not as if all flats are resale flats.

Speaking of media influence: Some property firms add fuel to the fire, aggressively marketing the myth of forever-rising prices. They publish books, launch websites, and conduct seminars, all of which are just veiled promotional efforts. When asked to comment on the news, some “analysts” interpret events in ways that pressure you to buy.

Be picky about the media you trust. Heed the ones that consult independent property investors, or real analysts (the people who sell nothing besides information).

So take a deep breath, and don’t get spooked by today’s news. If you want more commentaries and insights on property, follow us on Facebook; we do our best to keep it real. But if you’re still worried about property prices, you can check the current home loan rates on sites like SmartLoans.sg.

Image Credits:
taxbrackets.org, beggs, myguitarzz, talkev

What are your thoughts on the million dollar flat? Comment and let us know!

Get more Personal Finance tips and tricks on www.MoneySmart.sg

Click to Compare Singapore Home Loans, Car Insurance and Credit Cards on our other sites.



More From MoneySmart
  • Peeling out at Octane Academy, the free driving school for Ford ST owners 18 minutes ago
    Peeling out at Octane Academy, the free driving school for Ford ST owners

    Buyers of Ferraris or Jaguars are used to perks from manufacturers – including racetrack lessons to help master their exotic machines. But for enthusiasts on a tighter budget, the Ford ST Octane Academy might be the sweetest deal in motoring: Buy a Ford Fiesta ST or Focus ST hatchback, and the reward is a free day of training at one of America’s longest, most-lavish road courses.

  • Why you can't buy America's greenest car 3 hours ago
    Why you can't buy America's greenest car

    Ask me or any auto expert what's the fastest car you can buy for any given amount, and we could easily cough up several options. Same for most luxurious, or off-roadable, or any other measurement. Yet there's one type of question that's far harder to answer: What's the greenest, most environmentally friendly car you can buy today?

  • Audi TT Offroad concept debuts as a 124-mpg hybrid with wireless charging 4 hours ago
    Audi TT Offroad concept debuts as a 124-mpg hybrid with wireless charging

    The TT. Audi's diminutive sports car. Since production began in 1998, the two-door coupe has aged with the pugnacity of a grizzled New Yorker, but not in size. And why would it, as the arrival of the TT RS proved, adding some grit makes for a rather captivating dish. And so you'll excuse us for being puzzled by the Audi TT Offroad concept.

  • Pirates kidnap three on Singapore tanker off Malaysia
    Pirates kidnap three on Singapore tanker off Malaysia

    Armed pirates boarded a Singapore-managed oil tanker in the Strait of Malacca, kidnapping three Indonesian crew and stealing some of the vessel's shipment of diesel fuel, the International Maritime Bureau said Wednesday. The attack occurred early Tuesday off Malaysia's west coast, said Noel Choong, head of IMB's Kuala Lumpur-based piracy reporting centre. The diesel oil tanker was believed to be en route to Myanmar. "IMB is aware of the attack on the Singapore-managed ship in the Malacca Straits.

  • McDonald's Hello Kitty sale site temporarily suspended due to fresh wave of Kitty mania
    McDonald's Hello Kitty sale site temporarily suspended due to fresh wave of Kitty mania

    It may not be safe to enter a McDonald’s restaurant in Singapore on Mondays starting 28 April. To celebrate the iconic Japanese character Hello Kitty’s 40th anniversary, the fast food chain announced last Friday that it would be releasing a new collection of Hello Kitty toys in McDonald’s restaurants island wide next Monday.

  • First sign of S.Korea ferry disaster was call from a frightened boy
    First sign of S.Korea ferry disaster was call from a frightened boy

    He called the emergency 119 number which put him through to the fire service, which in turn forwarded him to the coastguard two minutes later. That was followed by about 20 other calls from children on board the ship to the emergency number, a fire service officer told Reuters.