I asked myself this question probably a billion times in my sleep – Should I dive in and buy a resale HDB unit?
I have no definitive answer here but I can provide you with my opinions.
As of the date of this writing, the price of
a any HDB flat is at its highest in history. When I was hunting a resale unit myself back in July 2012, everybody was telling me “it is too expensive to buy now”, or “the COV is crazy if you buy now”.
Now, looking back, I got it cheap when I bought the unit in November 2012. The prices are still climbing.
Some food for thoughts:
- The Government is looking at lowering the age limit for single to purchase resale flats. Currently it is age 35 and above. They are probably looking to lower it to 33? This will open the flood gates to a lot of resale buyers.
- Those influx of new HDB flats the Government pledged to built, will they affect resale prices? Well, to begin with, these new flats are not cheap to begin with. Second, by the time they are built, it will be 3 years later? And by the time they can be sold in the market, that will be like what? 3+5 years later?
- If HDB prices are to fall, a lot of people who bought it high will be finished. They cannot sell it. And when they cannot sell it you get less units into the resale market.
- Land is always limited in Singapore. We can only build upwards. The cost of building tall building can be exponential.
- A lot of people sell their HDB because they want to upgrade to private condos, and provided they can get a good resale value of their existing HDB unit. However, if the HDB prices falls, these people will not upgrade. And when they don’t upgrade they don’t sell. And when they don’t sell you get lesser resale units supply. And with a lower supply of resale units, coupled with an influx of demand from a lower age limit for singles, you get even higher prices.
The only thing, that I believe, will fluctuate in the short term is the COV. A good signal to buy is when COV falls. Current COV is coming down a little since the high in 2011.
Update: 4 June 2013. As of my last conversation with my property agent, he has indicated that overall the valuation of resale HDB continues to edge up, while COV has fallen a bit. Remember this, everything which has a price tag on it will see their price tags increase due to inflationary pressure. If your property do not increase in tandem with the rate inflation is growing, then you actually have a depreciating asset in real value, period.
Update: 27 Aug 2013. New 3-year waiting period for permanent residents to buy resale flats. This new ruling will have multiple consequences. On the surface, it may seems that this will drive the demand of resale flats down. However, we need to see how many new PRs actually buys resale HDB flats. Since ICA has made it difficult for other nationals to obtain Singaporean PR status, those who have new PR status will be those who are highly educated and have higher pay scale. Will these PRs buy resale HDB flats???
On the other hand, those PRs who want but are not prohibited from buying will have to rent. This will drive rental up.
HDB maintains a COV index of all estates since 2007.
Hopes you find the above information helpful.