Should You Buy an Old HDB Flat?

National Development Minister Lawrence Wong recently warned in a blog post that people should not be buying very old Housing Board (HDB) resale flats in the hopes that they would be selected for the Selective En bloc Redevelopment Scheme (Sers). Under Sers, the Government picks HDB estates it wants to acquire for redevelopment and gives flat owners market-rate compensation, and replacement units at discounted prices.

However, only 4 percent of flat owners have been selected for Sers thus far.

Recent trends have shown that young buyers are willing to pay high prices for ageing HDB resale flats as they assume that the Government will bail out flat-owners and offer Sers, or other schemes with generous payouts as the lease nears its 99-year expiry date.

Singaporeans should not assume that HDB flat prices will remain high as the flats age, given a tighter fiscal position, an ageing population, tighter immigration policy and political uncertainty.

A Straits Times opinion piece recently advised on buying an old resale flat only for long-term place of stay or to rent it out, but not to expect compensation for a fading lease. It also noted that a newer flat under 20 years old provides better chances of reselling it a decade later for some gain.  

Responding to citizens’ comments that the prices of ageing HDB prices might fall, Mr Wong has written a second blog post, stressing that HDB flats remain a good store of value and retirement asset.

Source: “To buy an old HDB flat or not, that is the question’, The Straits Times, 16 April 2017.

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