Despite the odds stacked against them like restrictive CPF rules which could have potentially dampened the demand for older flats in Singapore, a recent study proved otherwise. In fact, it’s the highest it’s ever been.
According to the study, Q1 2019 saw the highest percentage of transactions for old flats. These older flats made up 13.9% (or 628 flats) of the overall number of resale transactions for the quarter. This is quite a jump seeing as total old flat transactions increased from only 1.9% in Q1 2009.
The study pointed out that the rise in old flat transactions could be due to the gradually narrowing price expectation gap between buyers and sellers, as the average price of old flats decreased by 7 percent when compared to Q1 2018. The price expectation gap is the difference in expectation of buyer and sellers when it comes to flat prices.
The study also noted that while this spike in sales for old flats can be chalked up to an increase in supply as more and more flats age and/or meet their Minimum Occupation Period (MOP), there’s also the possibility that Buyers have a growing preference for smaller older flats that are more cost-friendly than the recent and more spacious 4-room flat models.
What’s more, there’s also the recently announced CPF rule change to consider. The change will now allow HDB flat buyers to withdraw more from their CPF Savings above Basic Retirement Sum from age 55 and get up to 90% HDB loan – if the remaining lease of the flat can cover the youngest buyer to the age of 95.
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