Demand for older HDB flats grows after CPF rules eased
Since May, buyers have been able to use more CPF savings, get bigger loans for ageing flats
The demand for ageing Housing Board flats is on the rise, two months after Central Provident Fund (CPF) rules were eased to expand the pool of people who can buy them.
A total of 1,783 flats older than 30 years changed hands in May and June, a rise from 1,507 in the same period last year.
This works out to a sharp increase of 18.3 per cent over the 4.6 per cent hike for such older flats when comparing the combined sales of March and April last year against this year, before CPF rules were relaxed.
Ms Christine Sun, head of research at real estate agency OrangeTee & Tie, which gave the data in its quarterly report, said yesterday the second quarter usually sees more sales.
But the fact that resale transactions have also increased - by 5.6 per cent year-on-year - shows that "apart from a seasonal effect, the recent CPF changes probably was a major catalyst that spurred buying demand last quarter".
Since May, buyers have been able to use more of their CPF savings as well as get bigger HDB loans for ageing flats, as long as the property's remaining lease covers the youngest buyer until the age of 95.
The new rules will not permit people to use their CPF funds or get HDB loans to buy flats with 20 years or less left on the lease.
This was lowered from 30 years.
When the new rules were announced, analysts predicted a bigger pool of buyers can use CPF to buy older flats, especially older buyers. But they also said it may deter younger buyers from buying flats with leases they may outlive.
HDB flats have a 99-year lease.
Last August, the Government announced the Voluntary Early Redevelopment Scheme, which gives owners of flats aged 70 years and older a chance to sell their homes to the Government. This will not kick in for several decades, however.
But the uptick in sales after the rule change in May indicate that buyer confidence in older flats has improved.
The policy change also appears to have benefited owners of bigger and older flats, said OrangeTee & Tie.
Resale volume of four-room flats that are older than 40 years rose 53.5 per cent for May and June compared with the same period last year.
With five-room flats, the jump was 54.5 per cent.
On the other hand, sales of similar-sized but younger flats - between 10 and 30 years old - dipped by 4.4 per cent for four-room flats and 15 per cent for five-room flats.
But sales of flats under 10 years old soared during the same period - a surge Ms Sun attributed to a swell in the supply of flats reaching their five-year minimum occupation period, after which they can be sold.
Mature estates such as Bukit Batok, Geylang and Bedok saw the highest year-on-year rise in the resale of older flats, said the company. - ADDITIONAL REPORTING BY JEANELL KIEW