The owners of some of the most popular HDB flats in Singapore have raised questions regarding the “age limit” for first-time resale HDB flat buyers. The question is whether the age limit should be lowered to allow more people into the market who would otherwise be unable to afford a home in HDB flat.
The reasoning behind the argument is that the home buyers must be able to provide at least an 80% guarantee that the new owners can pay back the bank or the flats’ owner within a certain period of time. In other words, it’s about security. At present, the government has put a minimum age on new flats on the HDB that would entitle them to higher pricing than others, including HDB blocks with a higher number of properties.
Some investors would argue that the requirement for security is due to the age of the HDB flats. This is something to remember that these HDB blocks were originally built in different stages – some of them to older ages. Therefore, this would not mean that it is impossible to renovate them.
However, some of the listed flats on the HDB aren’t actually 100 years old – they are considerably more recent, and as such, can be refurbished without the requirement for security. Some of these would certainly have their costs covered by the Government.
Therefore, those that are unhappy with the age limit on first-time resale HDB flat buyers need to question why there is a requirement for security when there are older flats that could be renovated? For their part, the developers and the bank that own the flats have indicated that they will continue to price higher than HDB blocks with more recent history.
The other main reason that some say could affect the price of a first-time HDB flat buyer is the current influx of young professionals who are looking for their first home. They do not want to be forced to stay in HDB flats that are not their choice, which leads to the demand for more spacious flats in high-value estates. If the age limit were to be lifted, these young professionals may have to find another place to live because they would be priced out of some of the more desirable estates.
Another potential issue is the strength of the market. At present, there is a shortage of housing in HDB flats, particularly in the coastal areas. It is believed that if the youth of today were to seek out a first-time HDB flat, prices might drop, but as more would-be homeowners, especially those with mortgages, try to get themselves into flats that are beyond their means, then prices may go up, causing the effect of oversupply, a possibility many thinks is an inevitable problem.
In the meantime, there are many available HDB flats that are sold fast, despite the age limits. These include the new developments that have not been pre-sold yet, some flats that have been pre-sold, some that have already been pre-sold, and many that have just gone through renovation.
With these risks weighing down on the sellers, there is little reason to believe that the rate of sales and prices would plummet as a result of the age limit being raised on first-time buyers. On the contrary, the banks and the developers that have not made their first-time buyers feel guilty about the age limit have had to raise the prices.
Indeed, it appears that the age limit is only a small part of the equation when it comes to getting the most out of an HDB flat. They are priced higher for two reasons – firstly, because of the first-time buyer requirement, and secondly, due to the fact that there are older HDB flats that would not be bought and sold without some premium due to their age.
There are those who argue that the government should consider lowering the age limit on HDB flats, but the problem is that these houses are already listed. in the market, and therefore, the restriction is already in place.