The prices of resale HDB units reached another record high in Q3 2009 amidst a growing multitude of unhappy and restless buyers sounding off that the values of flats are skyrocketing too high for their budgets.

Although disgruntled home seekers are complaining that the prices are becoming too high (and not necessarily wrongly so), property watchers say that there are still low-cost residential properties to be had - that is, if seekers would be less picky and look a little harder.

Where, then, can these affordable housing units be found?

A correspondent went looking for resale homes that recently transferred hands for as much as $200,000, an amount that can easily get a home buyer a built-to-order three-bedroom unit in new towns like Punggol.

The good news: Resale flats priced below $200,000 really do exist.

The bad news: Most of the homes that can be bought less than $200,000 are three-bedroom units or smaller, are 20 and even more than 30 years old, and are most likely located in the far corners of Singapore like Jurong West and Woodlands.

Even then, homes priced below $200,000 appear to be dwindling.

Between July and September 2009, fewer than 140 three-bedroom homes were transacted for $200,000 or less, compared to over 220 flats sold in Q2 2009 and over 280 in Q1 2009. This data is consistent with the information posted in HDB’s website.

Four-bedroom units that are being sold for less than $200,000 are virtually non-existent. Even if the budget is upped to $300,000, finding a four-room home is almost next to impossible.

”In the past, you could easily get some of the four-room flats for below $250,000, whereas now, most are above $300,000,” Mohamed Ismail, chief executive at PropNex, said.

According to Eugene Lim, associate director at ERA Asia-Pacific, a budget of $200,000 in 2003 could have been enough to purchase a four-bedroom home in almost any location, including popular sites like Toa Payoh, Serangoon, Bedok or Ang Mo Kio.

This year, however, $200,000 can only get a buyer a three-bedroom unit in Yishun, Woodlands, Kallang, Jurong West, Hougang or Geylang.

Similarly, $300,000 in 2003 could have been enough to acquire a five-bedroom home in the majority of towns, Lim added. In comparison, the only five-bedroom homes that can be bought at $300,000 this year are located in Woodlands or Jurong West, he said. In prime estates like Toa Payoh, Queenstown, Marine Parade and Clementi, only three-bedroom flats can be had at $300,000.

One of the reasons for this is the growing cash-over-valuation or COV component, which the vendors of sought-after homes can demand for in cash on top of the flat’s valuation. For three-bedroom units in popular sites, the COV can be as much as $50,000, whilst owners of units in outlying towns still demand at least $10,000, said Dennis Wee Realty’s senior division director, Aaron Hong.

Even with this excluded, the valuations of HDB units alone have shot up over the past few months.

In Tampines, for instance, the most modest valuation for a three-bedroom unit is approximately $210,000 to $220,000. The highest valuation, on the other hand, can be as much as $290,000, Hong said.

When COV is thrown in the mix, it will not come as a surprise that a three-bedroom resale unit can exceed the $300,000 barrier – and COV appears to be a must-have these days because of the property boom.

Ismail advises desperate seekers whose budgets are low to forget resale units and opt for build-to-order homes instead even if that implies a few years of waiting.

”The key is to enter the property market first, in whatever way you can,” Ismail explained. ”By getting one foot in the door, you can build a foundation and then work towards the home you really want.”
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