It was reported in the media that at a public feedback forum organized by government feedback unit REACH yesterday (21 Aug), National Development Minister Lawrence Wong now said that a HDB flat sold on a 99-year lease is an asset that will appreciate as the country prospers.
This a fundamental tenet of Singapore’s home ownership policy, he said.
“There is a high likelihood that over a period of time, if the economy does well, if incomes rise, then property values will appreciate together with the fundamentals of the economy, and your stake in the nation – your home – can also appreciate in value,” he told the audience.
The forum was organised to get people’s views about PM Lee’s National Day Rally speech he made last Sunday (19 Aug).
Conflicting messages sent out by Minister Wong
Minister Wong appears to be sending out conflicting messages to the public.
Last year in March, he cautioned home buyers not to assume that all old HDB flats will be automatically eligible for the Selective En bloc Redevelopment Scheme (SERS).
In a blog post published on 24 Mar 2017, he said that the Government will continue to maintain the strict selection criteria for blocks eligible for SERS, noting that only about 4 per cent of HDB flats have been identified for SERS since 1995.
He was then concerned about reports of HDB flats with short leases left being transacted at high prices in the resale market.
“As the leases run down, especially towards the tail-end, the flat prices will come down correspondingly,” he said. “So buyers need to do their due diligence and be realistic when buying flats with short leases. This is especially important for young couples, who have to plan for a much longer future.”
In other words, when the lease of a HDB flat expires at the 99-year mark, its value will be zero.
In the blog, he also advised first-time home-buyers to choose a resale flat with a sufficiently long lease to cover their needs. Since the average life expectancy of Singaporeans is 85 years, people could buy flats with leases that cover them until the age of 95, Mr Wong wrote.
So assuming Singapore will continue to prosper for the next 100 years. Does that mean a HDB flat a person bought now will continue to appreciate in value or hit zero when the flat’s lease reaches 99 years?