Should I Sell My HDB And Buy Condo? – Upgrading Made Simple

Should I Sell My HDB And Buy Condo?

Recently I have been receiving many Facebook enquiries on whether “Should I Sell My HDB and Buy Condo”. Hence i did a Facebook Live to share the importance of why HDB Upgrading is extremely important. In this 1 hour Facebook Live Video, i will be sharing an important Timeline Concept in which you are able to understand why you should not neglect about this critical topic

If you are someone who is not bothered about property upgrading, or too lazy to find out the importance of it, then this video is definitely beneficial for you. You might realised some important meaning to this at the end

The following are 3 different Life Scenarios about a couple who owned a HDB flat and the possible tough decisions that they would face at different points of their life

In Singapore today, owning private property has evolved from being more than just a symbol of financial stability. It offers a higher quality of living, convenience, and many amenities that are otherwise inaccessible, troublesome or at an additional cost. To some property is more than just a home, it also doubles up as an investment asset. Which is why this article is all about the importance of upgrading to private property, and particularly the right time to upgrade to one.

Let’s take a look at James and Jamie, a young couple both aged 35 with a 5-year-old kid, and living in a built to order (BTO) 4-room HDB flat they acquired six years ago. They are average income earners with a gross combined income of 9k a month and are living happily and contentedly with their current lifestyle.

Scenario 1:

All is great, but fast forward 30 years, where there are both 65, and their kid is now 35 years old and has probably already moved out of the house. At this point, they will most probably think of downgrading as their children have already moved out, and they do not need to upkeep such a big house. They will also think of cashing back on the value of the property that they have used their CPF monies for all this time for retirement.

However, by this point, James and Jamie’s 62 years old HDB will have already depreciated due to the balance on the HDB lease period. Some may argue otherwise, but the recent reiterations on the fact that HDB property remains a lease from the government have determined that HDB property is indeed after all just a long-term lease which will eventually expire.

Also based on my experience as an agent, it is also much tougher to market an older property due to the lower demand. At age 65, It will also be even harder to secure a loan from the bank, and hence newer properties will be off limits to James and Jamie. Bearing these facts in mind, the couple will have no choice but to sell their property at a lower price than they initially purchased, receiving less on the cash back value on the CPF unless they downgrade to an even older property.

Scenario 2:

Let’s assume a slightly different scenario. Imagine the couple are both 50 years now, their kid is all grown up and is 20 years old. The HDB they bought previously now has a 77 years old lease. At this stage in life, James and Jamie would not even consider upgrading because they have to worry about financing their child’s university. If they do decide to go for an upgrade, the maximum tenure that the bank will allow them is for 15 years, which may impose a huge strain on their finances. The couple probably will not downgrade at this stage as their child is still staying with them.

Scenario 3:

In scenario 3, the situation is right now, where James and Jamie have paid up a good amount of their current housing loan, and are young and still have far in their career to go. They still have a larger risk appetite as they do not have much to worry about.

They chose to immediately realise the profit on purchasing a BTO flat at a lower price, cash out some of their CPF monies indirectly and decided to go for an upgrade to private property. Selling their HDB entirely before upgrading, they do not have to pay for any ABSD which is usually 12% for a second property, hence if a property is worth a million, the ABSD would be 120k, a good capital profit which the couple could use for recreation.

Now fast forward 30 years again under this scenario. James and Jamie are now 65, and they decided to downgrade. This time, they will lose some value on the property leasehold being 69 years old, but they stand to a higher chance at a capital gain. Private property prices appreciate faster and higher than HDBs, and the couple stands a high chance in an En Bloc on their property at a higher market value due to it being a private real estate.

Furthermore, the couple would have gained the benefit of living in a private property all these years! They will come across more prestigious, benefit from all the amenities and facilities of the private property, a more favourable location along busy transport routes.

Lessons Learnt

Now consider these three scenarios, which scenario would you rather take? For some, a good nest egg for their retirement and living in prestige and convenience is important, to others, a home is just a home, and they would rather focus on other aspects in their life.

For those who actually are innately interested in upgrading, many often get so caught up with their lives that they fail to consider these important factors when it comes to their homes. They hence may miss out on the best moment in their life to upgrade, a golden opportunity for them to live a life of comfort and profit.

My reason for sharing this today with you, is so you can benefit and use this knowledge while you are still young. You may not want to miss out on an opportunity by starting out this planning and course of action that is only available while you are young, which is why I emphasise so much on understand the concept of a 30-year road planning.

And by now some of you may query, what if my private property doesn’t appreciate like in scenario 3? What if something happens along the way and I am unable to service the debt for private property? Is this a good time to buy property since private property PSFs are rising?

That is why I will recommend you to seek for professional assistance in understanding your financial status (Know how you can sell your HDB and buy 2 condo), the paths you can take currently, and how to spot a property in the market that will appreciate (I have covered this topic: on which condo is good for investment)

Keen to explore further through an experienced HDB upgrading strategist? Do fill up the form or drop me a PM or Whatsapp me to arrange an appointment to discuss further.

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