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Why I see little reason in a 5 Room Flat over a 4 Room Flat

The Sunday Times made a news reporting that HDB flats and Executive Flats are harder to sell or they take longer to sell. I note that distinction:

  • 5 Room and Executive flat owners are the worse hit in the resale market
  • 2nd qtr Seng Kang 5 room flat is down to $495k versus $523k a year ago
  • Loan curbs and TDSR are turning away more buyers but sellers are reluctant to lower prices
  • PropNex figures show flats take 1-2 mths to sell in 2009, 2-3 mths last year, 3-5 mths now
  • AMK Executive Flat seller says there are interested viewers but they just cannot get the loans
  • 5 rm flats is 25% of HDB flats, Executive flats is 7.5%
  • There are more supply from BTO coming online
  • 43 year old Janice Tan put her 5 room flat for sale in March and only closed it in July. This flat was previously valued at 500k. She actually sold 8% below market valuation

Whenever we talked about a distress period in resale housing market, it brings back some bad memories.

As a side track, I sometimes talk about a cognitive problem called Fear of Bad Memories that impede more rational wealth building planning. This is one of them in that being scarred by not just your own experience but your family, you have a disdained for properties. You do not want to relive that painful part of your life and would do anything to rid that feeling, even though it might not be the most rational.

Think about this from the standpoint of an investor. The market falls 50% in 2008 and early 2009. That hurts. Then it rallies 130% over the next few years, recouping all of your losses and then some. This feels OK, but not nearly good enough to ease the shock you felt from the 50% crash, which was emotional and memorable. You remember the crash much more vividly than the ensuing rally, and you change your portfolio to make sure you never suffer through a crash again. You buy bonds, hold a lot of cash, and swear off stocks for good. We’ve seen quite a bit of this behavior over the last few years. And we know it comes at the expense of long-term performance.

Read more here.

My family have never had a good experience with property. Then again we only had one which didn’t turned out so well.

The parents got a bigger flat as a form of upgrade from 3 room to 5 room in the old scheme so we have to sell and buy the flats in 1997. Which is probably at the height of the property cycle.

My dad had original selected 4 room. Changed his mind to a 5 room.

The difference in demand observed between the 2 flat types

The HDB built too much flats. I think a year ago people would have loved this happy problem to have. It is also a reason why HDB is so unwilling to put out much supply.

That fear which was not too long ago is still on the mind (another example of Fear of Bad Memories?) of the planners.

That period makes a very interesting study.

The price differential between 4 room and 5 room flat was very small. Perhaps 20-40k difference from what I can remember.

It is certainly doesn’t justify the premium that you pay for when you are considering a 1st hand HDB flat purchase for 4 room and 5 room. Back then the premium was $100k difference.

There are much reasons for the skewed demand in my view:

  • Both 4 room and 5 room have 3 bed-rooms. If we talk about the same projects, there aren’t a lot of size difference
  • 5 room comes with a bigger living room and balcony. These are good to haves
  • These good to haves become a lower consideration when times are harder
  • When money is tight, people down grade to 4 rooms from condo, 5 room or executive

The result is that demand of 4 room flats are rather sustained versus that of 5 room. Note that I am not saying there isn’t demand for 5 room, its just not as well as 4 room.

If you are seller…

During hard times, the price differential to sell wasn’t much. During good times, from the brochure, 4 room flats demand is just as strong as 5 room.

If you are seller, you would want to hold on to an asset that are in demand RELATIVE to the other assets. 4 room looks a better deal than 5 room.

I took a look at recent BTO projects, the price differential is still 56k to 90k difference.

Recent HDB Resale transactions in August shows that 5 room typically sell for 50k average higher.

When times are good, it is likely the location and furnishing provides a much higher premium in commanding higher selling prices then the difference between 4 rooms and 5 rooms.

The idiotic question is that if I were to sell and down grade, doing a 5 room to 4 room doesn’t seem to be the most sensible thing. You stand to pocket a 30-50k difference. I wonder if that is worth it.

If you are renting….

A check on listing seem to indicate that eventual transaction of successful rentals hinges more than on the size of the flat. If the price differential is small, people will tend to take the bigger ones.

The inverse is true as well, in that if the price differential is big,  people tend to take the 4 room. Unless they really need that space.

This tends to put another black mark on 5 room flats.


The government in their formula to derive how much subsidies that we should enjoy, takes into consideration the size of the flat. Therefore, if you overreach, and purchase a bigger flat, and you really depend on the subsidies, its another black mark for 5 room flats

When you are tight on money….

The main consideration is not when you are earning well. In such a scenario, 50-90k difference should not be a high deterrence.

If we are talking about the folks that are getting married, forming a young family, or a matured family thinking of upgrading, but tight in the cash flow department, all these becomes a consideration.

I felt that if you are tight on money, and you have no idea if the family’s total disposable income is going to improve, you have to make some hard choices.You cannot have everything, but I felt that forgoing a balcony and some extra living room space is not that big of a downgrade in lifestyle.

In the case of my family, when they are upgrading, we didn’t consider the 100k difference. Back then if you are not well educated in personal finance, you will do what the Joneses do, follow what others do. They say 5 room better, you get 5 room.

I am still servicing the loan, and they are greater than 65 years old, and we do not have this 100k for their retirement funds.

This becomes a total disaster. We often think of what life would have been otherwise.

Now you see some of the benefits when the government tries to limit the length of mortgage tenure for those that will touch close to 65 years old.

I walked past my neighbour’s 4 room every day and seen the size of their rooms, its not much of a difference from mine. If you are talking about the flats nowadays, yes, they are smaller, but they are proportionately smaller as well.


Not being a property agent, or someone looking to rent or sell, I tend to look at things rather superficially. Your data might be better than mine, and thus your conclusions might be different. I welcome any feed backs.

If you are in the midst of planning to upgrade or get a new one, loved to hear why you come to your decisions as well.

Personally the biggest problem for me is that, with only 3 person living in it now, a 5 room becomes really big to keep clean! I tend to enjoy a manageable size. Privacy is a concern to move from a 3 room to a 4 or 5 room. But with 3 people, I don’t find my old 3 room to be small.

A smaller flat matches my life goals better, frugal, having less material things, less clutter and making the outside world my living room.


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Saturday 10th of December 2016

For my wife and I, we bought 4-room resale because the size is effective and sufficient for our needs - not too big not too small.

Cleaning is easy with cordless vacuum stick and I mop the floor only once a week on weekends (minimalist furnishing and wood laminate flooring would make cleaning work easier).

We'd consider 5room bro upgrade if the layout allows me to convert the study area for another room (potential cash flow if can be rented out).


Saturday 10th of December 2016

hi Joseph thanks for sharing why you chose a 4 room. I think it is the right size for many family and in the worse case you could rent out one room.

I was wondering how long your cordless vacuum will last. I usually do not have a good experience with it.

How did the minimalist furnishing work out? are there some things your family chose not to do?


Tuesday 5th of August 2014

Yo bro,

I started an investment forum ( Feel free to patronise. :)


Tuesday 5th of August 2014

it will be hard. i am rather out of this forum scene


Tuesday 5th of August 2014

For me, the main reason why I chose a 5 room over 4 room was that I stood a higher chance of getting one. At the sale of balance flat exercise, the over subscription rate for 4 rm was much higher than 5 rm. If I had chosen 4 rm and failed to get it, I would need to buy a 4 rm resale from market with an amount that can get me a 5rm flat from govt. :)


Tuesday 5th of August 2014

Hi W,

Thanks for sharing. that is rather unique. I guess BTO is still more important than resale. Deep down i was thinking after most have, who will buy the resale from another.


Sunday 3rd of August 2014

Initially I wanted a 4 room because of costs, but when I looked at the resale 5 rm that I'm currently living, all rationality went out. In truth, I can tell you all the reasons for a 5 rm but these are not the real reason. The real reason is that I like that place - it gives off a good vibe, very roomy and airy and it's situated quite high, so that I can see MBS and a little bit of sea view. Any other justification comes after this good feeling after viewing the flat.

I spend a lot of time at home, mainly because I work at home too. To me, a home is not just a hotel for me to spend the weekends and nights in - it's also a place where I host guests and also the place where I spend a lot of time in. I spare very little expense in my 5 rm flat, thinking that I'm going to stay there for good.

So far, no regrets. It's a home that I stay in and I'm going to build many happy memories in it.


Monday 4th of August 2014

Hi LP, a comfortable location is good Feng shui perhaps.and the needs for u might be different .

Some things override cost.we just have to think whether it is rational at all.there are those that spent a fortune on a HDB and they use what you say as justification, right or wrong we cannot say cause it's up to the individual


Sunday 3rd of August 2014

The preference for 5-room flat has come about not just because of size, but also that it is known to have greater margins of appreciation than 4-room. However, I think people are starting to realise that 5-room may not appreciate that much in the future, so they would rather take 4-room. Also, with a smaller family nuclear unit, a 4-room seem more practical.

For me, I took a 3-room bto recently. As the bto is in an estate considered to be mature, the price is already quite hefty for a 3-room, so have to give up a 4-room flat. I prefer to live frugally to. If my finances cannot afford in the future, I would upgrade. As for now, I would prefer not to have heavy loan burdens and focus more on saving for retirement. Finally, who knows, there might be a property downturn one day, and if the price is right, upgrading then would be a good decision :)


Monday 4th of August 2014

Hi jomel thanks for commenting .you are the rare few who can go against the grain to choose such a "small" flat.

My question is do you really think it is very small

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