Another interesting takeaway from the recent Ang Mo Kio SERS, is that in the coming years, we may have to get used to more HDB resale flats selling for less than new HDB BTO flats!
I knew its a matter of time, especially with more ancient HDB flats with less than 50 year leases coming on to the market...
Somehow I've always thought its something to resolve 10 or 20 years later, but after writing my previous post, it suddenly dawned on me its happening in the here and now already!
Just talk to the affected SERS flat owners in Ang Mo Kio.
This assumption that HDB resale flats will always be more expensive than brand new virgin HDB BTO flats will have to go too!
For those who want to verify for themselves:
Look at the "subsidised" replacement flat selling prices and the compensation the Ang Mo Kio residents are getting.
The Glass Half Full Mindset
Today, seniors aged 55 and above looking for a shorter lease HDB flat are limited to the 2 room flexi scheme where you can lease between 15 and 45 years in 5 year increments.
But if you are more well-to-do (downgrading from private for eg), or need a bigger flat (for your harem of wives), you now have a lot more options!
3 room, 4 room, 5 room all available to you!!!
Just choose those ancient HDB resale flats with 45 years or less leases remaining and you can have them for less than brand new BTO flats.
The added benefit is you get to choose the location you like (near children or in popular mature estates), plus in general, older 4 to 5 room flats are bigger than current BTO ones.
And you can use the Bala's Curve to your advantage as a buyer. Wink.
For Singapore permanent residents, it works great if you aged 55 and above. Especially if you are from Hong Kong or Mainland China. You are already used to 50 year leases in HK and 70 years leases in China.
You won't have "aversion" like local Singaporeans have when it comes to HDB flats with shorter leases.
Sellers, I got your back too.
If you couldn't read between the lines, I've been helping you all along.
More important is not the decaying lease; its demand.
I'm not going to spoon-feed you.
If you want to educate yourself, go study why those ancient HDB landed terrace houses (3 room) and Tiong Bahru walkup apartments can be sold for more than a million and above - defying the Bala's Curve valuations!?
Of course no one can help you if you HDB flat is in a lousy location. That's a given.
Then you best bet is still SERS!
Smol,
ReplyDeleteI think this phenomenon started with Lawrence Wong's 2018 reminder that most HDB flats will expire worthless. Suddenly people woke up from smoking the asset enhancement ganja lol.
I took a look at Toa Payoh in 2019 and realised that old central Toa Payoh flats were going for cheaper than equivalent 3-rm & 4-rm BTO in borderline "Toa Payoh" area (think Bidadari).
Of course, depressed & muted resale property market then also didn't help.
I've kept the ST infopic of HDB lease decay.
Yup, to beat Bala's curve, you have to hope for good things in macro (loose monetary policies, WFH adoption, moderate inflationary period, good economy, animal spirits), & micro (location, unique sellable features, plenty of cash-flushed enbloc sellers or downgraders).
Spur,
DeleteHit them where it hurts, the masses will come round to Singapore 10 million soon enough!
Singaporeans want to have Big and Cheap. It cuts both ways. Someone have to pay for development and land. Is a good idea to choose old flat with 40+ years lease left at cheap price. That's mean I can recycle my condo money for expenses. Ding ! Ding !
ReplyDeleteCory,
DeleteAs its "new" territory for HDB buyers and sellers when it comes to flats with less than 50 year lease remaining, they would be arbitrage opportunities as the market would be "inefficient" in the early years...
Those land (business) owners and shepherd (management) with experience in buying industrial land with 30 year leases or negotiating commercial leases (2-6 years) will have an edge ;)
Same goes for real estate agents who are familiar with the tools on evaluating whether to rent or buy. I won't be surprised there will be black sheep agents taking advantage of clueless blur sotong clients - buy the property themselves and flipping it for a quick profit...
Two men looked out the night window.
One sees stars; the other sees mud.
Those of us on the Earn More path...
LOL!