Asked by Anonymous
Asked on 23 Sep 2018
My wife and I moved in 2 years ago and we are worried that our resale flat will lose its value if we live here too long. When do we know if it’s a good time to start looking for a new property? We are both working professionals with a combined income of approximate $9000.
Thank you all in advance!
You would have lost a certain pool of buyers after your flat turns 40 years old. That's because buyers can't use their cpf for the flat after it is 70 years old. For flats that are in between 40-70 years old (meaning remaining lease of 60-30 years), buyer's age plus remaining lease must be at least 80 years for them to still be able to use cpf and/or take max loan. Or else they have to buy your flat using more cash. Unless your house is in a prime district and many people are willing to spend cash, I would say your flat loses value after 40 years.
As what Petrine mentioned, when a property remaining lease reaches 60 years and lower, the next buyer must be able to stay in your flat until they are age 80 if not he/she wouldn't be able to use CPF OA to finance your unit.
Since after you reach MOP, your unit will have a remaining lease of 61 years, I would urge you to sell by then before it hits the 60 year mark.
This is a rough idea of how your HDB value may go after the 60 year mark. This appeared in the Straits Times last year (2017)
Although I would take this with a pinch of salt after the recent National Day Rally where PM Lee introduced the VERS (Voluntary Early Redevelopment Scheme).
The government assured that HDB owners would be able to opt for VERS when the lease is ending and HDB would give a 'reasonable' compensation unlike SERS (Selective Enbloc Redevelopment Scheme) which has a windfall effect. However, we would not know what is considered a 'reasonable' compensation since no one has undergone this program yet.
In a nutshell, I would recommend selling your place after you reach MOP. Even if you are not interested to upgrade to an EC or private condo, you should find a resale HDB with a younger age to be on the safe side!
It would be good to sell before the HDB flat reaches 40 years old. However, you need to fulfill your 5 years MOP before you can sell. You may also want to reconsider whether you want to just breakeven, make a profit or a loss, taking into account of your interest and loan repayments amount.
I believe your house buy value consider good and should be able to make profit after 5 years when you meet Minimum Occupation Period (MOP). Personally, I'll sell it and buy another one although I may incur additional charges and taxes but the HDB over 40 years old will be hard to sell with the additional rules and regulation except your house location is very good.
I think a good time is about 50ish
you did not mention the location of the property. Given that the location is good this number can be extended to 60-70
if you plan to live Long term then apply for an executive unit.
99-38=61 yrs lease left after mop then you can sell ur existing flat.
You only sell ur flat bcos u are offered a good price and you have a better place to stay.
If selling it at a loss or paying high amount of accurrred cpf interest then you have to re consider ur options without an affordable better location to stay.
You can refer to the Mop tables here
Is good to go thru this for the lease left issue
At 64 years
With less than 35 years of lease left, banks are unwilling to extend loans to finance the purchase of these flats. That applies to flats that are at least 64 years old.
With less than 30 years of lease remaining, CPF money cannot be used for down payment or to service the monthly mortgage.
At this point, the property has to be paid for in cash.
When leases drop to 20 years and below, the prospective buyers will not be able to get HDB loans, bank loans or use CPF for the purchase. Everything has to be paid in cash in one go.
Hope my reply helps.
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Now would be a good time. I generally advise against 30yo flats as there is usually no upside (unless mrt built just beside the hdb) and the only way is down. Usually stagnant value from 30 to 40, then start depreciating. Maybe take a look at URA website to see if there will be any favourable developments at your area.
You got a few option for asset progression depends on your risk appetite.
Under current legislation, u should try to sell your place while it still has >70 years lease left. After that, it gets harder for buyers to borrow. That said the government has plans for upgrades & VERS, if u really like your place, u can hold on to it & see what schemes the government rolls out.