In my last 2 blog posts, I discussed the price differential of different ages of condominiums, size of units, as well as how long is the leasehold of the condos. See Areas Where We Saved for Our House Purchase
and Could We Afford a Freehold Property?
for more info. In both posts, I mentioned my preference for proximity to a MRT station, as there are usually more amenities such as shopping centre, market, hawker centre, etc. Staying close to a MRT station also means that we save on a car, which could potentially cost $200K or more in future expenses. However, I also note that the closer a condo is to a MRT station, the more expensive it is. So how much more expensive is it?
Let us compare 2 condos that are still being built. One is within walking distance of a MRT station while the other one is far away from it. Using the same convention as the last 2 blog posts, the one that is near to a MRT station is Condo C (the same Condo C in Areas Where We Saved for Our House Purchase
), while the one that is far away is known as Condo D (Condo D is in the same area as Condos E & F in Could We Afford a Freehold Property?
) Both are 99-year leaseholds. Both will be completed in 2020. So, the main difference between Condos C and D is the proximity to a MRT station.
The average transaction price of the condo units for the 2 condos from Jan 2017 to Jan 2018, by no. of rooms and floor area respectively, are shown below.
|Rooms ||Condo C ||Condo D |
| ||MRT ||No MRT |
|2 ||$1,027 ||$845 |
|2+Study ||$1,091 ||- |
|3 ||$1,226 ||$1,138 |
|4 ||$1,532 ||$1,385 |
|5 ||$1,717 ||- |
|Area ||Condo C ||Condo D |
| ||MRT ||No MRT |
|601-700 ||- ||$845 |
|701-800 ||$1,027 ||- |
|801-900 ||$1,091 ||- |
|901-1000 ||$1,226 ||$1,138 |
|1001-1100 ||- ||- |
|1101-1200 ||$1,532 ||$1,385 |
|1201-1300 ||- ||- |
|1301-1400 ||$1,717 ||- |
Do note the limitations for the data above, which are described in greater details in Areas Where We Saved for Our House Purchase
. However, because both are newly launched condos, there are a lot more transactions for them. Hence, their prices are more reflective of the current investor sentiments. On average, Condo C has 12.2 transactions per month while Condo D has 63.9 transactions per month.
From the data above, it is natural that Condo C, which is close to a MRT station, is more expensive than Condo D. For a 2-room unit, Condo C is more expensive than Condo D by $182K, but that is also partly because Condo C has a larger floor area. The average floor area of a 2-room unit in Condo C is 771 sq ft, while that in Condo D is 660 sq ft. The price difference for a 3-room unit and 4-room unit is $88K and $147K respectively.
Using a 3-room unit as an example, would I be willing to pay $88K more for proximity to a MRT station? Definitely! In terms of finance, we save on a car (or 2 cars to last us until we retire). Each car can easily cost $100K, not to mention the running costs. So while we pay $88K more for the convenience of a MRT station, we save at least $200K in future expenses from not having to own a car. The net saving is at least $112K for staying close to a MRT station. In terms of travelling time, assuming we do not own a car, we save at least 15 minutes travelling from the MRT station to Condo D as compared to Condo C. Multiply that by 2 for the journey to-and-fro, and multiply the resultant figure by the no. of journeys per year, it adds up to very significant time savings. In terms of convenience, there are usually a lot more amenities near to a MRT station. If you are hungry, you could go to some nearby coffeeshops which are open 24 hours a day. If you forget to buy something, you could walk to a 7-eleven store to get it. In contrast, if you stay in an area with no MRT station, even getting something can mean a 20-minute bus ride to the nearest town!
In conclusion, while a condo within walking distance of a MRT station is more expensive, the higher price will usually pay off by itself in terms of finance, travelling time and convenience.
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