Does 5-room BTO flat make more resale profit than a 3-room BTO flat?

When I successfully balloted for my 3-room BTO flat back in September 2014, well-meaning relatives strongly urged that I should consider a 5-room BTO flat instead. There were indeed 5-room flats in Bukit Batok and Buangkok available during that HDB BTO sales launch. They put forth the key argument that a 5-room BTO flat, based on their experience, always make the most resale profit when sold. Much to their exasperation, we stood by our decision because we really like the central location offered at St George’s Towers. Now that these BTO projects have finally crossed their respective Minimum Occupation Periods (‘MOP’), there are at least some data to test this hypothesis- “Does a 5-room BTO flat in any location always make more resale profit than a 3-room BTO flat?” It turns out that this is not always the case.

HDB BTO Sales Launch Sep 2014

I explained in a previous blog post that I bought a 3-room BTO flat to significantly boost my chance of securing a flat in St George’s Towers. That is because most couples tend to try their luck on 4-room flats as they are bigger and hence more popular. The average price of 3-room flats in St George was around $360,000.

On the other hand, the average price for a 5-room BTO apartment at West Terra @ Bukit Batok was around $410,000. This was the project my relatives liked as it was near to their existing location as shown in Diagram 2.

Finally, the average price for a 5-room BTO apartment at Buangkok Edgeview was around $390,000 during sales launch.

Note that the 5-room flats at both projects were priced higher than the 3-room flat at St George’s Towers during sales launch. Let’s see how their prices compare when they eventually hit the resale market.

Average Resale Prices in 2024 

To determine the average resale prices of these 3 projects as of writing, I checked HDB’s database which is publicly available to everyone. I strongly urge everyone to do some basic due diligence before starting their buying/selling process as outlined in this step-by-step guide.

Diagram 4 shows the most recent 6-month data for prices of 3-room flats sold at St George’s Towers which works out to be around $790,000.

Diagram 5 shows the most recent 6-month data for prices of 5-room flats sold at West Terra @ Bukit Batok which works out to be around $761,000.

Diagram 6 shows the most recent 6-month data for prices of 5-room flats sold at Buangkok Edgeview which works out to be around $729,000.

If you tally up the math, here are the average capital gains of these projects during the same time period:

3-room flat in St George’s Towers: $430,000

5-room flat in West Terra @ Buangkok: $351,000

5-room flat in Buangkok Edgeview: $339,000

Even Heartland Girl was surprised at the outcome!

And I haven’t even factored in cost of renovation which would make the difference even starker since it is well-known that a home-owner would have to spend more renovating a bigger unit than a smaller unit, all else equal.

Limitations of this comparison

Admittedly, there are limitations to this study as I only used the projects in the sales launch that I participated in. Probably more case studies and data points are needed to come to the conclusion that a 5-room BTO flat always makes more resale profit than a smaller-sized flat. Then again, those were the choices that I were provided with and I eventually leaned onto my real estate fundamentals when making the final decision.

Therefore, if a homeowner is contented with the size of a 3-room flat in the first place, they can be assured that they might not be financially worse off by forgoing the bigger 5-room HDB flat. It is a fallacy that a 5-room HDB BTO flat anywhere always results in a higher absolute capital gain because the location of the HDB estates still matters at the end.

This article is published on 10 June 2024

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