With the recent relaxation of CPF rules for the purchase of older resale HDB flats, these properties are not only receiving more interest but also more takers.
Resale HDB flat transactions rose 5.6% year-on-year
It has been a bit of a rollercoaster ride perhaps for owners of these older resale flats.
In March 2017, National Development Minister Lawrence Wong cautioned buyers against having the presumption that older HDB flats will go en bloc, especially as more young buyers were paying high prices for these units at that time. Following that, the public responded by showing marked restraint in their purchases of these flats.
In August 2018, the Volunteer Early Redevelopment Scheme was announced. This scheme allowed flat owners aged 70 years and above to sell their homes to the government. However, the effect of this scheme will not kick in until much later and did not do much to help owners of older units.
In May this year, the authorities relaxed the rules on the use of CPF savings for ageing flats. Previously, the use of monies from CPF ordinary accounts for purchases of flats with fewer than 60 years left on their leases was restricted.
With the new rules, as long as the lease covers the youngest buyer up till the age of 95 years, buyers are able to access more of their CPF savings and also obtain larger HDB loans for older units. For flats with 20 years of less left on the lease however, these new rules will not apply.
Will competition heat up as older units become fair play?
Over the May-June period, the number of HDB flats 30 years or older changing hands rose 18.3% with 1,783 units sold in that period this year, compared to the 1,507 units sold in the same period last year.
This year, and possibly the next as well, more new units are also reaching the end of the minimum occupation period (MOP) and hence are able to be sold in the resale market.
With older resale units also booming more accessible to buyers, will this possibly dilute the buyers market?
These new CPF rules may encourage older buyers to purchase older resale flats but may deter younger buyers from purchasing flats whose lease they may outlive. For those who need more space, these older and often roomier units could be a good alternative, especially as the family size expands.
In May, for example, the resale volume of 4-room flats and 5-room flats aged 40 years or more grew 53.5% and 54.5% respectively compared to last year.
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