Where To Find “Undervalued” BTOs: HDB Towns With The Biggest Price Gaps Between BTO And Resale Flats

With the current housing shortage, buyers are caught between a long wait for BTO flats or sky-high resale flat prices. On top of that, a recent rule tweak means that backing out at flat selection – if you don’t like what’s available, it relegates you to second-timer status.

So if you are caught in a bind on whether to opt for a resale HDB, one way that might help is to look at the price gaps between BTO and resale flats in different estates. This could help you decide whether it’s worth waiting for a new flat, or whether you should just go out and hunt in the resale market.

That said, we’d like to caveat this by saying that you should not just look at the numbers and follow them blindly. For some estates, there may be big variances due to the differing ages of the older HDB flats.

Note: For the following, we used average BTO prices across various projects, for each of the flat types. We then compared them to the average prices of resale flats in the same area, between September 2022 to March 2023.

It’s all about the value of four to five years

What’s the impact of the “price premium” for resale flats? Apart from availability (some mature estates haven’t seen BTO flats in many years), what you’re paying for is a shorter wait time. Also, depending on the home, you might not even have to spend a cent on renovating (as long as the style is to your taste).

A resale flat can be moved into immediately, but it’s also a more tempting prospect for aspiring upgraders. Because the Minimum Occupancy Period (MOP) starts from the key collection, a BTO flat will only go up on the open market after nine to 10 years. A resale flat, however, ensures you’ll be ready to sell in five years. 

It’s a simple enough concept – but when you get down to details, opting for a resale flat may be more reasonable in some estates than in others: 

3 Room BTO

4 Room BTO

5 Room BTO

Some points to note from the above

• Geylang is the only estate where the average BTO price could be higher
• For 3-room flats, the price gap in some estates is almost negligible
• Families choosing Ang Mo Kio may want to consider skipping the ballot
• Maintenance and renovation are outside the data 
• 5-Room flats at Bukit Batok have the biggest disparity with BTO prices

1. Geylang is the only estate where the average BTO price could be higher

It’s uncertain why this is the case, but it’s nothing to do with the Red Light Area; Geylang as an estate encompasses much more than just that concentrated spot. It’s also interesting because Geylang benefits immensely from the recent development of the Paya Lebar Quarter (PLQ) nearby, and it’s one of the more central estates. 

Rather, we’d attribute this to simple lease decay. Many of the 3-room flat transactions came from older blocks, with some of them dating back about 40 years. Geylang is also a rather old estate, with many blocks having leases that date back to the ‘80s. 

This represents an opportunity for younger couples and small families, who are intent on upgrading after MOP. Geylang provides good access to the city area, and if you have a short holding period then the lease decay is a smaller concern. 

As an aside, it is well known that Geylang may not be liked by those who prefer low-density areas. This is a heavily built-up town, with notably less green space than many other estates. 

2. For 3-room flats, the price gap in some estates is almost negligible

Besides Geylang, you may be interested to know that some mature estates – including Queenstown, Kallang/Whampoa, and Toa Payoh – have very reasonably priced 3-room flats. We recorded a gap of around $60,000 or under in these areas. 

The reason is again likely due to lease decay, with many 3-room flats in these places dating back to the ‘80s. This trend runs contrary to large 5-room counterparts though, where prices in such old estates are more likely to set record highs. 

This goes to show that, if you’re willing to settle for a little less space, you might in fact be able to afford a resale flat in a mature town. 

3. Families choosing Ang Mo Kio may want to consider skipping the ballot

For both 4 and 5-room flats, the price gap between BTO flats and resale flats was not as huge as expected ($40,471 and $41,437 respectively). 

We’d hazard that, for most home buyers, this higher amount for resale flats is almost negligible; especially if it would shave off the four to five-year construction period. 

This being said, some realtors warned us that Ang Mo Kio is a large area, and prices are a bit harder to generalise. One realtor noted that prices can be significantly higher in the surroundings of the Lentor MRT area.

Nonetheless, if your desired home falls within this estate, there’s no harm in checking resale prices before you join the BTO queue. 

4. Maintenance and renovation are outside the data

One of the things we can’t show on the tables because it varies for each unit is the cost of renovation or maintenance work. With 40+year-old flats, for example, you’d have to expect higher costs in terms of renovation. 

(And if the current owner hasn’t taken good care of the unit, even a five-year-old flat can end up costing steep renovation fees). 

A BTO flat is always in a ready-to-move-in condition; and the Interior Designer doesn’t need to do much hacking, replacement of damaged old flooring, etc. This is one other factor to consider when considering between the BTO queue and just getting a resale unit. 

5. 5-Room flats at Bukit Batok have the biggest disparity with BTO prices

Surprisingly, 5-room flats at Bukit Batok have an average price of $743,744 – the second highest on our list. This is due to the recent MOP of Skyline I & II @ Bukit Batok which saw many units transacting for $700K+ on lower floors, and up to $900K+ on higher floors. One particular unit on a very high floor went for $935,000!

While it is an oversimplification to compare average BTO prices with resale prices given Skyline’s pretty decent location, its current market performance hints strongly at significant profits for those who secured a BTO in Bukit Batok – close to around $300K.

For more on the HDB market as the year progresses, follow us on Stacked. We’ll keep you updated on rules tweaks, trends, and notable pricing changes, to help you make the right housing decision. 

get in touch for a more in-depth consultation, you can do so here.