We Need More Space For Our Family Of 6 — Should We Buy A $675K Executive Maisonette Before Our Flat Sells?

Hi Stacked,

My partner and I would appreciate your advice on whether we should buy an executive maisonette (EM) in Jurong West, even though the sale of his existing flat is unresolved.

For context, my partner jointly owns a five-room flat on Sumang Lane with his ex-spouse. That flat was initially listed for $850,000, but only saw three viewings over two months. They are now trying to sell it for $820,000 – bearing in mind that a court order requires the flat to be sold by December.

Should the listed price of that flat be reduced further to attract more buyers; does the low number of viewings suggest that the asking price is still too high? The court-imposed deadline also weighs on his selling considerations.

Meanwhile, we are considering an EM in Jurong West together that is currently listed for $675,000. It is close to both of our parents’ homes, and will eventually be near the upcoming Corporation MRT station on the Jurong Region Line. Together, we have four children and our family needs substantially more living space, so we are considering reconfiguring the EM to accommodate everyone.

We have obtained an estimated loan of over $300,000 and have approximately $330,000 in CPF available. Our combined monthly income is between $10,000 to $15,000. Would we qualify for the Proximity Housing Grant since our parents live in Jurong? In general, the location of our new home and proximity to public transport are not major concerns since we both drive and frequently travel around Singapore for work. 

Do you think it would be financially sound, and legally permissible, to commit to the Jurong West EM before the Sumang Lane flat has been sold? What other considerations – like resale comparisons or lease decay – we should consider?

Thanks!

(This is part of an ongoing series where we answer reader questions about the property market. If you have one of your own, send it to stories@stackedhomes.com.)

Hi, and thanks for writing to us!

There are several important components to your situation, but let’s focus on the most immediate point of importance for you. That is being able to sell the five-room flat on Sumang Lane. And since it’s also getting close to the court-ordered December deadline, the fact that it has only garnered three viewings in two months isn’t the best start to this selling process.

We’ll start by looking at why the Sumang Lane flat may be struggling to attract buyers, and whether lowering the price would help. Then, we’ll touch on the other issues raised in your question.

Let’s begin by looking at average five-room HDB resale transaction prices along Sumang Lane to date (so, from January to 21st August):

In general, the data indicates that most of the five-room flats in your area typically sold for below $800,000. Based on the 10 transactions that we’ve compiled, the average resale price is around $782,000.

There were two transactions that managed to fetch prices above $800,000, so we know that some buyers are willing to fork out that price level for certain units. However, those two sales involved relatively high floor flats on the 16th and 18th floors.

Thus, a resale price of over $800,000 is above average for a flat of that type in that area. You should also note the sole transaction for a flat that was located between the 10th to 12th floor was only able to command a resale price of $753,000.

Granted, other external factors like the condition of the unit, its orientation, and the quality of the renovation, also play a part in buyer’s considerations. But even so, you do have to consider that buyers recognise that a flat on the 12th floor is listed at a price that is usually fetched for higher floor units, such as those on the 16th floor and higher.

We also examined current listings for five-room flats in your area

Unfortunately, we found that most (not all) listings have an asking price of less than $820,000. While asking prices are not “real” transactions (in the sense that they reflect the price expectations of most sellers), it still has a psychological effect when buyers search through the listings.

In addition, if several comparable units are available for a relatively lower price, most buyers tend to view those units first.

Ultimately, if you didn’t have the December deadline looming, you could try to hold out for a higher price. But given the time constraints, it may be worth discussing a more competitive pricing strategy with your agent.

Does the Jurong West EM make sense for you?

In general, an EM does make sense given the size of your family today, and the fact that you’ve already identified the need for more living space. The Jurong location can also make sense, as both of you have private transport – so MRT access isn’t an immediate priority.

However, we should point out one consideration when it comes to your family size and your children. Unless you’re going to be ferrying them all the time, there’s a good chance they will be increasingly dependent on convenient public transport access. So take that into account as you move ahead.

Otherwise, we think that based on what you’ve shared, it does make sense for you to consider that Jurong West EM. So, we’ll address whether this particular unit represents good financial value.

For that, we need to compare its $675,000 asking price against recent similar transactions nearby, as well as competing listings. As before, we compiled resale HDB transactions for this unit type that have been lodged since the start of the year to date (August 21).

Based on the 22 transactions that we were able to compile, the average resale price for an EM in that location is about $729,000. This means that an asking price of $675,000 for the unit that you’re eyeing is about 7.4% below the average resale price.

That isn’t what we’d call a substantial discount, but it’s reasonable and in-line with the norm for this type of unit in that area.

As an aside, it’s also worth considering how EMs have performed in the resale market over time. This will give you a sense of what you can expect in terms of its capital growth and resale potential down the road.

Here, we compared EM price movements against other HDB flat types in Jurong West.

One of the first things we noticed after compiling this information is that there were unusually strong gains right after 2020. But this isn’t unique to executive flats. Instead, it was the result of a strong recovery in the housing market after the Covid-19 pandemic.

Broadly speaking, the resale performance of executive flats was not significantly stronger than other standard flat types. In fact, the data suggests that the resale performance of EMs in Jurong West was weaker compared to four- and five-room flats in terms of percentage price growth.

We attribute this to the increasing age of this type of public housing – EMs stopped being built in 1995, and no new executive flats of any sort have been built since 2004.

That said, limited supply can also work in the favour since demand can be supported through scarcity; there just aren’t any new HDB flats that are this spacious anymore.

So this could help to support the price growth in the years ahead, until the day comes when the leases run down too much. Namely, to the point where financing issues and CPF usage restrictions eventually narrow the pool of eligible and willing buyers.

 In light of this, an EM should be bought for its space and layout. It’s less ideal for fetching high prices in later years. So consider what comes next for you and your family after you outgrow this flat.

This brings up the next set of concerns, beyond the scope of financial performance and exit options

While the EM you’re considering does meet many of your needs today, we would think about how long you intend to stay in it.

If we assume you are either in your mid to late 30s, having to move between two floors in our home is unlikely to be much of an immediate concern. In fact with four children, the separation between the “social spaces” downstairs and private bedrooms upstairs is more comfortable and private.

But most EMs do not have a bedroom on the lower floor, as you’ve probably already noticed – there may be some ability to build a small one on the ground floor but this could mean extensive renovations.

As you get older, having to regularly climb the staircase isn’t just tiring, it can become a safety risk. And if you do stay in the EM for a very long time to come, do remember that – at the point where you need to sell and move on – the sale proceeds could be quite limited, if the lease has run down.

This is why we think it may also be worth considering an Executive Apartment (also an executive flat but it’s single storey) in Jurong West. You would still get the larger living space associated with an EM, but with everything contained on a single level.

Mind you, this is not to say EMs are bad. We just want to ensure you’re prepared and ready for the eventualities.

Can you comfortably afford the move?

Let’s take a look at whether your finances can comfortably cover the move, since this is the next important consideration. We assume the full $330,000 in CPF can be used, and you qualify for the $20,000 Proximity Housing Grant.

According to our initial calculations, the shortfall doesn’t look too bad, coming in at approximately $12,850. However, keep in mind this is before accounting for other associated costs like renovation, moving expenses, and other incidental costs.

This is a bit of a bigger concern for EMs than for regular flats, because (1) EMs tend to be older, and that could mean you need more extensive renovations, and (2) the double-storey layout and larger space could mean more furnishing and features.

It would be prudent to set aside a sufficient buffer in your budget to accommodate these costs.

Our Final Thoughts

Overall, we think that the Jurong West EM does seem to meet your requirements, in terms of spaciousness and being near both sets of parents. The asking price is also reasonable, and very slightly below the average for that area.

Your main contention for now should be the disposal of the Sumang Lane flat. While it is painful to have to lower the asking price, this may be necessary given the time constraints you’re facing. Getting the highest possible price is always the aim, but not to the point where a total failure to sell (within the deadline) is worth accepting.

The choice between an EM and an Executive Apartment (EA) depends mainly on how long this next home needs to serve you. If you intend to remain there until your retirement, an EA may be more practical for the reasons we listed earlier.

If you expect to rightsize after the children move out, the EM also makes more sense. Its two-storey layout can provide some much-needed separation while all four children are living at home. Later when they leave, you can move to something smaller (and easier to clean!)

The purchase also appears manageable based on the figures you’ve provided. But bear in mind the higher renovation costs that can come with larger and older flats. The deciding question for your next home – be it an EA or EM – is whether you’re buying for your current life situation, or whether you intend to hold it to the end.