Limited Edition HDB Flats: All About Terrace Houses

PropNex Picks

November 08, 2021

Limited Edition HDB Flats: All About Terrace Houses

Since its inception in 1960, the Housing and Development Board (HDB) has resolved Singapore’s housing crisis and successfully housed a nation, building public housing flats that have kept pace with the times. Over the decades, the HDB has offered a variety of flat types to meet different needs.

In this blog series, PropNex Research looks at some flat models which are no longer built - such as HDB terrace houses, maisonettes, Design, Build and Sell Scheme (DBSS) flats, and executive apartments – and why they have remained popular and are commanding premium prices in the resale market.

Part 2: Terrace Houses

1. What is an HDB Terrace House?

HDB terrace houses were built by the colonial-era Singapore Improvement Trust, pre-dating the establishment of the HDB. They are very rare in Singapore and one could say they are basically landed HDB flats.

These HDB terrace flats look much like private terrace houses, except most of the HDB variety do not have a private parking space or drive way leading into the property, and that several units share a common block number - just like the high-rise HDB flats. With living spaces spanning across two storeys and a small private yard, terrace flats are typically larger than the average HDB flat.

Like all public housing flats, these terrace houses were given a 99-year lease by the HDB, and the units that have been transacted so far have leases starting in 1968 or 1972.

2. Where can they be found?

Based on online resources by the National Heritage Board, there are 285 HDB landed terrace flats in Singapore – their small number makes them very unique, considering there are over a million HDB flats.

The terrace flats can be found in just two towns, Kallang/Whampoa and Queenstown – both are mature estates – namely in Stirling Road, Jalan Ma’mor, Jalan Tenteram, and Jalan Bahagia. Since 1990 up to date, there have been 67 resale transactions for HDB terrace houses, with floor area ranging from 78 sqm to 307 sqm (840 sq ft to 3,305 sq ft). These units are typically 3-room or 4-room units.

3. How have HDB Terrace Houses performed in the resale market?

An HDB terrace house has been in the spotlight recently for having shattered the record price, becoming the most expensive HDB resale property to be sold of all time. The 210-sqm (2,260 sq ft) terrace flat at 39 Jalan Bahagia was transacted at $1.268 million in June 2021, surpassing the previous high set by a 5-room flat in The Pinnacle @ Duxton, which changed hands for a cool $1.258 million in September 2020.

Of the eighteen HDB terrace flats sold in the first nine months of 2021, five deals had breached the $1 million-dollar mark. Apart from the record-breaking transaction at 39 Jalan Bahagia, the other four units that went for over $1 million are located at 46 Jalan Bahagia, 50 Jalan Bahagia, 51 Jalan Bahagia and 61 Jalan Tenteram.

HDB Terrace House Transactions in January to September 2021

Source: PropNex Research, Data.gov.sg (as at 1 Oct 2021)

With such a limited supply, the number of resale transactions for terrace flats tends to be low – it ranged from 10 to 18 units per year since 2011. Despite the thin trading volume and declining lease, the average unit price of HDB terrace houses appears to have held up relatively well over the years.

Tracking data from 2005 to 2020, the average unit price of terrace flats showed a general up trend, barring a few dips within that time frame. In 2005, the average transacted price was $358 psf, but in 2020, it has risen to $732 psf, representing a 104% jump from the 2005 figure.

While the prices of HDB terrace houses may seem to be on the high side for ageing public housing flats, they are significantly cheaper than 99-year leasehold private terrace homes – an apt comparison given the HDB terrace flats’ “landed” nature.

Evaluating Realis caveats, it was found that the average unit price of 99-year leasehold private terrace landed homes have been higher than that of HDB terrace flats in every year between 2005 and 2020. Over that time period, the widest average unit price gap was 34% in 2013 where private terrace homes went for an average $901 psf versus the $675 psf for HDB terrace houses. The price gap remained substantial at 35% as at the first 9 months of 2021.

Source: PropNex Research, Data.gov.sg (as at 1 Oct 2021) and URA Realis (as at 26 Sept 2021, incomplete data for Sept 2021)

4. Why are HDB terrace flats popular and does it make sense to buy them?

The appeal of HDB terrace flats is pretty obvious, given that they are essentially like landed property, with ample living space as well as a private backyard or garden. They will attract owner occupiers who value a spacious home amid the more relaxed vibe of a terrace flat neighbourhood, and perhaps those who are after a certain lifestyle. For example, the outdoor private backyard allows the owner to host family and friends to a small BBQ gathering – something that would be challenging to do from a flat in a high-rise HDB block.

For those who aspire to live in a landed home but do not have the budget for a private terrace house, these HDB terrace flats would fit the bill. In 2020, the average transacted price quantum of HDB terrace flats was approximately $830,000, much lower than the $1.87 million for 99-year leasehold private terrace houses.

Given their unique characteristics and locations in mature estates, some buyers – including retirees, empty nesters, or those who are downgrading from a larger private home - may not mind the HDB terrace flats’ declining lease.

However, prospective buyers hoping to purchase such unit and re-sell them later on after fulfilling the 5-year Minimum Occupation Period should think twice. Due to their declining lease, HDB terrace flats may be more suited for own stay than as an investment property.