All HDB flats built in Singapore have a 99-year or shorter leasehold. The 99-year lease serves HDB owners and their children, while ensuring that land can be recycled to serve future generations.
However, there has been much public debate over the value of HDB flats as retirement or depreciating assets [Examples: 1, 2, 3].
Photo by Nguyen Thu Hoai on Unsplash
Does the remaining lease period of HDB flats really have a strong influence on their resale prices?
In the following visualisations (grouped scatter plots), I explore the relationship between remaining flat leases and median resale flat prices, in mature and non-mature towns. I am also interested how different flat types (coloured clusters) influence this relationship.
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Resale prices are positively correlated with the remaining lease. The lower the remaining lease of the flat, the lower the resale price.
Regardless of housing type, the resale value of flats in mature town appears to decline more sharply over time than a flat in non-mature towns, which means a HDB flat in a mature town is less likely to hold its value over time.
Prices of resale executive flats appear to less influenced by remaining lease than other housing types.
If you are a resale buyer, besides ensuring that the HDB flat can last you for as long as needed, you should also understand the value of the flat that can be monetised for your retirement needs.
If you are a resale seller, you should consider that besides your flat characteristics (e.g., storey, amenities, etc), its remaining lease can also influence resale prices. The Government has introduced several ways you may monetise your flat for retirement.