19 May 2018

My HDB Flat Left with 48 Years Lease

Recently I read an online article about the lease of older HDB flats, the current minister for national development Mr. Lawrence Wong mentioned the following:
He said the oldest Housing Board flat today is around 50 years, and that the majority have more than 60 years remaining on their leases. He stressed that lease extension is not an immediate issue and "we still have time to do this work".
Then I decided to check the remaining lease on my HDB flat, the lease started in 1967, so 2018 - 1967 is 51 years old, ok this number is around what he mentioned, then 99 - 51 is 48 years remaining, this second number is quite far from what he mentioned. So if he can get the first number so close, how come second number so far apart? I don't know man, 60 - 48 is like 12 years, maybe he didn't think 12 is a very big number, but when one factor in the 99 years lease, 12 is actually 12.12% of 99, so it's not a very small number to neglect.

Anyway obviously resale price is closely tied to remaining lease, I checked the resale transactions for my area Queenstown in the last 6 months, those with 90+ years remaining lease for 2-room one unit at Ghim Moh Link sold for $380k, 2-room HDB flat $380k?!? For 3-room sold between between $480k to $605k. For 4-room can go up to $940k. Really crazy prices here.

Then those less then 60 years lease, 2-room is between $190k to $250k. For 3-room $243k to $355k. For 4-room is $385k to $670k. The $670k 4-room is probably very well-renovated or location is superb, otherwise the previous highest is $575k.

So as you can see quite a big difference in the pricing by lease. I bought my 2-room for $250k in 2014, in future if sell I think won't worth much, almost certainly will be sold at a loss. Good thing that time didn't overstretch to buy a 3-room, that time same area got a 3-room $350k, lucky never buy. Another good thing is I still have one more chance to apply for subsidised flat so not too bad.

So always buy within your means, if even after housing loan still cannot afford then just hold off, save up then buy, don't borrow everywhere just to buy a house, I know some people borrow from friends, borrow from family or even take personal loans, good to have your own home but don't get drowned in debts.

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