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Should I Buy An HDB Maisonette? Are HDB Maisonettes A Worthy Investment For Young Homeowners?

13 February 2024 | BY

Maisonettes are great for experiencing ‘landed living’ at a fraction of private property prices, but here are some pros and cons to consider.

Should I Buy An HDB Maisonette? Are Maisonettes A Worthy Investment For Young Homeowners?

If you’re one of the Singaporeans who have complained about the ‘shrinking’ BTO flat sizes, then an HDB executive maisonette is a dream come true. Ranging from 1,475-2,616sqft, executive maisonettes are one of the largest HDB types around.

Maybe you and your partner are looking for a first home or to upgrade from your BTO flat to a bigger space. Either way, you are probably a young couple who values space and have turned towards HDB maisonettes in Singapore as a possible option. But before you decide to buy an HDB maisonette in Singapore, here are 5 factors to consider.

Are HDB maisonettes worth the cost?

Good price-to-space value when compared to private property 

Should I Buy An HDB Maisonette? Are Maisonettes A Worthy Investment For Young Homeowners? Image credit: jlv.maisonette

One of the main appeals of living in an HDB maisonette is experiencing living in a landed home at a fraction of the cost. 

Aside from presenting as a novelty for single-storey apartment dwellers, the price per square foot (PSF) ratio offered by HDB maisonettes is unparalleled. If you look at where HDB maisonettes are located and look for private homes of the same size, you’ll be paying a lot more for the same space.

Take for instance this executive maisonette at 447 Bright Hill Drive. The asking price for the 1,873sqft property built in 1989 is $1,600,000. That works out to $854.24 psf.

Right across the road, the owners of this freehold semi-detached landed property on Thomson Ridge are asking for $6,550,000 or $1,965.20 psf. Granted, the listed landed property has a land size of 3,333sqft, but it has only 1,123sqft of built-up living space. 

If you’re a young couple looking to upgrade from your BTO flat, you might not have the financial muscle to finance such a large private home. HDB maisonettes then offer a happy compromise. 

Still, that’s not to say that HDB maisonettes are cheap. At the time of writing (February 2024), the listed sale prices for HDB maisonettes on PropertyGuru range from $678,000 to $1,980,000.

Here are some questions to ask yourself:

  • What type of home do I want to upgrade to?
  • Am I looking for the best price-to-space ratio when purchasing a property?

Could lease decay affect an HDB maisonette’s resale value?

Should I Buy An HDB Maisonette? Are Maisonettes A Worthy Investment For Young Homeowners?

HDB executive maisonettes were introduced in 1984. However, they were discontinued and the last HDB maisonettes were built in 2000. What that means is that even the newest maisonettes are 24 years old and have only 75 years remaining on the lease. 

For those intending to resell their flat after the 5-year Minimum Occupation Period (MOP) is over, consider lease decay. HDB flats tend to reduce in value as their 99-year lease runs down. What that means is that your home might not be able to sell for the same price you bought it, as the older it gets, the less value it draws.

Additionally, if you are buying an older HDB maisonette in 2024, it means you’re buying it when HDB flat resale prices are at an all-time high. What goes up must come down and HDB resale flat prices have shown signs of plateauing. Combine this factor with lease decay, there’s a pretty good chance you might sell at a loss.

Despite the shorter remaining lease, these older, larger flats still maintain their appeal. The limited supply of HDB maisonettes and bargain price-to-space ratios help the flat type hold value well. If you intend to sell your home eventually, you can make a gamble and bank on these factors.

Here are some questions to ask yourself:

  • Am I alright with having only one home for my whole life?
  • Do I intend to resell my home? If yes, do I care about getting maximum profit?
  • Does the financial cost of moving and renovating homes make sense to me?

Financing the property: Will a shorter lease affect the loan and CPF?

How you’re going to finance your executive maisonette is another issue to consider. This is where the shorter remaining lease of many HDB maisonettes may present a challenge. The age of the property affects:

  • The HDB loan amount you qualify for
  • How much CPF OA savings you can use to finance your home
  • How much HDB housing grant you can get (if eligible)

But for most young homeowners intending to buy an executive maisonette, the first 2 points are more relevant.

TLDR; Make sure your executive maisonette can cover the youngest applicant-owner till they’re 95. If not, this rule applies–the older the executive maisonette, the smaller the HDB loan amount you get and the lesser the amount of CPF OA savings you can use.

If you’re taking an HDB loan

Looking at available mortgage packages on the market, the offered interest rates by banks are higher than that of HDB’s 2.6%. For first-time homebuyers, it currently makes more sense to take up an HDB loan.

For HDB loans, there is a loan-to-value (LTV) limit of 80%. This means you can borrow up to 80% of your home’s property value or purchase price, whichever is lower. To qualify for the maximum LTV limit, the remaining lease must cover the youngest core applicant-occupier till they’re 95 years old. If not, the LTV limit will be prorated.

Note: For those taking their second HDB loan, there are a different set of eligibility criteria. Aside from a reduced eligible loan amount, you’ll be charged a commercial interest rate (not the concessionary rate of 2.6%).

Whatever you cannot loan, you will have to pay as part of the down payment. If your executive maisonette is much older, you might have to fork out a hefty downpayment. You might be thinking, “It’s fine, I can use my CPF OA savings to pay for it.” This brings us to the next point…

If you’re using your CPF OA monies

Regardless of whether you take up an HDB loan or a bank loan, you’ll probably use your CPF OA monies for your downpayment and monthly mortgage repayments. How much you can use is dependent on 2 factors:

  • The remaining lease of your HDB flat must be at least 20 years
  • The remaining lease has to cover the youngest buyer till they’re 95

Again, if the remaining lease doesn’t cover the youngest applicant-occupier till they are 95, the amount allowable is prorated. You can check how much of your CPF OA savings you can use to finance your home via the CPF housing usage calculator.

If your home is older, you’re already getting a smaller HDB loan and will need a lot of liquid cash to cover the down payment. You’re also limited by how much of your CPF OA savings you can use. 

For those who are not cash-rich, this could be a challenge as you need to cough up a lot of money. Don’t forget that you may also have to maintain liquidity to repay your monthly mortgage instalments.

Here are some questions to ask yourself:

  • Am I using a bank loan or HDB loan to finance my property?
  • How much will I be prorated for my CPF OA savings usage?
  • If using my CPF OA savings is limited, do I have enough cash to finance my property comfortably?

Location: How much will you pay in relation to remaining lease, access to amenities and public transport?

The price of an executive maisonette will depend on where it is located. Looking at HDB resale flat data, there were 642 transactions for executive maisonettes from 1st Jan 2023 to 24th January 2024. Here is how much they transacted for:

HDB Estate Type of HDB Estate Transaction Range
Ang Mo Kio Mature estate $1,080,000 (only 1 transaction)
Bedok Mature estate $780,000 to $1,034,000
Bishan Mature estate $908,000 to $1,450,000
Bukit Batok Non-mature estate $713,000 to $1,088,000
Bukit Panjang Non-mature estate $750,000 to $965,000
Bukit Timah Mature estate $1,200,000 to $1,360,000
Choa Chu Kang Non-mature estate $700,000 to $885,888
Clementi Mature estate $875,000 to $1,100,000
Geylang Mature estate $780,000 to $1,060,000
Hougang Non-mature estate $800,000 to $1,070,000
Jurong East Non-mature estate $650,000 to $1,018,000
Jurong West Non-mature estate $620,000 to $915,000
Kallang/Whampoa Mature estate $930,000 to $1,050,000
Pasir Ris Mature estate $785,000 to $1,030,000
Queenstown Mature estate $1,228,000 (only 1 transaction)
Sembawang Non-mature estate $786,000 to $810,000
Sengkang Non-mature estate $802,888 to $898,888
Serangoon Mature estate $815,000 to $1,110,000
Tampines Mature estate $773,000 to $1,025,000
Toa Payoh Mature estate $830,000 to $1,120,000
Woodlands Non-mature estate $710,000 to $912,888
Yishun Non-mature estate $600,000 to $895,000

HDB executive maisonettes in the city fringe and centrally-located HDB estates tend to command higher prices. These neighbourhoods also tend to be mature estates with more amenities. However, being located in mature estates also tends to mean these desirable executive maisonettes are older. 

When choosing where to buy, it’s good to have a clear understanding of your needs. After all, you want to ensure your home is compatible with your lifestyle. It’ll also help you decide whether you find it worthwhile paying for a more expensive flat with a shorter remaining lease.

For example, for those who work in the CBD and are constantly out and about the town, living in a centrally-located property might be a better fit. If not, you’ll spend a lot of time on public transport; and if you dislike travelling, this may prove detrimental to your happiness. However, you’ll likely have to fork out more for your home.

If you value space above all else, buying a more affordable executive maisonette in a non-mature estate may be a good choice. But you likely have to contend with fewer amenities in your neighbourhood and public transport may be less accessible.

Here are some questions to ask yourself:

  • What are my top priorities when looking for a home? (i.e. space, location, distance to amenities, price, etc.) 
  • Do I spend more time at home or out?
  • How much am I willing to pay for a home?

What is the rental value of an HDB maisonette?

Should I Buy An HDB Maisonette? Are Maisonettes A Worthy Investment For Young Homeowners?

HDB maisonettes are in demand due to the preference for larger rental spaces. Asking rental prices for entire HDB maisonettes on the PropertyGuru website range between $3,000 to $6,500. 

Renting out part of or the whole HDB executive maisonette can be a ‘strategy’ to safeguard against lease decay. A city fringe or centrally-located apartment near an MRT station will generate the most rental income. Even if the lease runs down, you will likely still be able to command high rental prices, especially if you keep your property in good shape. However, this means higher upfront costs and your rental yield may be lower. 

This rental game plan is most suited for those intending to keep their property for the long haul. You can consider this if you:

  • Intend to relocate permanently or spend a few years abroad
  • Want to own multiple properties to rent out (i.e. buy a private property and keep your HDB executive maisonette to rent out)

If you’re a “dual income, no kids” couple, you can consider renting the extra bedrooms to cover the mortgage. For those concerned about privacy, you can consider letting just the downstairs bedroom.

Should young couples buy HDB maisonettes in Singapore?

Young couples who want to grow a large family will appreciate the space offered by HDB maisonettes. And for those who don’t want kids, the luxury of space offered is unparalleled. Hopefully, this article has been useful in helping you decide if HDB maisonettes will be a good investment for you.

Read more about HDB maisonettes:

Cover image adapted: br.maisonette, K O Z É

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