HDB pricing does not reflect flat lease period

[bargain hunter]

HDB pricing does not reflect flat lease period

PublishedApr 18, 2017, 5:00 am SGT

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'

[Khng8]

Are you expecting s reply from HDB? I doubt so.

[bargain hunter]

Are you expecting s reply from HDB? I doubt so.

i think the author is waiting for one. they'll probably reply with "Old repurchase flat price is due to open market valuation".

[Kelonguni]

No issue leh, they need the new flat owner to have a profit margin after TOP.

It will probably sell near 500k which equalises the lease value.

[Arcachon]

To price the HDB, they need to know what is the Market value.

They know the Market value by having a sizable private condo and EC to refer to about 30%

They also need people to live in the OCR so a discount is given.

Whereas the Mature area is given less discount.

In the 80's value of HDB are group under Urban, Sub-Urban, outer Sub-Urban and New Town.

They have since converted old New town into Mature and New New Town as Non-Mature.

So depending on the area, the balance of lease is not taken into consideration since they are using valuation and discount to sell the repossessed unit.

MND will sooner or later need to change the valuation or complete delink New unit and resale unit valuation.

Looking at the various announcement, they look like preparing for the lower Lease for the Mature area and those at the city.

Do not be too bored by the Lease Balance if you look at HDB as an investment but if you look as HDB as a consumption then you need to know what are you consuming.

Durian got a lot of types, so sweet, some bitter, some creamy but the end product is still shit.

You cannot complain paying too much for the Durian even the end product is shit.

[star]

The author is wrong. First amk do not have avenue 21 don't know where he pluck the number from. Yes $400k is only for new bto 4 room flat u need to ballot for one at HDB and that does not mean u sure get and u need to wait for 3 to 4 years for it to be built finished. If u want to sure get the location and don't want to wait for 3yrs then no choice u will need to buy resale. That's y u want fast and sure get pls pay abit more.
Next as u notice amk blk 307a to blk 310a were those reached 5yrs MOP and the transaction for these new flat is above $600k and not $400k. $400k is based on bto and u need balloting and highly unlikely u will get because the number of people applying for mature town r huge.

Sometime simple mind without think can be swayed by articles like this.

[bargain hunter]

i don't think the older flat being referred to is resale. the author is referring to flats which hdb has repossessed and put back on sale at that price. ie the seller is hdb, not individual sellers.

[star]

i don't think the older flat being referred to is resale. the author is referring to flats which hdb has repossessed and put back on sale at that price. ie the seller is hdb, not individual sellers.

You cannot compare new uncomplete bto and resale flat they r different in the sense u want fast and want sure get u just need to pay premium.

[star]

Even if repossessed there is only few units but demand is very high. Y sell u $400k?

[Arcachon]

You cannot compare new uncomplete bto and resale flat they r different in the sense u want fast and want sure get u just need to pay premium.

If more are willing to pay, 60 years lease should not be a problem.

Which bring us back, all type of Durian after you eat will become shit, no complain after you buy.

[ExplorerII]

Population is ageing, so are the HDB flats. Come 2040~2050 more folks will take up Lease Buyback Scheme, if resale prices are high then HDB needs to give a fair valuation. LW is asking people not to overpay for old flats, when time comes HDB need not overpay LBS as well when lease are shorter.

When these owners kick the bucket, the Lease could be less than 20 yrs, 0 value at 99yrs and land return SLA. Who is going to foot the bill for high valuation for LBS? :cower:

"Ang Mo Kio Avenue 21, with its 99-year lease to begin next year"
Think the writer meant AMK St 21 those new flats across Mayflower Sec.