201 Million-Dollar Flats: What That Headline Actually Means for Your Family

You will have seen the headline by now. In August, 201 HDB flats sold for a million dollars or more. It was the first time the monthly count has crossed 200, beating the record of 188 set in June.

If you are a young family quietly saving towards a four-room flat, that number lands somewhere between discouraging and frightening. It sounds like a door closing.

It isn't. Here is the same month from the other side.

92 per cent of flats sold for less than a million

In August, 2,524 flats changed hands in total. 201 of them crossed a million dollars. That is eight per cent. The other 92 per cent — more than 2,300 families — bought at ordinary prices, in ordinary towns, and none of them made the news.

While the top of the market was setting records, the market as a whole was doing the opposite. The HDB resale price index has now fallen for two quarters running. That is the first back-to-back decline in nearly seven years. August's transaction volume was down 5.1 per cent from July.

So prices are flat to slightly softer, more flats are reaching the end of their five-year minimum occupation period and coming up for sale, and a small, very loud slice at the top keeps breaking records. All of it is true at once. Only one part is a headline.

The million-dollar flats have a type

They are not a random sample of Singapore. Look at what they keep having in common.

August's highest sale was a five-room flat at Tiong Bahru View: $1,688,888, about 1,206 sq ft, between the 28th and 30th storeys, roughly 88 years left on the lease, walking distance to Tiong Bahru MRT. In early September, a five-room at The Pinnacle @ Duxton went for $1,701,000.

Read that as a description rather than a price. Large. High up. Barely used, with almost the full lease intact. Central, or in a mature estate with a train at the door.

If your shortlist is four-room flats in Punggol, Sengkang, Woodlands or Yishun, you are not bidding against those buyers. You are not even in the same room. The record tells you what a scarce, newly released flat in a prime location fetches. It tells you very little about what you will pay.

Where it does touch you

There is one situation where this market genuinely reaches into your search, and it is worth knowing about.

On 28 July, the government removed the 15-month wait-out period for private property owners buying a resale flat. Someone selling a condo can now buy a non-subsidised flat straight away instead of waiting more than a year. That widens the buyer pool, particularly for people right-sizing out of private property with sale proceeds in hand.

It is too early to say how much of August's record came from that change. Resale figures are based on registration dates, and some of those deals were negotiated before the rule was lifted. The fuller picture will take a few more months.

But if the flat you love is a recently MOP-ed unit in a mature estate — the Bidadari, Dawson, Alkaff kind of flat — assume some of the people viewing it alongside you are downgraders with a completed sale behind them. That matters mostly for how you bid. Cash over valuation has to be paid in cash, out of your own pocket, on top of everything else. Losing a flat is survivable. Winning one by $40,000 of your renovation budget is harder to undo.

What a million-dollar flat actually costs

The price tag is the least interesting number. Here is what one would take, on an HDB loan.

At 75 per cent financing, the loan is $750,000 and you put down $250,000. With an HDB loan that downpayment can come entirely from CPF, with no minimum cash portion. Buyer's stamp duty on a million dollars is $24,600, and legal fees run around $3,000. So roughly $275,000 before you have bought a single light fitting — plus any cash over valuation, in cash.

On the servicing side, HDB assesses you at a 3 per cent floor rate over 25 years. That works out to about $3,560 a month, and the mortgage servicing ratio caps that at 30 per cent of your gross household income. You would need close to $11,900 a month coming in.

That is the real gate, and it is why this segment stays small. Not many young families clear it, and the ones who do are usually not first-time buyers.

How to read the next headline

There will be another one. The count will probably cross 200 again, and someone will post it with a shocked caption.

When it comes, ask three questions. What percentage of flats sold above a million that month? Which towns and which flat types? And what did the price index do?

Answer those and the panic tends to dissolve. The market is not running away from you. It has split in two, and only one half is on the news.

If you want to know what your own number is rather than the market's, the Buying Budget calculator works it out in about two minutes — what you can borrow, what you need in cash and CPF, and the price you can actually pay.

And if a flat you are considering happens to sit in that premium band, it is worth a proper conversation before you bid.

Talk it through with me.