Buckle up folks, the worst is yet to come. More nightmares courtesy of the nincompoop government that is Pay And Pay unravelling in due time.
Now we know the bulk of Singaporeans are merely tenants making lease payments to HDB. Home owners my ass.
Straits Times reported today ('Owners worry older HDB flats a depreciating asset', 15 Apr) that owners of older HDB flats are worried about the value of their flats hitting zero as the lease of their flats comes to an end.
Some were forced to sell their flats at a much lower price especially after National Development Minister Lawrence Wong came out last year saying that not all old HDB flats would be eligible for Sers redevelopment. Those not selected would be returned to the state when their 99-year lease expired, he said.
Mdm Chai was one of those affected. She received several offers when she first listed her 3-room HDB flat at Bukit Merah in January last year, after her mum passed away. She was asking for $340,000, comparable to the market price of 3-room flats in that area at the time. But her flat had only 54 years left on its lease.
Two months later in March, Minister Wong let the cat out of the bag when he told everyone that only 4% of old flats have been identified for Sers redevelopment since 1995 and for the rest of the HDB owners, their flats will be returned back to the government at the end of their lease.
That was when troubles began for Mdm Chai. All offers started to dry up for her after Minister Wong's announcement. Buyers told Mdm Chai that they were having second thoughts about buying her flat with only 54 years of lease left.
She then lowered her asking price to $320,000 but there were still no takers. Finally, after more than a year later, she managed to get rid of her old flat two months ago in February this year, at a much reduced price of $288,000 - some $52,000 less than her initial asking price of $340,000.
In other words, based on her selling price 2 months ago, the value of 3-room flats in Bukit Merah has dropped 15% in slightly more than a year, thanks to Minister Wong's announcement.
The promise made by his predecessor, Mah Bow Tan, about "HDB flats grow in value over time" has vanished overnight. Mah, then the National Development Minister told everyone just before GE 2011, "We're proud of the asset enhancement policy. (It) has given almost all Singaporeans a home of their own... that grows in value over time."
"Upon knowing the age, sometimes they won't even proceed with viewings"
In an accompanying report, ST also highlighted another case of HDB owner trapped in buying old HDB flats.
It featured a property agent, Janet Ow, who bought her 5-room flat with her husband, also a property agent, in the old estate of Telok Blangah. They bought the flat at $580,000 some 8 years ago in 2010. Currently, their old flat has just got 56 years left on its lease.
In 2016, they started marketing their flat at $680,000 to $690,000 hoping to make at least a $100K. Bids came in at $620,000 and $630,000 but now offers have also dried up. For more than a year now, they couldn't sell their flat.
"Those who called asked about the balance of my lease first," Ms Ow said. "The flat's age has now become a main concern after National Development Minister Lawrence Wong's reminder in March last year."
"Upon knowing the age, sometimes they won't even proceed with viewings. In 2016, when we put up an ad, we would get around 10 calls. Now, we don't even get a single call for one to two weeks," she added.
"If I don't sell now and prices keep dropping, I will be making losses on my flat eventually."
Ms Ow and her husband are hoping to sell their flat quickly so that they could get a condo with a fresh lease.
"At least we know we have a long lease ahead of us and can cash out," she said. "We don't want another HDB resale flat because the ageing lease problem will crop up again."
Property agent wants government to relax CPF rules for people to buy old HDB flats
One of the factors dampening demand for older flats is due to the restrictions imposed by CPF Board. Flats with lease more than 60 years (ie, newer flats less than 40 years old), can be bought with 100% CPF savings.
But for flats less than 60 years but with at least 30 years, only a percentage of CPF savings can be used. For example, a 30-year-old intending to buy an old flat with 55 years of lease left, he can only finance up to 55% of the purchase price with his CPF savings. The rest will have to be paid in cash. And for flats with lease less than 30 years, CPF savings can't be used at all.
So, in the case of older flats whose age just crossed the 40 years barrier, CPF financing for buyers nosedived considerably from 100% to 60% or less with them needing to cough up large amount of cash of 40% or more to buy the old flats.
Ms Ow said, "Perhaps HDB could look into allowing buyers of flats with less than 60 years left on the lease to utilise their CPF fully (ie, 100%) instead of partially."
"That will help to alleviate the worry of having to pay cash for part of the purchase. This will help buyers who need to buy flats in an oder estate to be near their parents who may be there," she added.
But of course, that would also mean whoever uses 100% of his CPF savings to buy such older flats, he will run the risk of expending large sums of his CPF savings now but having not enough to retire later when he could not also monetize his flat in later years due to the near-zero value of his almost expired flat.
In any case, at the moment, Ms Ow said she feels "insecure about the future". It's not known how much was taken in by Ms Ow and her likes with regard to the "Asset Enhancement Policy" espoused by the PAP government under then PM Goh Chok Tong in the earlier years.