Unker don't live in HDB flat, never have. But the con was obvious to me years ago. Most of the gong cheebyes here don't understand it. Now a few of my friends have been coming to me with the same problem.
They have flats which are now 40 years old plus or minus a few years. Of course, they are old now and want to sell and take the money. On paper, the valuation on their flats is close to half million $. And some of them have big units. 5 room flats, in those days was quite big. Now comes the problem. When they list with the property agent, they have only low ball offers. The reason is because no banks will provide housing loan for such an old flat. HDB will also not provide financing of such an old flat even though its their own flat! So, the flat has to be bought with cash.
Of course, very few sinkies have $500K sitting in their bank account to pay cash. And its only the younger people who are even coming for the viewing. So now, they have to low ball my friends. In some cases, offering $200K below the asking price. Its not their fault, that is all the available cash they can come up with. But at the offer price from the buyer, my friends cannot sell. If they sell, then Every 4 years, they will spend almost $100K to rent not even a fancy or large place. They are estimating $2K a month for any decent rental. They calculate that if they take one of these $300K offers, in 10-12 years, this money they get for their flat will be used up renting a replacement home. Then how. If they are dead by then, no problem. If not, then big problem.
The irony is that if they had sold their flats 10-15 years earlier. they could have gotten more money for it because its still barely eligible for house loan. What the PAP say about your flat being an appreciating value is a lie. What they say about monetizing the flat is also another lie. U can't monetize your flat if its too old and no one can or wants to buy it.
So what to do? The only thing to do is to speculate on your flat. If you think the market is high, then sell it, whether u want to or not. There is no other way. If u wait to long, u ride it down the drain.
They have flats which are now 40 years old plus or minus a few years. Of course, they are old now and want to sell and take the money. On paper, the valuation on their flats is close to half million $. And some of them have big units. 5 room flats, in those days was quite big. Now comes the problem. When they list with the property agent, they have only low ball offers. The reason is because no banks will provide housing loan for such an old flat. HDB will also not provide financing of such an old flat even though its their own flat! So, the flat has to be bought with cash.
Of course, very few sinkies have $500K sitting in their bank account to pay cash. And its only the younger people who are even coming for the viewing. So now, they have to low ball my friends. In some cases, offering $200K below the asking price. Its not their fault, that is all the available cash they can come up with. But at the offer price from the buyer, my friends cannot sell. If they sell, then Every 4 years, they will spend almost $100K to rent not even a fancy or large place. They are estimating $2K a month for any decent rental. They calculate that if they take one of these $300K offers, in 10-12 years, this money they get for their flat will be used up renting a replacement home. Then how. If they are dead by then, no problem. If not, then big problem.
The irony is that if they had sold their flats 10-15 years earlier. they could have gotten more money for it because its still barely eligible for house loan. What the PAP say about your flat being an appreciating value is a lie. What they say about monetizing the flat is also another lie. U can't monetize your flat if its too old and no one can or wants to buy it.
So what to do? The only thing to do is to speculate on your flat. If you think the market is high, then sell it, whether u want to or not. There is no other way. If u wait to long, u ride it down the drain.
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