Should You Buy An Old Tiong Bahru HDB In 2024? Here’s A Breakdown Of The Performance

Tiong Bahru is unusual as far as HDB enclaves go. Some of the flats here are among the oldest in Singapore, and predate the HDB era; the housing board’s predecessor, SIT, is known for having built larger and less standardised units. Even the regular HDB flats in Tiong Bahru can be quite old, dating back to the earliest housing projects of the 1960s. And yet, Tiong Bahru is the iconic hipster neighbourhood: a high-rent area with a definite upper-income bent. 

We know of many younger homeowners who desire to live in this unique neighbourhood, but are concerned by the age and high prices. Given this odd contrast of lease decay and high demand, can the old HDB flats of Tiong Bahru still be a suitable purchase? Here are the numbers to date:

Looking at 3-room flats in Tiong Bahru

As mentioned above, flats in Tiong Bahru are uncommon in terms of size; so bear in mind that when we say 3-room, it can refer to flats that go up to 947 sq.ft. By regular HDB standards, this is closer to a 4-room flat (which would be between 960 to just over 1,000 sq.ft.) 

These are price trends over the past 10 years, first using price psf, and then overall quantum:

Do note that the strong returns between 2021 to 2024 is due to the post-Covid housing supply crunch, whilst the weak returns from 2013 to 2020 was due to several years of decline after the introduction of the Mortgage Servicing Ratio, and HDB ceasing publication of Cash Over Valuation data.

Year	3 Room $PSF	3 Room Total Price
2013	$712	$643,030
2014	$687	$622,643
2015	$697	$632,769
2016	$709	$633,500
2017	$689	$617,571
2018	$646	$592,222
2019	$674	$622,657
2020	$639	$582,357
2021	$709	$632,631
2022	$732	$654,909
2023	$784	$699,624
2024	$812	$737,324
ROI (13 - 20)	-1.5%	-1.4%
ROI (21 - 24)	4.6%	5.2%
ROI (13 - 24)	1.2%	1.3%

Returns of 1.2 and 1.3 per cent are far from impressive; you’d get twice as much from just CPF OA interest. However, it does drive home the point that in Tiong Bahru, even 50+ year old flats still see some appreciation. 

Just for the sake of comparison, let’s look at the appreciation rates for flats in neighbouring Bukit Merah. For this estate, the flats have leases that date back to the ‘70s; not quite as dated as Tiong Bahru, but still quite old:

Year	3 ROOM	4 ROOM	5 ROOM
2013	$562	$565	$579
2014	$536	$532	$557
2015	$509	$523	$539
2016	$484	$535	$539
2017	$482	$522	$501
2018	$452	$462	$508
2019	$428	$461	$498
2020	$433	$456	$483
2021	$467	$486	$476
2022	$515	$523	$578
2023	$524	$549	$608
2024	$541	$561	$630
ROI (13 - 20)	-3.7%	-3.0%	-2.5%
ROI (21 - 24)	5.0%	4.9%	9.8%
ROI (13 - 24)	-0.3%	-0.1%	0.8%

Over the same 10-year period, 3-room and 4-room flats here saw declining prices due to age. Only the 5-room flats saw a positive return, of less than a single percentage point. So it’s fair to say that demand in Tiong Bahru, whether due to its larger flats, hipster amenities, or proximity to Tanjong Pagar, makes the flats more resistant to lease decay.

Next, we made a comparison against all HDB towns in general:

Year	3 ROOM	4 ROOM	5 ROOM
2013	$523	$528	$534
2014	$491	$497	$535
2015	$468	$476	$516
2016	$458	$476	$528
2017	$438	$469	$513
2018	$418	$450	$509
2019	$402	$418	$478
2020	$406	$424	$445
2021	$450	$463	$514
2022	$492	$503	$552
2023	$512	$520	$566
2024	$532	$550	$597
ROI (13 - 20)	-3.6%	-3.1%	-2.5%
ROI (21 - 24)	5.7%	5.9%	5.1%
ROI (13 - 24)	0.2%	0.4%	1.0%

There is positive appreciation across the board, but it’s not particularly significant - the best is a one per cent return. So again, Tiong Bahru does pull ahead of the pack.

What if we were to compare the returns of newer flats, to old Tiong Bahru properties?

For this comparison, we looked again at flats in Bukit Merah. This time we will look at flats with leases dating back from 1990 to 1999. 

Year	3 ROOM	4 ROOM	5 ROOM
2013	No Data	$568	$581
2014	No Data	$559	$579
2015	No Data	$533	$589
2016	No Data	$554	$552
2017	No Data	$554	$562
2018	No Data	$565	$594
2019	No Data	$574	$582
2020	No Data	$551	$565
2021	No Data	$599	$595
2022	$483	$629	$653
2023	$552	$658	$687
2024	No Data	$713	$734
ROI (13 - 20)	No Data	-0.4%	-0.4%
ROI (21 - 24)	No Data	6.0%	7.3%
ROI (13 - 24)	No Data	2.1%	2.1%

Newer flats have a higher rate of appreciation, particularly 4 and 5-room flats. To some degree this is unsurprising, given the financing issues faced by buyers of older flats. Banks may lower lending limits once there’s 60 years or less on the lease, for example, and CPF usage is more limited if the lease doesn’t last till the youngest buyer is 95.

The overall conclusion is that - whilst Tiong Bahru flats do defy ageing better than other HDB counterparts - it’s not to the extent we can ignore lease decay. So whilst the location and amenities may be excellent, young buyers should have clear exit plans; plans which don’t assume significant resale value from liquidating the flat. 

There’s also the added risk that gentrification comes and goes. As quickly as the hipster cafes and boutiques moved in, they can also move out to another, trendier hotspot; and this might bring a steep drop in demand. There’s no crystal ball with which we can predict this. 

What about using the flats as rental assets?

If you’re lucky enough to have a Tiong Bahru flat to rent out, then you would have had a windfall from the gentrification of the area:

Year	Post-War SIT Flat Median Rent	Bukit Merah Median Rent (Q1 Of Each Year)
2013	$2,550	$2,200
2014	$2,700	$2,210
2015	$2,800	$2,200
2016	$2,600	$2,100
2017	$2,650	$2,000
2018	$2,700	$1,900
2019	$2,600	$1,900
2020	$2,700	$1,900
2021	$2,525	$2,000
2022	$3,100	$2,100
2023	$4,200	$2,800
2024	$4,100	$2,800
Change in Rent (2013 - 2024)	60.8%	27.3%
Change in Rent (2021 - 2024)	62%	40%

Rents in Tiong Bahru are up by 60 per cent over the past three years, compared to 40 per cent in neighbouring Bukit Merah. This is a little unsurprising given the demand,  and that - as long as the flat is well maintained - tenants may not pay significantly less just because it's older. 

But if you really want to live in Tiong Bahru, does it make sense to buy there instead of renting?

Let’s say the flat is 51 years old, and has 48 years remaining:

Price in 2024	$737,324
Lease remaining	48
Price per lease remaining	$15,361
Monthly "rent"	$1,280

By buying instead of renting, you’re paying $1,280 per month to live in Tiong Bahru. This is about a third (31 per cent) lower than the rental rates common to Tiong Bahru right now; but it comes with the baggage of a down payment, renovations, property taxes, etc., which either evens out the “savings” or still makes things more expensive overall.

What if we compare it to a newer and more expensive flat, such as one that’s around 14 years old (85 years left on the lease)

Price	$737,324
Lease remaining	85
Price per lease remaining	$8,674
Monthly "rent"	$723

Compared to this newer flat, you’d be paying around 77 per cent more to rent in Tiong Bahru, with the older unit. This comes to a rather substantial saving. 

Overall, we can conclude that buying in Tiong Bahru is still somewhat reasonable if (1) you intend to live there for a long time, possibly to the very end, and (2) $1,280 a month, for around 49 years, falls within your range of affordability (roughly speaking, this shouldn’t exceed 30 per cent of your monthly income if you want to be very safe).

If you’re more investment-focused though, such as having your heart set on upgrading after MOP, or funding your retirement with the sale of your flat, then an old Tiong Bahru flat may not be your best bet.