Tuesday, 24 December 2019

In 2020, we know HDBs are a depreciating asset. Now what? - by 99.co


Image by inmacus from Pixabay 

By the time you’ve read this, everyone from the government to property agents would have told you that HDBs are not assets meant to appreciate or be traded like bitcoin. Instead, they will remain affordable housing for the masses – and they will stay that way for the forseeable future.
With this in mind, as a prospective HDB buyer, here are few ‘common sense‘ things you need to do:

Temper your expectations when you sell your HDB…(or just don’t sell it)

Give it up. The days of profiting massively from your HDB flat as dead as MySpace and Google Glasses. 2013 was a death knell for the HDB resale market, and it hasn’t recovered ever since. With reduced appreciation, and accrued interest assuming you used CPF to pay for your flat, consider yourself lucky if you even make money from your flat. This also means the longer you hold on to your HDB, the more accrued interest you’ll rack up, the less money you’ll make.
Therefore, if you do want to upgrade from HDB, you should do it ASAP. Preferably at MOP.  That said, if you intend to live in your HDB forever, the capital appreciation/accrued interest doesn’t really matter.




Buy the most affordable HDB for your needs 

Singaporeans would be really unhappy if public house costs waaaay too much, amirite? If the government intends to keep HDB prices low for the next 10, 20 or even 40 years, then it makes sense to purchase the most affordable one – even if the lease is running out. Why? Here’s the reasoning:
  • HDB flats are a depreciating assets
  • HDB flats are starting to be affordable and will remain affordable for the foreseable future
  •  Therefore, it makes sense to lock up as little money as possible in something that has stagnated growth.
  • Even if you bought an old flat and the lease did run out, the fact that HDB flats would still need to be affordable to future 20-something 30-something years means you should be able to afford them if you invested your money dillgently.

Invest the money elsewhere

If you bought the most afforadable flat for your needs, that would leave you with significant liquid cash/CPF to invest. Now, you save up and eventually invest in a condo locally, or invest in the stock market. You could start a business. Or buy gold. But the whole idea here is to invest in something that has the potential to outperform the stagnating price of a HDB flat.  




Don’t buy million dollar HDB flats unless you really really really know what you’re doing

Come on guys. If you’re going to blow a million bucks on property, I think at least you could do is to make sure the property has a decent shot at appreciation. And by this, I’m saying you should seriously consider buy a condo. Why?
Because while HDBs need to be affordable moving forward, condos don’t share that burden.
Source: 99.co (24 Dec 2019)