Madam Chai received several offers when she listed her three-room Bukit Merah Housing Board flat for sale in January last year, after her mother died.

The flat had 54 years left on its 99-year lease and the administrative clerk was asking for $340,000 - about what three-room flats in the area were commanding then.

But two months later, the offers started drying up. Madam Chai, 52, said buyers told her they were having second thoughts about buying her 45-year-old flat.

The buyers were reacting to National Development Minister Lawrence Wong's remarks about people buying old HDB flats in the hope that they will be chosen for the Selective En bloc Redevelopment Scheme (Sers).

Under the scheme, the state buys back these flats at the market rate and offers residents new units at another location at discounted prices.

Mr Wong had cautioned in March last year that not all old HDB flats will be eligible for Sers and those not selected will eventually be returned to the state when the 99-year lease matures.

His remarks came as a 30-year-old flat in Bishan sold for $1.09 million earlier that month. A 33-year-old flat in Potong Pasir fetched $925,000 a month before that.

In general, the value of most older HDB flats starts to depreciate more steeply after the 40-year mark.

Property agents interviewed said Mr Wong's reminder was a wake-up call for buyers. OrangeTee head of research Christine Sun said: "There was too much speculative demand for HDB flats with Sers potential and prices of older flats had run up significantly."

• Ask ST, you ask. we answer

• Q When should one sell an older HDB flat?

  A Ideally, the best time is before the flat exceeds 40 years, as depreciation tends to steepen after that.

  This is partly because restrictions on CPF usage kick in when the remaining lease is less than 60 years.

  A buyer can use his CPF money if his age plus the number of years left on the remaining lease of the property is at least 80 years , but subject to restrictions.

  No CPF money can be used if the remaining lease is less than 30 years.

  Further, when the remaining lease is short, say, less than 30 years, it may be hard to get a loan because the loan tenure will be shortened. This means owners may face difficulty selling the property since potential buyers may not be able to secure a loan, according to OrangeTee.

  Q What factors should one consider when selling an older HDB flat?

  A When selling a flat that is more than 40 years of age, you have to look at its location and valuation, as well as whether it is near an MRT station, to determine a realistic asking price. For instance, who are your competitors? Are there a lot of new flats in the area?

  Q What are the advantages of buying an older flat?

  A Affordability is a key advantage. There are people who will buy older flats if their size and location are good, or if they have panoramic views.

  Q What are the advantages of a Build-To-Order flat?

  A Apart from a fresh lease, some BTO flats are well-located in areas like Queenstown. But these flats are generally smaller than older resale flats.

  INFORMATION FROM ERA REALTY, PROPNEX AND ORANGETEE

About 70,000 flats, or 7 per cent of the total stock of around one million, are over 40 years old.

By 2030, more than 400,000 HDB flats will be left with a remaining lease of 59 years or less, property analyst Ku Swee Yong said.

Property agents said buyers are becoming sensitive to the ageing lease issue. After finding out that a flat has fewer than 50 years left on the lease, some might not even view the unit.

Concerns over ageing leases can be seen in the widening gap between average resale prices of older flats and units under 40 years old. The Sunday Times looked at resale price data analysed by OrangeTee of HDB flats in Queenstown, Toa Payoh and Ang Mo Kio, three mature estates with a significant number of flats above 40 years of age.

The price gap is more pronounced in Queenstown and Toa Payoh, compared with Ang Mo Kio.

For four-room flats in Toa Payoh, the price gap can be as high as 65 per cent, according to OrangeTee.

In Queenstown, the average resale price of older three-room flats was 46 per cent lower than that of newer flats last year. The gap was 22 per cent in the previous year.

The gap widened on two fronts - the prices of older flats dipped more steeply and prices of newer flats rose at a higher rate.

OrangeTee's analysis showed a 3.5 per cent drop in prices of older three-room flats in Queenstown last year. In 2016, the dip was 0.6 per cent. Ms Sun said: "Three-room flats tend to be more affected because young people who tend to buy such units for Sers potential are now staying away."

The supply of new Build-To-Order flats that come with a shorter waiting time, and the introduction of the Re-offer of Balance Flats have also affected the prices of older flats, analysts say. Meanwhile, the average price of newer three-room flats in Queenstown jumped 16 per cent last year, compared with an 11 per cent rise in 2016.

Madam Chai, who declined to give her full name, said she lowered her asking price to $320,000, but there were no takers. She finally sold her flat in February this year for $288,000 - $52,000 less than her initial asking price.

Even the bigger, older flats in a mature estate like Queenstown no longer command a premium, compared with the newer flats.

In 2016, older five-room flats in Queenstown boasted a higher average resale price - $858,750 - compared with $829,918 for the newer five-room flats.

But last year, the prices of older flats slid 11 per cent to $764,913 while those of newer flats went up 4.2 per cent to $864,784, according to OrangeTee's data.

But it is not all bad news for older resale flats. PropNex Realty chief executive Ismail Gafoor said buyers also consider factors such as location, the flat's physical attributes and amenities. Some are drawn to older, bigger flats as they are generally more spacious, he added.

ERA Realty Network key executive officer Eugene Lim said some buyers will overlook the ageing leases if the flats are attractive enough. "Some sea-facing flats in Marine Terrace have only 55 years left on their lease. But buyers are willing to shell out almost $800,000 for a five-room flat there because of the panoramic view."

Property agents also point to the growing pool of cash-rich private property owners dislodged by recent collective sales who may downgrade to larger, older HDB flats in choice locations, as they see such flats as cheaper replacements.