Sengkang: An investment for the future

A vibrant HDB town in the North-East

In the north-east corner of Singapore lies Sengkang. Now a vibrant town, it is filled with HDB flats that have sprouted up alongside the two corners on the Tampines Expressway (TPE). Based on the latest 2015/2016 Annual Report by the Housing and Development Board’s (HDB), Sengkang is home to about 201,800 residents as of 31 March 2016.

The whole estate occupies a total land size of 1,055 ha, of which 397 ha is devoted to residential usage. Currently, there is an estimated 63,047 dwelling units in Sengkang, with a projected addition of around 20,000 units to reach the target of 92,000 units.

Average prices of HDB flats in Sengkang

 According to HDB’s annual report, a breakdown of the average price range for various flat types in Sengkang are as follows:

Source: HDB Annual Report 2015/2016 (AHG means Additional Housing Grants; SHG means Special Housing Grants)

Source: HDB Annual Report 2015/2016 (AHG means Additional Housing Grants; SHG means Special Housing Grants)

Based on the average selling price range of the flat types, the net amount of a typical 2-bedroom flat and above, after grants is about 3% to 95%. The volume of sales and rental transactions are as follows:

Source: HDB Annual Report 2015/2016

Source: HDB Annual Report 2015/2016

The most popular flat type sold in Sengkang are the 4 & 5-bedroom HDB units, while the most common rental flat type is the 2-bedroom. It is likely that space and functionality are important criteria for each household when ultimately deciding on a certain flat type.

For example; in the general sales/purchase market, a household looking to purchase a 4 or 5-bedroom HDB flat will have requirements based on family size (possibly including parents in the equation), costs, and potential resale price appreciation in the future, after the minimum five years Minimum Occupation Period (MOP) is over.

For the HDB rental market in Sengkang, one of the possible explanations for the relatively high take-up rate for the 2-bedroom units could be singles who typically aim for the smaller units due to practicality and budget constraints. Alternatively, they could be renting a modest apartment while waiting for their new flats to be completed within the same neighbourhood.

Upcoming Built-To-Order flats in August

In the upcoming Built-To-Order (BTO) exercise in August, the government plans to launch 2,440 units comprising of 2-bedroom Flexi to 5-bedrooms. The site for the flats is as follows:

Source: HDB

Source: HDB

This site is expected to be modelled after a waterfront living lifestyle as it is situated along the Serangoon Reservoir. However, part of the site also runs parallel to the busy interchange junction connecting the Kallang Paya Lebar Expressway (KPE) and the Tampines Expressway (TPE). That may be great for convenience but noise and air pollution will inevitably be a concern, especially for households on the lower floors. 

Conceivably, some applicants who prefer quietness and fresher air might be impeded by this factor, especially if they fail at the chance to pick a reservoir facing unit (which will undoubtedly be the more popular option), or a unit that is high enough so as to mitigate the consequences of facing a busy road. 

Moreover, the site is located quite a distance from the main Sengkang Town Centre (not shown on the map), and the nearest Light Rapid Transit (LRT) station is Bakau LRT station, or Rumbia LRT station (not shown on the map). Potential applicants who want accessibility may need to consider this factor more closely.

Development plans in the pipeline

In July 2016, Prime Minister Lee Hsien Loong unveiled development plans for Sengkang West that includes an integrated community facility due by 2020, and a hospital; the Sengkang General & Community Hospital to be opened in the second half of 2018.

Also, to ease the child care concerns of many young parents living in the town, the government erected a childcare centre at Fernvale Link which saw completion in 2016.

The government has also built two additional covered walkways from Anchorvale Street to Anchorvale Link and along Sengkang West Avenue starting from Seletar Mall, which was ready last year.

As part of the Urban Redevelopment Authority (URA) Master Plan 2014, the Sengkang West area will be integrated with various green corridors. There will also be various LRT stations nearby.

Additional land sites for public housing have been allocated in the vicinity including land surrounding projects like Compassvale Boardwalk, and Compassvale Mast.

Monthly resale prices since 2012

From the 3-bedroom flat prices represented on the graph below, the average prices have turned out more or less stable at around SGD380,000 to SGD400,000, with the July 2016 median prices dropping close to the SGD320,000 range.

Source: HDB

Source: HDB

The 3-bedroom prices in general has fallen substantially if current prices are compared to those in 2012 and 2013. It is possible that with the introduction of more supply for the larger room sizes in the town, prices for the 3-bedroom flats could see some stabilising.

Source: HDB

Source: HDB

Monthly resale prices for 4-bedroom flats in Sengkang range from SGD500,000 to close to SGD600,000 with the peak being around SGD650,000. There were around 2,433 transactions from March 2012 to July 2016 compared to the 104 transactions for 3-bedroom flats in Sengkang during that same period.

Presumably, one of the factors for the rise in prices, aside from a bigger flat, could be the impact of upgraders and transaction volumes. With many 3-bedroom flat owners crossing the MOP period, they may wish to upgrade to a larger unit within the same town, thus creating the demand for that flat type.

Notably, prices for 4-bedroom flats did not exhibit much significant decline on the long-term trend basis, although since 2016 prices have moved lower to around the SGD450,000 to SGD500,000 range.

Source: HDB

Source: HDB

For 5-bedroom flats, the monthly resale prices have crossed the SGD500,000 mark. However, in comparison with the 4-bedroom transaction volumes, there were about 1,790 transactions from March 2012 to July 2016.

The lesser transactions for the 5-bedroom HDB resale market could partly be attributed to supply/demand factors, and the household’s decisions where upgrading is concerned. For example, they could choose between a condominium, an executive condominium or a HDB flat.

Price resiliency could also work to the advantage of a 5-bedroom household as they may want to market their properties based on the flat’s interior design (ID) features, along with the potential flat price appreciation due to supply dynamics working in favour of the 5-bedroom owner.

Executive maisonette resale prices

The resale prices of HDB executive maisonette units have been lowered down close to the resale price of a standard 5-bedroom flat in Sengkang. Choosing an executive maisonette is made increasingly irrelevant to potential flat owners as some may opt for an executive condominium or a condominium simply by topping up some extra cash to enjoy the private facilities available in both markets.

Source: HDB

Source: HDB

Another possible reason could be the narrowing of price differences, and the practicality of choosing a larger unit as compared to a 5-bedroom which can easily accommodate multi-generation families living comfortably under the same roof.

However, prices alone can’t be the main decisive factor for upgraders choosing between a 5-bedroom or an executive maisonette. There could be additional reasons impacting buyer behaviour.

Sengkang is expected to thrive going forward

With plenty of planned developments in store for Sengkang Town, both residents and potential residents would be glad to know that it is no longer just another isolated north-east town, but a town being built for people who prefer to live near nature, have easy connectivity, and be a place to raise their kids.

On that final note, there are two good schools called Nan Chiau Primary School and Nan Chiau High School situated in Anchorvale Link. These two are one of the few schools that have produced many talented artists and individuals.

This factor might reassure parents that Sengkang offers both quality living, and education opportunities for their children and is therefore a sound investment to make for the future.

 

If you’re a first-time homebuyer preparing to purchase a BTO, find all the information you’ll need at our Ultimate BTO Guide.