PLH Model HDB Flats VS Other “Prime” Resale Flats: How Do They Stack Up?

The first PLH model flats, River Peaks I & II, are part of the November BTO launch. It’s crunch time for some homebuyers, who are now faced with a tough choice: do they act as potential guinea pigs and go for the new PLH model flats? Or at that price range, should they consider other conventional, high-demand resale units? Here’s how they stack up:

The first PLH model flats are available this November

PLH model homes are subject to greater restrictions than normal flats; you can see the full details in this article. 

At present, River Peaks I & II are priced as follows:

	Transaction ranges for nearby flats	Price before grants	Price after grants
3-room	$490,000 to $555,000	$409,000	$349,000
4-room	$630,000 to $777,000	$582,000	$537,000

Transaction ranges as indicated by HDB

Note that, as an additional cost to PLH model flats, the first batch of buyers are subject to Subsidy Recovery (SR). This will be a clawback of six per cent of the resale price, for River Peaks I & II.

Here’s how PLH model flats stack up against other high-demand flats today, in terms of pricing and size:

3-room flats:

Flat type	Average price	Average size
PLH Model Flat	$409,000	66 sqm
Pinnacle at Duxton	N/A	N/A
Average closest DBSS Flat (City View)	$610,000	70 sqm
Average in Bishan	$395,800	65 sqm
Average in Queenstown	$405,886	66 sqm
Average in Kallang / Whampoa	$392,804	68 sqm

4-room flats:

Flat type	Average price	Average size
PLH Model Flat	$582,000	88 sqm
Pinnacle at Duxton	$997,615	95 sqm
Average closest DBSS Flat (City View)	$879,200	94 sqm
Average in Bishan	$587,453	100 sqm
Average in Queenstown	$759,992	89 sqm
Average in Kallang / Whampoa	$654,207	93 sqm

A ballpark cost breakdown, compared to resale flats in the Central Area:

For this example, we will compare River Peaks to a resale 4-room flat nearby, at the high range of $777,000 (based on the estimates given by HDB above).

Note that we have omitted the subsidies/grants, as not every buyer qualifies for the same amount of grants. As such, these figures are on the high side. 

	PLH flat	Nearby resale flat
Initial down payment (HDB)	$58,200	$77,700
Initial down payment (Bank)	$29,100 in cash, $116,400 in CPF	$38,850 in cash, $155,400 in CPF
Buyers Stamp Duty (BSD)	$12,060	$17,910
Monthly loan repayment (HDB)*	$2,376.30	$3,172.51
Monthly loan repayment (Bank)*	$1,705	$2,276
Subsidy Recovery (SR)	6%** of resale price	-

*Assumes a 25-year loan tenure, with the minimum down payment. The amount is projected at applicable interest rates in 2021. This is 2.6% for HDB, and 1.3% for banks. 

**Only for River Peaks I & II. The SR is project-dependent.

The dollar amount of the SR is an unknown

The SR for River Peaks I & II is six per cent of the resale price, whatever that may be at the time you sell. If the PLH flat sells for $840,000, for example, you will end up paying SR of $50,400. 

It’s hard to predict this amount, as we don’t know whether PLH flats will appreciate the same way as other resale flats in the area. The 10-year MOP, for instance, could mean lower demand and appreciation; so this is a bit of a gamble. 

Whether this is a significant drawback, compared to buying a resale, is a matter of debate. Some buyers feel six per cent is rather insignificant, whereas others consider it a more serious issue (note that even if you somehow sell at a loss, you will still pay the SR). 

Our cost breakdown omits Cash Over Valuation (COV)

A resale flat can have a price that’s higher than its actual valuation – this is the COV. The home loan – be it from a bank or HDB – will not cover COV, which has to be serviced in cash.

For Central Area or high-demand flats, the COV can reach substantial amounts – sums of over $50,000 are not unheard of. It is not possible to verify the average amount, as HDB stopped publishing COV rates after 2013 (or you can refer to our crowdsource table here).

In any case, COV can mean a higher cash outlay; and this could be unattractive to some buyers. This is particularly the case for owner-investors who use a Cash-on-Cash method, to gauge returns. 

PLH flats, like all new properties, are considered to have the same price and valuation. 

Overall, a high-demand resale flat offers significant advantages, for a very small price difference

The size of a 3-bedder at River Peaks is around 710 sq. ft., while the 4-bedders are around 947 sq. ft. This comes to roughly $576 psf for a 3-bedder, and $615 psf for a 4-bedder. 

(Note that the average price of a resale flat in Singapore, across the board, was $501 psf as of end-October)

Even if you were to buy a resale unit in a hot area like Bishan, you would be looking at around $550 psf for a 3-bedder, and $541 psf for a 4-bedder. 

In fact, we notice one of the latest transactions in Bishan, on November 2021, was a 4-room flat at 260 Bishan Street 22. This flat was between the 10^th to 12^th floors and was 1,119 sq. ft (bigger than the PLH flat)

The total transaction price was $610,000, a mere 4.6 per cent higher than a 4-room PLH unit.

This is for a unit that’s larger, has only a five-year Minimum Occupancy Period (MOP), and doesn’t have a clawback upon resale. It can even be rented out fully after the MOP, unlike a PLH flat. Of course, it will also be significantly older by that time - so it isn't without downsides.

As such, we think it’s probable that owner-investors types will prefer resale flats that skirt the prime area, or that are in high-demand areas which don’t yet count as “prime”. These locations have comparable advantages but without significant restrictions and Subsidy Recovery.

The PLH model flats will appeal to genuine homeowners, however; the allure will be a flat with Central Area benefits but at a lower overall cost. Since these buyers seldom intend to rent out the whole flat, and will probably stay 10 or more years anyway, the drawbacks are less of an issue. 

Finally, do remember again that the PLH model flats will only TOP in 2028. Hence the first batch will MOP only in 2038 - so it's not going to be very flexible depending on your family needs.

For more help in your decision, and further updates, follow us on Stacked. We also provide the latest in-depth reviews of new and resale condos alike, in case you want to consider going private instead.