Commentary: Tengah residents' complaints reflect age-old problem of moving into non-mature estates

SINGAPORE: The first batch of Tengah’s residents have moved into their homes and complaints about the lack of amenities and transport options have started to surface.

Other issues raised include poor data connectivity, prevalence of dust and mosquitoes, and challenges with booking a taxi or food delivery.

The public’s reactions have been mixed. Some netizens have pointed out that this is expected for anyone moving into a non-mature estate, given that even areas like Punggol and Woodleigh were once like that in the beginning.

Others have empathised with the inconveniences faced by Tengah residents and called for improvements to be implemented as soon as possible.

DOWNSIDES OF NON-MATURE ESTATES

It is no secret that there will be trade-offs for the first batch of homeowners in non-mature estates. Amenities and transport networks in such estates take time to build up.

These also account for why Build-to-Order (BTO) flats in non-mature estates are sold for significantly cheaper than their counterparts in more built-up estates. They are also easier to secure due to lower demand.

Tengah was a forest up until merely a few years ago and is the first new housing town to be developed, two decades after Punggol.

With 42,000 new homes to be built, the ongoing construction work naturally means plenty of dust in the area.

The Housing Development Board (HDB) plans to establish Tengah as a “forest town” the size of Bishan. It took Bishan several decades to have the transport networks that it boasts of today, so residents living or moving into Tengah will have to temper their expectations accordingly.

However, with some planning and preparation, you can overcome the inconveniences of living in a non-mature estate. Factor in the longer travelling time into your schedule, and make it a point to travel out and stock up on your home and food essentials each week in advance.

HDB has rolled out interim amenities like a mobile grocery truck and vending machines in Tengah, as shops are only expected to be ready around the second quarter of 2024.

POTENTIAL FINANCIAL GAINS

On the other hand, the benefit of buying a BTO flat in new estates like Tengah is that homeowners may see capital appreciation in the years to come. Buyers would be willing to pay more for the improved accessibility and amenities.

First-time buyers who bought a BTO flat in non-mature estates like Punggol and Sengkang have profited significantly from selling their house in the resale market after both towns became more built up.

When BTO flats in Punggol and Sengkang were first launched in the early 2000s, the price of four-room flats ranged from S$129,000 to S$205,000.

These owners saw the value of their homes tripling when they sold a decade later, with resale prices ranging from S$356,000 to S$650,000. 

So Tengah residents willing to ride out daily inconveniences could enjoy a financial pay-off years later. Across the 18 BTO projects in Tengah, the median prices of four-room flats were below S$355,000, while five-room flats ranged between S$430,000 to S$485,000.

HDB resale prices have seen robust growth, though cooling measures implemented in recent years have moderated rates of increase. Should this trend continue, Tengah homeowners can expect to resell their flats at a profit in the next decade, barring unforeseen circumstances.

In this sense, BTO flats in non-mature estates can make a sound investment. Homeowners can enjoy first-mover advantage by reselling their flats once the town matures and their minimum occupation period (MOP) is complete.

But if your aim is not to flip your BTO for a profit, then these inconveniences may not be worth your while. If your finances permit, then you may be better off purchasing a smaller resale flat in a mature estate instead.

NEW HDB CLASSIFICATION FRAMEWORK

The government has also announced that estates will no longer be classified as mature or non-mature because the distinction between the two has blurred. From the second half of 2024 onwards, HDB BTO flats will be split into 3 categories: Standard, Plus or Prime.

Standard flats will form the majority of new housing supply, keeping to standard subsidies and restrictions such as the existing five-year MOP.

Plus flats will be located in choicer locations that are near MRT stations or town centres, with more subsidies to keep these flats affordable. However, they come with tighter restrictions including a 10-year MOP and a partial return of subsidies to HDB upon resale.

Prime flats are currently offered under the Prime Location Public Housing (PLH) model, and are typically located closer to the city centre.

These flats will come with the highest subsidies, but also with the tightest restrictions including a 10-year MOP and a bigger portion of the subsidies to be returned to HDB upon resale.

The tighter restrictions and subsidy clawbacks upon resale are expected to slow down the rate of resale price increases, but in my view, will not stop the prices of homes in Tengah (or other new estates) from appreciating.

Once the Jurong Region Line opens from 2027 onwards and Anglo-Chinese School (Primary) relocates to Tengah in 2030, flats in Tengah will see significant capital growth.

But if you’re not used to living in a non-mature estate and do not really care for the financial payoff, then living in yet-to-be-developed towns like Tengah may not be the right choice for you.

Dawn Cher, also known as SG Budget Babe, runs a popular blog on personal finance and has a licence in real estate.