$808,080 HDB sale hits the roof

Just how much are people willing to pay for an HDB flat?

Mr Freddy Choo paid $808,080 for his executive maisonette in Tampines.

Worth every cent, he said.

The price includes a whopping $168,080 in cash over valuation (COV).

That's among the largest COVs paid since the financial crisis in 2008, said real estate agents.

One of the previous reported highs was about $200,000 for an HUDC flat in Shunfu. It was sold at $1.1 million in July, 2010.

Mr Choo, 46, said he was willing to pay a premium as his new home was renovated just five years ago and came fully-furnished.

The real estate agent had come across the unit, on the eighth storey of Block 146, Tampines Avenue 5, in April.

The 150 sq m flat is two bus stops away from the Tampines MRT station and Tampines Mall.

Mr Choo said it was valued at $640,000.

The median resale price of executive flats in Tampines was $640,000 as of the second quarter of 2012, according to HDB's website.

The father of two said the final amount - $808,080 - was also an auspicious number.

It is the highest price paid for an executive HDB flat in Tampines in the past year, according to HDB's website which shows transacted prices.

Mr Choo is married to another real estate agent, and they have a daughter, nine, and a son, 13.

Mr Choo said his family had previously owned a condominium penthouse in Geylang, which he sold for $1.4 million.

To pay for his new place, Mr Choo has taken out a 24-year loan of $560,000, saying: "You can always earn more money.

"But it's not easy to find a suitable flat which you can call home."

"I searched for a month and looked at six units before I decided on this one."

The block is about 600m away from St Hilda's Secondary which Mr Choo's son attends.

His daughter, Schermaine, attends the nearby St Hilda's Primary School.

She said: "I can walk to school in 10 minutes. There's also a park, shopping mall and playground nearby for me."

Mr Choo's family was also drawn by the extensive renovation to the unit.

He said the previous owner had spent $200,000 and had fittings such as a water feature in the living room, and glass banisters.

And Mr Choo claimed the owners left behind furniture worth $100,000.Some of the furniture they included a custom-made bed, Japanese-style tabletop and a Swarovski crystal chandelier worth $3,000.

They also left electrical appliances like a flat-screen TV, fridge and speakers.

Said Mr Choo: "They were also a Singaporean family who upgraded to a condominium. They initially wanted a COV of $240,000, but I managed to bargain down."

The previous owners could not be contacted as Mr Choo said he does not have their telephone number.

The transaction was approved in May and Mr Choo's family moved in two weeks ago.

He said: "All my friends who have seen my place say it is worth the amount I paid."

Good buy?

Mr Albert Lu, key executive officer of property firm C&H Properties, told TNP: "On the surface, the figure definitely looks like a lot.

"But if what Mr Choo says about the renovation and furnishings is true, it is actually a good buy."

Most flat owners, he said, spend under $100,000 on renovations.

"For someone to spend $200,000, the renovations would have been very 'high-class'."

Mr Mohamed Ismail, chief executive officer of PropNex, agreed.

He said: "In this case, the transaction seems value-for-money, considering the value of the renovation and furnishing the previous owner left behind."

COVs have exceeded $160,000 before, said Mr Ismail. For example, he encountered two such flats - one in Yishun and another in Jurong East - in 1996.

Indeed, it was previously reported that resale prices had hit a high in 1996, with the median COV going as high as $42,000 in the third quarter of 1996.

Since the economy recovered after the 2008 financial crisis, it is possible for some COVs to have returned to such "spikes", Mr Ismail added.

Mr Chris Koh, director of property firm Chris International, said Mr Choo's case is the largest COV transaction he has come across since 2008.

It was previously reported that in 2007, some home-owners were asking for COV sums of more than $150,000 in certain mature estates.

"But if the flat was well-renovated and well-furnished, as claimed by Mr Choo, I can understand why he agreed to pay such a large amount of COV."

Half of all flats sold are renovated, he estimated, but only about 20 per cent have good furniture for buyers to use, he said.

"Most owners tend to bring their furniture along with them when they move out."

Only about 5 per cent of all flats can command such high COVs, he added.

All three did not think this case was reflective of housing prices in general.

Mr Koh said: "This is a resale flat, which is more expensive than a Build-to-Order (BTO) one.

"The BTO flats are still affordable, and there are many schemes to help young couples get these flats quickly."

For example, a four-room flat in Tampines Alcoves and Tampines Green Terrace - BTO projects launched earlier this year - was reported to cost $292,000.

Mr Ismail warned that the transactions like Mr Choo's are "one-off" and are not reflective of general prices.

He said: "It would not make sense to pay such large COVs for flats which do not have comparable furnishings and renovations."

COVs have fallen to an average of $25,000 island-wide, he noted, so buyers should exercise caution before paying large amounts over valuation.

"They should also remember that if the property market corrects itself, like during an economic downturn, whatever COV you pay will mean nothing."