HDB time bomb: Should lessees wait for it to explode?

Retiring Singaporeans who bought into PAP’s asset enhancement (AE) programme – now turned out to be a scam – should seriously consider selling their HDB flats if they are approaching 40 years old.

The HDB time bomb has already started ticking after MND Minister Wong reminded HDB lessees that the value of HDB flats will be kosong at the end of the 99-year lease.
1hdb3aAfter Wong’s comments, HDB lessee Madam Chai could only managed to sell her unit at $52,000 lower than her initial asking price of $340,000 because potential buyers “were having second thoughts about buying her flat with only 54 years of lease left”. (TOC)

ST has in fact confirmed the HDB time bomb has been ticking away for some time (table below). The difference in prices of flats older than 40 years vs below 40 years: 3-room up to 46%, 4-room up to 61% and 5-room up to 47%. (ST)
1hdb3Despite the reality – prices of older HDB flats have been falling – many HDB lessees continue to delude themselves and refuse to believe PAP had tricked them.

Since 1995, about 4% of HDB flats have been identified for SERS.  Although many HDB lessees continue to hope for a SERS windfall, history will not repeat itself: there are severe infrastructure constraints.

PAP really has no choice but to break its AE promise and screw older HDB lessees.  If prices of older flats remain elevated – additional billions trapped in property – this will only lead to an unmanageable crash in future.

To have an idea of deep PAP has dug HDB lessees’ graves, one only has to look at the number of flats turning 40 every year.

This year, almost 30,000 flats will turn 40. The number of flats turning 40 averages 22,000 annually, increasing to almost 50,000 between 2023 and 2026. (data.gov.sg)1hdb2a

Without any change in legislations, the HDB time bomb will likely explode no later than 2023.

HDB lessees with shorter leases retiring soon should accept the fact that they have been scammed by PAP.  If possible, bite the AE bullet now and don’t wait for the stampede to start.

 

 

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