Old HDB flats: Assets losing their value?

Old HDB flats: Assets losing their value?

SINGAPORE: When Mrs Y L Dong and her family moved into their resale five-room Housing Development Board (HDB) flat 20 years ago, she was certain they had found their ideal home. The Ang Mo Kio apartment may have been 17 years old, but its age did not bother her.

“We have all the necessary conveniences like coffee shops and wet markets nearby. It’s a really friendly neighbourhood with a cosy feel and it is also really convenient to get to town from here,” she said.

But last year, when she approached a property agent with the intention of selling her flat, the response was poor.

“After realising that the lease of the house was reaching its 40-year mark, most buyers weren’t keen at all. They were afraid they might not be able to sell it off in the future,” said the housewife who has two teenage children.

“Even though the flat is spacious and opposite Bishan Park and near prestigious schools, no one wanted to buy.”

Mrs Dong is not alone. A growing number of HDB flat owners are holding on to properties nearing the halfway point of their 99-year leases, raising mounting uncertainties of depreciating values, which have run counter to long-held narratives that Singaporeans’ HDB flats are not just homes, but also appreciating assets.

Today, with older flats in the spotlight, the notion of asset-enhancement, which has seen HDB flat prices rise in the past few decades, is under threat. 

And the larger question of what will happen to people’s HDB homes when leases actually end has become an issue of growing traction.

Experts like Dr Fu Yuming put it starkly. “I know what will happen to a private estate when the land lease expires: it will revert to the government,” said the associate professor at the Department of Real Estate in National University of Singapore.

“But I don’t know what the government is thinking about for the lease management of HDB estates, since there is no open discussion about the issue. In theory, the estates revert to HDB when their lease expires. But will there be any lease renewal policy or re-housing policy? The uncertainty needs to be resolved to protect the interest of HDB homebuyers.”


The issue came under scrutiny last year after National Development Minister Lawrence Wong said in a blog post that the Selective En bloc Redevelopment Scheme (SERS) will apply only to a few flats, not all.

His comments came after reports of buyers forking out high prices for ageing flats, in the hope of cashing in through SERS, where residents are rehoused in new blocks and also receive compensation for their old homes.

But Mr Wong cautioned that SERS is a highly-selective scheme. Since it started in 1995, only 80 sites have been chosen. That makes up a mere 4 per cent of total HDB flats.

There are about 70,000 flats which are more than 40 years old, all facing lease expiry in about 50 years.

Among them, there will be owners who may have bought the new flats at a subsidised rate. But there will be a sizeable group who, like Mrs Dong, are resale flat owners and who bought these flats at a much higher price with the hope of making a profit.

Many could be disappointed. If properties have to be handed back to the Government at the end of the 99-year lease, some owners of old flats may have to sell at a loss, assuming any buyer can be found. And if there are no buyers, owners will eventually be left with an asset which has negligible value. This despite the fact that they may have spent many hundreds of thousands of dollars on it.

The first to cross the line will be the oldest HDB flats in Geylang, Jurong East and Queenstown, and property agents are reporting dips of up to 20 per cent for the prices of these flats, depending on the flat’s and the buyer’s age.

“We have to educate sellers of these older flats that with the Central Provident Fund (CPF) Withdrawal Limit imposed, younger buyers are no longer keen,” said Ms Tracey Wong, chief executive officer at the Institute of Estate Agents, Singapore.

“We then ask the sellers to be more realistic in their sale price in order to attract buyers.”

The CPF Withdrawal Limit places a cap on how much a buyer can tap on his CPF for property purchases. The shorter the lease of a flat, the less CPF can be used.



Charan Singh
Mrs Charan Singh, 78, enjoying some quiet time in the living room of her five-room HDB apartment located at Marine Terrace. (Photo: Prabhu Silvam)

Mrs Charan Singh, 78, is one of those who worries about the future even though she is not looking to cash in on her five-room flat in Marine Parade, which is 45 years old.

She wants to bequeath the property to her children but wonders if she is passing on a worthless asset.

“I’m content for now but once I die, my flat will go to my children,” she said. “If my house does not fall under the SERS policy what will happen to the value of my flat then? What will this mean for my children?”

Experts say there is no point in speculating. Instead, they suggest that the authorities be more transparent, in engaging people more in discussions on the fates of their ageing homes.

“The important question is how relevant policies should be debated and made,” said Dr Fu, urging more dialogue on lease management and potential re-housing solutions.


On the part of Singaporeans, a shift in mindset would be useful, said analysts. Instead of seeing their flats as investments, they should view them primarily as homes.

“HDB flats are public housing, so it needs to serve the needs of the housing demand first. The decision of buying and selling a HDB flat for investment purposes should not be the end game,” said Dr Tu Yong, associate professor at the Department of Real Estate in NUS.

In this regard, homeowners can be assured that the Government will not allow ageing flats to be neglected, said observers.

“The Government is committed to the upkeep of HDB estates regardless of SERS,” said Dr Fu. “There has been no general degradation of old HDB estates and, I believe, it is unlikely that the Government will allow general degradation to happen in the future.”

Ms Tan Chia Chia
Mdm Tan, 86, and her daughter Ms Tan Chia Chia, 42, sit down to take a breather after a morning stroll around their estate at Mei Ling Street. (Photo: Prabhu Silvam)

One homeowner who is happy with her older estate is Ms Tan Chia Chia, a 42-year-old PhD Student who lives with her 86-year-old mother in a four-room flat at Mei Ling Street in Queenstown.

“I’ve lived in this estate my whole life and all my memories have been built here,” she said. “I’m completely happy with my estate and I hope they never tear it down. There’s a lift on every floor and there are ramps around to help the elderly so I couldn’t ask for more really.”


While concerns are emerging about ageing flats, both experts and homeowners believe that many properties still retain some value, whether it’s monetary or other qualities.

After all, the flats are still subsidised by the government, said Professor Sing Tien Foo, Director of Institute of Real Estate Studies in NUS.

They can still use their HDB flat as the starting house, and accumulate wealth to support their upgrading aspirations as they move onto the next phase of their lives,”
he added.

If an old flat is in a good location or has easy access to key amenities, there is still a demand, said Ms Wong.

It was this sort of demand that first attracted Mrs Keethanjali Prakaash, 27, to buy an executive maisonette at Serangoon North.

Mrs Keethanjali Prakaash
Mrs Keethanjali Prakaash in the living room of her Serangoon North executive mansion. (Photo: Prabhu Silvam)

Having recently tied the knot, the first-time house buyer and her husband made the decision to buy the unit, which had reached its 35-year mark, in the region of S$600,000.

“We were looking around for quite a bit and we finally settled here because it's near my parents’ house and it's also a really lovely neighbourhood with plenty of shops and other amenities nearby,” she said.

When asked about her flat’s future resale options, she said that given the rarity of executive maisonettes, it will always offer a premium for buyers especially for large families looking for bigger spaces. The government has stopped building executive maisonettes since 1995.  

“The housing market in Singapore is always changing and you never know what to expect - what was relevant 10 years ago isn’t now and the same goes for the next few years ahead. What’s important is living in a house that is conducive and comfortable for your family, that’s the only thing you can really control.” 

Source: CNA/na