Should You Sell Your HDB flat in 2023?
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 among it!
Looking at the price index for the past two years, HDB price increase slightly more than 17% from 2020 to 2022.
- Property demand to pick up with overall macroeconomic recovery post-COVID
- Diminishing supply of new projects and land could keep prices high
- New cooling measures 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 urging you to sell the flat quickly before the prices dip.
Please take note of the following: Only properties within the age group indicated during the time frame are used in the study.
For example: For an 11 – 20 years study, if a HDB is 20 year old in 2016, it is excluded from the study in 2017 when it reaches 21 year old.
Here is a case study based on the resale price index of Bukit Merah HDB flats in four different age brackets –
- 4 to 10 year-0ld (just after MOP period);
- 11 to 20 year-old;
- 21 to 30 year-old; and
- 31 to 40 year-old
The growth rate for Bukit Merah HDB flats from 4 to 10 year-old
What you need to know – 2.52% growth per annum average. (This is above CPF accrued interest rate)
The growth rate for Bukit Merah HDB flats from 11 to 20 year-old
What you need to know – 3% growth per annum average. (This is above CPF accrued interest rate)
The growth rate for Bukit Merah HDB flats from 21 to 30 year-old
What you need to know – 2.45% growth per annum average. (This is below CPF accrued interest rate)
The growth rate for Bukit Merah HDB flats 31 to 40 year-old
What you need to know – 0.07% growth per annum average. (This is below CPF accrued interest rate)
Here’s what the numbers show:
- For flats sold (4 to 10 years age), the median price shows an appreciation of 2.45% per year.
- In contrast, for flats that is sold after 30 years old, the median price show appreciation of 0.07%, way below CPF accrued interest of 2.5% per year.
Prices do depreciate as the flat ages – but it will not be immediately after MOP – so there is definitely enough time for you to do your necessary research and to prepare for the move within the immediate year or two after MOP.
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 $100,000 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, 2023 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 investment
Let’s take a look at how different categories have been performing for the past 5 years.
Comparing the 5-year price trends different between HDB, EC, Private (non-landed) and landed:
HDB overall performs the lowest compared to the rest.
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.
Selling and buying HDB at the same time
A joint effort by HDB and the CPF board, it allows sellers to sell their existing HDB flat and concurrently buy another HDB resale flat using the proceeds (as well as the refunded CPF monies).
For HDB owners that are considering selling and buying hdb at the same time, you can consider using hdb contra. (read more to find out)
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Rick Long, Associate Division Director of Huttons Asia Pte Ltd, has been in the Real Estate industry for more than 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.
Well-equipped with expertise in residential properties, Rick often impressed his clients with knowledge of market trends, advising on timelines, financial calculations and best options for his clients.
Amidst the hustle and bustle, Rick enjoys quiet time and indulges 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?)