More Buyers with HDB Addresses Purchasing Luxury Landed Homes Above $5 Million

The number of luxury private property buyers with HDB addresses more than doubled between 2013 and 2023. Notably, landed homes accounted for 65% to 75% of luxury home transactions by HDB dwellers between 2021 and 2023, underscoring their stronger financial capacity and growing appetite for more spacious living.

Data reveals that transactions by buyers with HDB addresses purchasing luxury homes priced at $5 million and above rose from 33 in 2013 to 73 last year, representing a 121% surge. In the first two months of this year, three such transactions were recorded.

The number of buyers with HDB addresses acquiring non-landed private homes priced at $5 million and above has remained relatively stable over the past seven years—recording 22 units in 2017 and 19 units last year. However, once landed properties are factored in, total transactions jumped from 39 units in 2017 to 73 last year.

Analysis: Post-pandemic appreciation for spacious living to accommodate work-from-home needs

There was a marked increase in landed home purchases by this group in 2021, aligning with the broader trend of non-HDB dwellers upsizing during the same period. This may stem from a heightened post-pandemic appreciation for larger living spaces to cater to work-from-home (WFH) demands.

At the time, rising property prices may have also motivated many buyers to enter the market while homes remained relatively affordable, opting for larger or freehold private properties.

Based on the monthly household income ceiling of $14,000 for HDB flat applications, a $5 million private home is far beyond the reach of average HDB dwellers. At a 75% loan-to-value (LTV) limit, alongside Buyer's Stamp Duty (BSD) and other expenses, the required cash and CPF outlay would reach approximately $2.5 million. Even after selling a million-dollar HDB flat, covering the upfront costs would still be a stretch.

How can buyers with HDB addresses afford $5 million luxury homes?

Some buyers with HDB addresses may have reaped windfalls from en bloc collective sales or inheritances, while others may have pooled family assets to purchase a multi-generational home.

The en bloc wave between 2017 and 2018 may have enabled some former private property owners who downsized to HDB flats to amass significant untouched savings. Furthermore, the emergence of more million-dollar HDB flats over the past two years has also empowered some flat owners to make the leap into luxury property.

Nevertheless, buyers who transition straight from an HDB flat into a $5 million property still represent a tiny minority.

Monthly mortgage instalments of around $20,000 for a $5 million luxury home

Monthly mortgage repayments on a $5 million luxury property are estimated at around $20,000—far surpassing the average monthly household income of around $13,000 for the largest HDB flats. Consequently, those who can afford such homes are typically windfall recipients or high-earning individuals who chose to remain living in HDB flats.

Another worst-case—though difficult to verify—scenario is that some HDB flat owners may be acting as nominees for investors, particularly foreign buyers looking to circumvent Additional Buyer's Stamp Duty (ABSD). Acting as a proxy to collude with foreign investors in tax evasion constitutes a serious criminal offence.

Data shows there were eight transactions above $10 million involving buyers with HDB addresses last year, on par with 2013. However, the number of landed property purchases among them increased from six to seven.

Last year, the most expensive luxury home acquired by a buyer with an HDB address was a landed home at Capitol Park spanning 11,022 sq ft, which changed hands for $18.5 million ($1,678 psf). The priciest non-landed private home was a 6,060 sq ft unit at St Regis Residences, which transacted at $13.5 million ($2,228 psf).