For the young adults (or heaven forbid, adults that seem have lived their entire life under a rock) that may not know how your HDB flat work in Singapore, here’s a message to wake to up – HDB flat are not owned by you, they are a lease and will have to be returned back eventually, in some form or another, sooner or later. For many of us staying in Singapore, that “sooner” situation of a hot potato will land on our hands before we expire. Here’s an article for you to read up: HERE
Most people would like to think that they are proud flat owners, but with all due respect you are in need of a serious wake-up call. Perhaps many of you have known about this when you signed the 99 year-lease and are just struggling to come to terms with it by rejecting the unpleasant reality. But all you’re doing is just simply deluding yourself, like what our older generations did when they signed their leases. The only issue now is that with the lease period ticking away, people are starting to realize that their HDB flats are not the perfect investments that they once thought, and are more like “depreciating assets”, with its value dropping every quarter.
In fact most of you reading this either knows this is actually happening, or has already made the smart move of selling your HDB flat 5 years ago.
But if you actually thinking about it, “buying” (more like leasing) a HDB flat, expecting it to be resold 30 to 40 years later at a profit is simply unrealistic expectation to speak off. As Eugene Lim, an ERA Realty Key Executive officers says, “Owners of leasehold properties need to realise that the value of their properties is indeed the value of the remaining lease. When the remaining lease is depleting, it is not realistic to expect the prices to remain high.” The price decline of any item as time passes is simply inevitable.
If that’s the case, why not just buy a condo right? If you think about it, most condos are either freehold or have a 99 or 999 year lease in Singapore which means they’ll not depreciate as badly as HDB flats, are easier to rent out, and nowadays most HDB flats are just slightly less expensive than condos anyway, right?
Well, no. For those who’ve been watching the news and have seen the Budget 2018, you’ll have heard about the increase of stamp duty from 3 to 4 percent for any property worth more than S$1 million. For those of you who’ve been researching condos to live in, you’ll understand that this will most likely apply to 99% of the condos in Singapore. Here’s an article to check out: HERE
While a 1 percent increase may not seem like much, 1 percent on just S$1 million alone would mean an additional cost of S$10,000 which safely assume is way more than most people’s monthly (or 3 months’ worth of) salary. You know, rather than buying any property in SG, maybe we can start considering other places of venues around that is so much more effective.