Should You Sell Your HDB flat in 2021?
2020 has been an unpredictable year for many of us – from the unfolding of the pandemic, the nation-wide “circuit-breaker” and now, the slow return to normalcy with phase 3 introduced just towards the end of the year.
Similarly, at Youhome.sg, I have experienced a fulfilling year of opportunities along with the winds of change – with me adapting to new ways we service and provide consultations to my clients and finding a great new balance!
- Property demand to pick up with overall macroeconomic recovery post-COVID
- Diminishing supply of new projects and land could keep prices high
- Improvements to HDB resale market
- And more…
To help you focus your efforts, I’ve consolidated the considerations for 3 common groups of property buyers and/or sellers:
- HDB reach (MOP): To Sell or Not To Sell?
- Upgrading Plans: Bigger HDB Resale or Private Property?
- Down-sizing Plans: Can Downsizing Help to Reduce Financial Commitments?
Feel free to skip ahead to which section is relevant to you!
Table of Contents
1. HDB reach (MOP): To Sell or Not to Sell?
If you have a BTO that is approaching the end of the much-awaited 5-year minimum occupation period a.k.a MOP, you might have heard from your friends or family to sell the flat quickly before the prices dip.
Here is a case study based on the resale price index of Punggol 5-room flats in two different age brackets – one that is 5 to 10 year-old (just after MOP period) and another that is 10 to 15 year-old.
Here’s what the numbers show:
- For flats sold just after MOP (5 years) to slightly older flats within 10 years, the median price shows an appreciation of 3.35% per year.
- In contrast, for flats that are only sold after 10 -15 years, the median price show depreciation of 1.19% per year.
If you know your BTO is not going to be your forever home, the smart decision is to make plans to sell!
Just make sure you don’t hold on too long if you plan to make a sale, since it can affect you in quite a few ways.
One example is the amount of cash proceeds you will receive from the sale.
If you delay a sale and your flat’s price depreciates, you will end up with much lesser cash proceeds (that can be used for your next purchase).
In some cases, we have seen a difference of up to $50,000 reduction in profits just because of a delay in sales.
2. Upgrading Plans: Bigger HDB Resale or Private Property?
a) Upgrading for more space
If so, 2021 may be a good year to consider upgrading to a larger space at home with more space for everyone!
With a relatively strong HDB resale market, it is most definitely a good sign to sell and lock in the cash profits to channel into either an older and bigger HDB resale or private property.
b) Upgrading for lifestyle change
2021 is a good time to consider making the change!
Wondering why so?
Analysts in the industry are anticipating trends that could push up prices further in the short-medium term! Not good news for anyone since that means more cash outlays in the future!
Hence so now’s a good time to enter before:
- Changes to higher buyer stamp duties for investors and foreigners to mitigate the steady price increases
- Possible tightening of mortgage terms
- Developers increasing minimum sizes for new developments
All of which will make upgrading or investing a lot more expensive in the future!
3. Down-sizing Plans: Can Downsizing Help to Reduce Financial Commitments?
With the pandemic wreaking havoc on the economy, it is inevitable that many have their livelihood significantly impacted.
If you are a property investor who is seeing less than optimal returns on your property portfolio due to the economic downturn, and hope to reduce your monthly mortgages, it might be helpful to look at restructuring your property portfolio.
While it may be a difficult decision to make, downsizing is definitely an effective way to help reduce financial commitments in the long-term.
With the right professional guidance and help you navigate around taxes, fees and any other hidden costs, downsizing can be a smooth and painless process for you.
Still Undecided About Selling Your HDB in 2021?
Just by reading the headlines, we can tell that both HDB resale and resale condos in Singapore are moving on an upwards trend by the end of 2020.
Buyers’ interest and demand for properties have increased and the forecasted dwindling supply in the near future also added to the attention while economy is midway towards recovery.
Recent article also touched on potential cooling measures that may be implemented soon.
In all, the nature of selling property is understandably complex and different depending on each individual needs.
This is why we hope this article helped to shed some light on possible opportunities and options for you if you find yourself in any of the above 3 situations!
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Rick Huang, Associate Deputy Group Director of OrangeTee & Tie, has been in the Real Estate industry for a decade.
He is driven, committed and is enthusiastic about real estate investments.
Today, he leads Team Youhome.sg, and together, he aims to provide his clients with the best experience in their property journey.
The team focuses on understanding the client’s finances and needs and is determined about delivering the best solutions and results for them.
Amidst the hustle and bustle, Rick enjoys quiet time and indulge himself in the intricate art of tea-brewing and teapot appreciation.
He would also take this chance to energize himself and reflect on his personal development and areas of improvement.
He is also a proud fur daddy to 2 rescue kitties and loves spending his free time with his wife and furbabies.
Ever wonder if you are suitable for Sell one buy two investment concept? – Read more (Sell one buy two)
Is buying new launch or resale condo have better returns? – Read more (New Launch vs Resale condo)
Looking to upgrade from Hdb to condo? – Read more (Sell Hdb buy condo)
What to take note when selling Hdb resale flat? – Read more (Hdb Resale Process)
Buying another Hdb flat, and using the fund from current home? – Read more (Hdb contra)
Why do some Hdb flat price depreciate so much? – Read more (Hdb depreciation curve)
What is one of the most common reason for property negative sales? – Read more (Cpf accrued interest)
Financial calculation for selling a Hdb flat? – Read more (Hdb resale calculator)
Buying EC before selling your HDB? – Read more (Upgrade to EC before selling your HDB)
Should you sell your EC after 5 years? – Read more (Selling EC)
Should you sell your MOP HDB after 5 years? – Read more (Selling HDB after mop)
Property Wealth Planning – Read more (What is property wealth planning?)