Should You Sell Your HDB flat in 2023?

2023 bodes a fresh new start for all, and this too is reflected in many exciting property trends. The industry as a whole is anticipating:

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…

If you are a homeowner or property investor who put a hold on your plans in the past, now is the time to plan ahead and decide if there’s an opportunity to make a change!

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?

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.

Worried? Before you make a rash decision based on hearsay, let’s look at some numbers to help you decide:

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

Let’s look at how these different groups perform during the past 10 yeas trend

The growth rate for Bukit Merah HDB flats from 4 to 10 year-old

What you need to know – 2.63% 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 – 2.38% growth per annum average. (This is below CPF accrued interest rate)

The growth rate for Bukit Merah HDB flats from 21 to 30 year-old

What you need to know – 3.64% growth per annum average. (This is above CPF accrued interest rate)

The growth rate for Bukit Merah HDB flats 31 to 40 year-old

What you need to know – 0.86% 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 2.63% per year.
In contrast, for flats that is sold after 30 years old, the median price show appreciation of 0.86%, way below CPF accrued interest of 2.5% per year.

Question! Why is appreciation below CPF accrued interest important to you?

The reason is because HDB Negative sales happen when the selling price of a flat is lesser than the outstanding loan and CPF with accrued interest combined.

Read more about CPF accrued interest.

Conclusion

Prices do depreciate as the flat ages – but not immediately after MOP – so there is definitely enough time for you to do your necessary research and to prepare for a 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.

So, don’t let yourself make this mistake!

Upgrading Plans: Bigger HDB Resale or Private Property?

a) Upgrading for more space

Are you working from home a lot more since the new normal and need more space to avoid distractions while at work? Or have you since welcomed a new addition to the family?

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

Looking to upgrade for investment and capital appreciation?

Let’s take a look at how different categories have been performing

Comparing the 5-year price trends different between HDB, EC, Private (non-landed) and landed:

HDB overall performs the lowest compared to the rest.

2023 may be a good year to consider upgrading or property wealth planning

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 your livelihood has been affected, and you are looking for ways to reduce your financial commitment or even unlocking potential proceeds from your home, downsizing can be a possible option for you.

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)

We hope this article helped to shed some light on possible opportunities and options for you if you find yourself in any of the above 3 situations!

Bonus for our readers

If you’re still unsure about whether to sell your HDB in 2023, don’t hesitate to reach out to a trusted realtor for advice.

We can help guide you through the process and provide valuable insights to help you make an informed decision.

So why not take the first step today and schedule a consultation? Your future self will thank you.

Taking the first step to schedule a consultation with us is easy!

All you need to do is click on the “Schedule” button.

We’ll take care of the rest, and in just 30 minutes of your time, we can help turn your questions into a clear understanding of the options available to you.