Why some central 2-bedroom homeowners in Singapore are stuck

Maybe it's because of my age, but I prefer space over convenience these days; and that sets me apart from recent homebuyers. 

I'm talking about the number of homebuyers who are interested in living within the Core Central Region (CCR), where prices typically require a compromise.

Quite often, that compromise is having to own a two-bedder first, and then hoping everything works out well enough to upgrade. But here's the tough, chewy bit that's hard to digest:

Going from a two-bedder to a three-bedder, in the prime CCR districts, is a big challenge. The median asking prices for a two-bedder in the CCR right now are about $2,900+ psf for a new launch, or about $2,450 psf for resale.

So, assuming a two-bedder is about 700 sq ft, you'd usually be looking at prices of around $1.8 million; possibly more than $2 million for some fancier new launches. 

Now, what does it cost to add another bedroom?

For three-bedders, you can expect about $2.7 million to $3 million to be the norm. Case in point: One Marina Gardens had prices reaching from $2.57 million to over $3 million for three-bedders, ranging from 904 to 1,012 sq ft. 

This is around an extra $1 million just for that one added bedroom; and barring a windfall, it's not something many two-bedder owners can comfortably envision. For example:

Current situation:

• Couple owns a two-bedroom CCR condo.
• They sell it for $2 million (typical resale value for a CCR two-bedder)
• Outstanding loan: $800,000 (assume they've paid down some over time)
• Net proceeds from sale: $2 million - $800,000  = $1.2 million (let's loosely assume this is any combination of cash or CPF, available for the next property)

Target upgrade:

• A new three-bedroom in CCR costs about $3 million (based on recent launches like One Marina Gardens)
• Downpayment: 25 per cent minimum ($750,000), and the rest via loan ($2.25 million).
• Stamp duties & legal fees: Approx. $120,000 (Buyer's Stamp Duty alone on a $3 million property is already about $114,600)

Couple's combined income:

• Let's assume both earn around $8,000 a month each (it's reasonable to assume it's above median income, as they're already living in private property in the CCR)
• Given the Total Debt Servicing Ratio (TDSR) of 55 per cent, this means a monthly loan repayment limit of $8,800 per month (assuming no other debts)
• At a rate of four per cent per annum, on a 25-year loan tenure, this is a loan quantum of between $1.75 million to $1.8 million. 

Shortfall calculation:

• Required loan: $2.25 million
• Eligible loan: Approx. $1.75 million to $1.8 million
• Loan shortfall: Approx. $450,000 to $500,000

Even with $1.2 million in sales proceeds, the couple cannot borrow enough to finance the remaining amount, and must cover the $250,000 to $300,000 gap to make up the shortfall. 

Bear in mind that these are already optimistic calculations, with assumptions that the couple have no other loans, have steady incomes of $8,000 per month each, already have a two-bedder in the CCR, etc. 

Nonetheless, the CCR is where the majority of new launches will be

We go over some of the main reasons here; but just to recap, 14 of the roughly 22 remaining new launches this year are in the CCR.

Coupled with the limited supply of resale units, some buyers may not have much choice; they may have to settle for two-bedder layouts, or some compromises on space. 

Weekly sales roundup (May 5 – 11)

Top 5 most expensive new sales (by project)

Top 5 cheapest new sales (by project)

PROJECT NAME	PRICE S$	AREA (SQ FT)	$PSF	TENURE
ONE MARINA GARDENS	$1,250,320	420	$2,978	99 yrs (2023)
PARKTOWN RESIDENCE	$1,262,000	506	$2,495	99 yrs (2023)
BLOOMSBURY RESIDENCES	$1,400,000	570	$2,454	99 yrs (2024)
LUMINA GRAND	$1,451,000	980	$1,481	99 yrs (2022)
CANNINGHILL PIERS	$1,456,000	484	$3,006	99 yrs (2021)

Top 5 most expensive resale

PROJECT NAME	PRICE S$	AREA (SQ FT)	$PSF	TENURE
THE GLYNDEBOURNE	$7,438,000	3541	$2,100	FH
VIVA	$5,180,000	1991	$2,601	FH
GALLOP GABLES	$4,080,000	1733	$2,354	FH
MARINA BAY SUITES	$3,830,000	2056	$1,863	99 yrs (2007)
OUE TWIN PEAKS	$3,740,000	1604	$2,332	99 yrs (2010)

Top 5 cheapest resale

PROJECT NAME	PRICE S$	AREA (SQ FT)	$PSF	TENURE
PARC ROSEWOOD	$630,000	431	$1,463	99 yrs (2011)
THE INFLORA	$700,000	463	$1,512	99 yrs (2012)
RIPPLE BAY	$718,000	484	$1,482	99 yrs (2011)
NOTTINGHILL SUITES	$735,000	398	$1,845	FH
HIGH PARK RESIDENCES	$740,000	452	$1,637	99 yrs (2014)

Top 5 biggest winners

PROJECT NAME	PRICE S$	AREA (SQ FT)	$PSF	RETURNS	HOLDING PERIOD
THE TESSARINA	$3,100,000	1335	$2,323	$21,448,000	18 Years
CARABELLE	$2,580,000	1389	$1,858	$3,991,000	24 Years
SERAYA VILLE	$2,150,888	1432	$1,502	$2,180,000	24 Years
WILLYN VILLE	$1,980,000	926	$2,139	$1,661,000	13 Years
THE MINTON	$2,338,000	1324	$1,766	$1,412,888	14 Years

Top 5 biggest losers

PROJECT NAME	PRICE S$	AREA (SQ FT)	$PSF	RETURNS	HOLDING PERIOD
THE SCOTTS TOWER	$1,900,000	872	$2,179	-$950,000	7 Years
OUE TWIN PEAKS	$3,740,000	1604	$2,332	-$827,050	11 Years
MARINA BAY SUITES	$3,830,000	2056	$1,863	-$609,000	15 Years
ONE SHENTON	$1,200,000	603	$1,991	-$156,750	13 Years
SKYSUITES@ANSON	$930,000	398	$2,335	-$121,200	12 Years

Transaction breakdown

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This article was first published in Stackedhomes.