Do you own an aging HDB flat? Rejoice! We have good news for you. A study found that aged Housing and Development Board (HDB) flats of more than 30 years depreciate slower than private non-landed housing.
This disparity in depreciation was most apparent after 10 years when comparing the three housing types, namely the 99-year leasehold non-landed residential properties, the freehold non-landed residential properties, and HDB flats.
According to the study, various factors tend to affect the depreciation rates, such as building age, land size and term, thus resulting in an adjustment in price changes. Here, the study accounted for factors beyond age, from housing type and size, to the amount of housing units in the area, as well as the distance to landmarks like the Central Business District and the nearest MRT station.
Declining depreciation rates
Tapping on data retrieved from the Urban Redevelopment Authority (URA) and HDB, the study was carried out by evaluating the depreciation rates of resale houses from 1997 to 2017. The twenty-year long study reflected its historical resale transaction of both flat types against the depreciation rates of resale flats.
The study revealed that prices for all property types decreased with age, along with similar depreciation rates for the first 10 years, although HDB flats were depreciating slightly 1% faster. But in contrast to HDB flats and private leasehold properties, with both having a similar depreciation rate over 20 years, private freehold properties tend to depreciate less after the 10-year mark.
The difference is most apparent after 21 years, when HDB flats tend to flatten out at a depreciation rate of around 3%, as compared to more than a staggering 10% for private properties. According to the study, this alarming fall could be attributed to declining leasehold private residential property prices with a depreciation rate of more than 30% at the same age.
Old HDB flats depreciate slower than private properties in the long term
In the long term, prices of HDB flats aged 30 years and above maintained at a relatively moderate rate, in contrast to aging private properties beyond 30 years old. Due to the overall lack of maintenance of private properties and its surroundings, private housing will not age as gracefully compared to HDB flats, which benefits from upgrading initiatives including the Singapore government’s and Home Improvement Programme.
Also, besides getting to enjoy upgrading efforts and redevelopment schemes that slow down the falling prices of old HDB flats, first-timers are given subsidy grants of up to $50,000 when purchasing resale flats, which tend to reduce the depreciation rate in the long term.
But seems like the issue is here to stay for leasehold private property owners, as they resolve ongoing lease decaying effects as well as severe ageing, which can accelerate the economic obsoleteness of old private buildings.
Do you still need help in selling your old HDB flat? Seize this opportunity and jump on the Ohmyhome trusted agent service now! We are here to help with our HDB Resale Agent Services if you need more assistance with your timeline and financial planning.
You may call us at 6886 9009 to secure an appointment today.