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There is still value in older HDB flats: Minister for National Development Lawrence Wong

(Source: www.channelnewsasia.com)

SINGAPORE: There is still value in older HDB flats which can be unlocked for retirement, said Minister for National Development Lawrence Wong in Parliament on Thursday (May 17).

Speaking during the debate on the President’s address, he said there have been concerns about the impact of lease expiry on HDB resale prices. 

Quoting transaction data over the past year, he said that an older 4-room flat with less than 60 years remaining on its 99-year lease would sell for around S$300,000 and a 5-room would sell for around S$400,000 in non-mature estates. 

For flats in more popular locations, prices can be significantly higher, he added. “So the transacted price depends not just on length of remaining lease, clearly, but also many other attributes,” he said, adding that factors like location, storey height, and the condition of the flat are all relevant.

Whatever the price, the sales proceeds would be “more than sufficient” to purchase a smaller flat, he said. 

He gave the example of 67-year-old Abdul Aziz Haji Hamdan, who owned a 3-room flat in Marsiling with around 60 years remaining on the lease, and moved to a  studio apartment in Kampung Admiralty with a 30-year lease. 

His S$250,000 sales proceeds were more than sufficient to cover the $109,000 purchase price, and provided excess in cash and CPF proceeds, supplementing his retirement savings, he said. 

He harked back to the time when people were speculating in older HDB flats hoping to benefit from the Selective En bloc Redevelopment Scheme (SERS). 

“Now the reverse has happened, and there are people overly anxious about how much their older flats can fetch in the resale market,” he said. 

SINGAPORE STILL SEVERELY CONSTRAINED BY SPACE

Addressing calls by some to allow automatic lease extensions or lease top-ups by private developers for older HDB flats, which mostly have more than 60 years remaining on their leases, Mr Wong said: “It will be easy for me to give you a politically expedient answer now and try to wave away the problem, but there are serious trade-offs and ramifications to consider.”

This is because Singapore is still severely constrained by space, despite the Government’s best efforts at planning, he said. He questioned what would happen to Singapore’s children and grandchildren if there is “no more land” to recycle for future public housing. 

“How will they have access to subsidised housing in the future?” he asked.

“The Government must grapple with these questions, study the matter, and do the responsible thing,” he said. 

The issue of lease extension is also not so straightforward a matter, and it must not be assumed that everyone wants it, the minister said.

There is also the issue of maintenance.

“Much more maintenance is needed for older flats and this will be costly for residents. How to do it well, and who will pay?” questioned Mr Wong. 

He added that the Government made it clear from the HDB lease is 99 years, which is “a long time” covering two generations. 

“Our duty is not just to the current generation who already own homes, but also to the future generations – those not yet voting, and those not yet born, whose lives and future depend on us making the right decisions on their behalf,” he said. 

There is still time to work through the issues, he added.

MISINFORMATION CAN IMPACT MARKET

But for now, what’s important is that people do not speculate or spread misinformation which can impact on the market, Mr Wong said. 

One such example of misinformation was that the Government would stop the use of CPF entirely for the purchase of HDB flats.

Addressing this in his speech, Mr Wong said the Government has no such plans.

Even for older flats, CPF can still be used but under certain conditions to safeguard homebuyers’ retirement adequacy, he said.

The speculation started from a media report highlighting a suggestion from an academic, who later clarified that his views were not fully reflected.

Still, the information continued to circulate online and through chat groups, Mr Wong said.

“What’s important is that we do not speculate or spread misinformation which can impact on the market,” he said.

DOING MORE TO MAKE RESALE MARKET WORK BETTER

Apart from the HDB resale portal, which was launched at the beginning of this year to make transactions faster, Mr Wong said more will be done to make the resale market work better.

The Government will provide more information on the available flats in the market, whether new or resale, to help buyers and sellers transact more smoothly and help Singaporeans make more informed housing decisions that best suit their needs.

“We will continue to monitor market trends closely and make use of various policy levers to ensure a stable and sustainable property market,” he said, giving assurance that the Government will continue to provide affordable and quality homes for all Singaporeans, both now and in the future.

More Info: www.channelnewsasia.com

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