HDB pricing does not reflect flat lease period

The report (HDB leases and what's in store for retirement as society ages; April 15) brought up a concern that high-priced resale HDB flats do not reflect the shorter lease available and that the Government will have the right to retake the expensive flat with no compensation.

Recently, I noticed an interesting class of housing available called repurchased flats, which are flats that were previously sold and subsequently returned to the HDB.

It seems that prices of these flats do not reflect the lease period.

For example, a four-room flat (91 sq m) in Ang Mo Kio Avenue 5, with a remaining lease of 52 years, was being sold for $357,200, while a similar four-room flat (93 sq m) in Ang Mo Kio Avenue 21, with its 99-year lease to begin next year, was being sold for $404,000.

I would have assumed that the price of a flat with a 52-year remaining lease would be a percentage of the price of a new one with 99-year lease - in this case, around $212,200.

Even taking into consideration the older flat's location and amenities available, the $145,000 difference between the assumed price and the actual price is considerable.

It seems that it is not only buyers who are not sensitive towards the lease issue - the HDB is not either.

Chua Bean Chong

A version of this article appeared in the print edition of The Straits Times on April 18, 2017, with the headline 'HDB pricing does not reflect flat lease period'. Print Edition | Subscribe