Living in a mature HDB estate? Your property may be seeing a decline in value

Strong correlation seen between transacted property price and remaining lease.
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By Khalil Realtor

Since the Lee Kuan Yew era, Singaporeans have been ingrained with the idea that our HDB flat is an asset. While you can make a profit from your HDB flat, this depends on the lease that is remaining on your property. Based on our research and analysis, we found that HDB flats in older estates with a remaining lease of fewer than 60 years saw their property values diminish. Meanwhile, those that have around 80 years of lease left were able to fetch far higher prices. This is according to data captured on HDB’s website.

On the other end of the spectrum, HDB flats that are located in newer estates did not see that much price variation. In conducting this study, we had looked into HDB transactions for 4-room flats that were recorded between January 2021 to January 2022 and then compared it with the remaining lease. The estates chosen included the mature estates of Toa Payoh and Ang Mo Kio as well as the non-mature HDB estates of Punggol and Jurong West.

Here are some quick snapshots based on our findings.
#1: Toa Payoh: Older HDB flats changed hands at lower prices 

An HDB flat at Block 95 Toa Payoh Lor 4. Photo: Khalil Realtor.

When it comes to buying an HDB flat, most Singaporeans will prefer to buy in a mature estate such as in Toa Payoh or Ang Mo Kio. However, if you have a flat that with a remaining lease of fewer than 54 years this may have an impact on your resale value. According to data captured on HDB’s website, there were 302 transactions for 4-room HDB flats in Toa Payoh during this period.

The data showed a strong correlation between the price versus the remaining lease. For instance, older HDB flats (71) with 54 years or less of the remaining lease were transacted at an average price of S$395,787. Meanwhile, newer HDB flats (114) with 80 to 95 years of the remaining lease were transacted at an average price of S$725,032. This represents a price difference of 83.2 per cent.

#2: Ang Mo Kio: Newer HDB flats fetched higher selling prices

Ang Mo Kio HDB estate is served by a dedicated MRT station. Photo: Khalil Realtor.

Ang Mo Kio is also another favourite estate among buyers explaining why Built-To-Order (BTO) launches have always been oversubscribed. Like Toa Payoh, Ang Mo Kio also witnessed a strong correlation between price versus the remaining lease. According to data captured on HDB’s website, there were 297 transactions for 4-room HDB flats in the estate during this period. Newer HDB flats (57) with 80 to 95 years of the remaining lease were transacted at an average price of S$683,937.

On the other hand, older HDB flats (216) with 59 years or less of the remaining lease were transacted at an average price of S$438,143. This represents a price difference of 56.1 per cent.
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#3: Punggol: A non-mature estate where capital values experience fewer fluctuations

An HDB estate in Punggol: Photo: Khalil Realtor.

Punggol is a non-mature estate with a relatively young population. While it may seem far-flung, Punggol is among the top ten estates in Singapore where HDB resale homes have changed hands.

According to data captured on HDB’s website, there were 1,486  transactions for 4-room HDB flats in the estate during this period. The remaining lease in Punggol ranges from 79 to 95 years.

As such, there is not much price variation as seen in the case of Toa Payoh and Ang Mo Kio. For example, HDB flats (232) with between 82 to 89 years of the remaining lease were transacted at an average price of S$400,862. Meanwhile, newer HDB flats (1,254) with 90 years or more of the remaining lease were transacted at an average price of S$503,186. This represents a price difference of 25.5 per cent.
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This suggests that newer estates like Punggol may be ideal if you want to protect the capital values of your property.
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#4 Jurong West: A semi-mature estate with a price gap similar to Punggol

An HDB estate in Jurong West. Photo: Khalil Realtor.

Jurong West is a semi-mature area and as such the remaining lease here is between 47 and 95 years. According to data captured on HDB’s website, there were 571 transactions for 4-room HDB flats in the estate during this period. Similar to Punggol, there is not much price variation as seen in the case of Toa Payoh and Ang Mo Kio.
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For example, HDB flats (179) with less than 70 years of the remaining lease were transacted at an average price of S$395,934. Meanwhile, newer HDB flats (100) with 90 years or more of the remaining lease were transacted at an average price of S$535,366. This represents a price difference of 35.2 per cent.
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#5 Price gap is widest in Toa Payoh

Toa Payoh HDB estate experienced the widest price gap. Photo: Khalil Realtor.

Toa Payoh makes an interesting case study. We decided to zoom into this estate as property agents have long complained that they have had a hard time selling older HDB flats in the area. Our analysis seems to concur with our findings on the ground when speaking to agents as they appear to diminish in value nearing the end of the lease. In the case of Toa Payoh, the price gap is a whopping 83.2 per cent compared to Ang Mo Kio, Jurong West , and Punggol at 56.1 per cent, 35.2 per cent and 25.5 per cent respectively.

Summary: Capital values appear to be better protected in non-mature estates

HDB flats in Punggol are among the highest in demand estates in Singapore. Photo: Khalil Realtor.

While HDB is an asset, older HDB flats in mature estates will likely see their value decline as the data showed. As such, prospective homebuyers might want to think twice before purchasing such flats. On the other hand, the data suggests that the capital values of your HDB flat are better protected in non-mature estates like Punggol and Jurong West. As such, you may want to consider selling your property after five years once you have fulfilled your MOP and then upgrade to private property or downsize according to your lifestyle needs.
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Having said that, I would like to stress that your HDB flats are for long-term occupation and not for you to make a quick profit. In closing, housing is a delicate issue. The government will need to address their diminishing value sensitively especially to the older generation who are currently living in mature estates.