There is still value in older HDB flats: Lawrence Wong

National Development Minister Lawrence Wong pledged that the HDB will do more, including providing more information on available flats in the market and helping people make more informed decisions. PHOTO: ST FILE

Owners of older HDB flats today have become "overly anxious" about how much their flats can fetch in the resale market, National Development Minister Lawrence Wong noted in Parliament yesterday.

This is a reversal of the situation some time back when people were speculating in such flats, hoping to benefit from the Selective En bloc Redevelopment Scheme, he said.

But Mr Wong does not share the current sentiments, saying the older flats still have value that can be unlocked for retirement.

Giving transaction data of the past year, he said an older four-room flat with a lease of less than 60 years would sell for around $300,000, and a five-room, for around $400,000 in non-mature estates.

In more popular locations, prices are more than double those: above $600,000 for four-room and over $800,000 for five-room flats.

The length of the lease is just one factor as location, storey height and the condition of the flat are also relevant, he said.

He also said the sales proceeds would be more than enough to buy a smaller flat, say, a two-room flexi flat with a 40-year lease that costs around $100,000, while a three-room resale flat is around $250,000 depending on location.

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Amid calls for automatic lease extensions for older public flats, National Development Minister Lawrence Wong said that such policy measures will involve serious trade-offs and ramifications.

For those who want to stay put, there are programmes such as the Lease Buyback Scheme, in which home owners can sell part of the remaining lease to the Housing Board. They can also rent out a bedroom.

The monetisation schemes are working, he said, adding: "We will continue to review and enhance the schemes, and help our elderly unlock the value of their flats for retirement."

The issue of the value of older flats was raised this week in Parliament by several MPs, including Non-Constituency MP Leon Perera of the Workers' Party (WP).

Mr Wong said that he looked forward to the opposition party's suggestions on the matter, which Mr Perera said the WP is studying "very seriously".

He also called on all parties and Singaporeans to give their views and feedback to the Government, saying that "it's a matter that all Singaporeans care about".

Mr Wong noted that HDB leases are for 99 years: "That is a long time - it covers two generations."

Meanwhile, the Government is looking into the issue, he said. "Our duty is not just to the current generation who already own homes, but also to the future generations - those not yet voting and those not yet born, whose lives and future depend on us making the right decision on their behalf.

"At the end of the day, we want to ensure every generation will be able to have an affordable and quality home in Singapore."

For now, what's important, he said, is that people do not speculate or spread information that can impact the market.

He referred to recent online speculation that the Government would stop the use of Central Provident Fund (CPF) savings entirely for the purchase of HDB flats.

This stemmed from a Straits Times report last week on an idea from Singapore University of Social Sciences labour economist Walter Theseira.

He had suggested a redesign of the CPF so that people no longer need to pay for housing out of CPF, by cutting contribution rates to focus on retirement and health.

As the values of homes may dwindle as they age, this would mean less retirement assets for people, Dr Theseira had said.

Some people had taken the article, which initially did not fully reflect his views, to mean that the Government intends to stop CPF savings from being used to buy HDB flats.

Yesterday, Mr Wong said: "Let me be very clear about this. We are not stopping the use of CPF for HDB flat purchase. Even for older flats, CPF can still be used but under certain conditions to safeguard home buyers' retirement adequacy."

Restrictions on the use of CPF saving kick in when the remaining lease is less than 60 years.

Mr Wong reiterated that the Government wants to make the resale market work better for potential buyers and sellers, saying that the HDB resale portal has simplified and sped up the resale transaction process.

He pledged that the HDB will do more, including providing more information on available flats in the market and helping people make more informed decisions.

Mr Wong said the Government is also watching the private housing market, and that it cannot control or fix prices.

"We recognise that there may be over-borrowing in a very low interest rate environment, and that sharp price changes that run ahead of fundamentals can be destabilising to the broader economy."

He added that the Government will "make use of various policy levers to ensure a stable and sustainable property market".

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A version of this article appeared in the print edition of The Straits Times on May 18, 2018, with the headline There is still value in older HDB flats: Lawrence Wong. Subscribe