SINGAPORE – Those who buy a 50-year-old Housing Board (HDB) flat today can expect prices to continue to rise over the next 10 years, Transport Minister Khaw Boon Wan said in a dialogue with young people on Sunday (2 September).
Mr Khaw denied claims that HDB flats are not assets, only because the lease has a limited duration of 99 years. He spoke to more than 200 young people from GRC Sembawang about topics such as housing, health care and living expenses, which were raised last month during the National Day Rally speech.
"If you buy a 70-year-old flat, there is still a lot of appreciation, especially as this government is willing to continue to invest in this through Home Improvement Program (HIP) II and the Voluntary Early Redevelopment Scheme (Verse)," Mr Khaw said .
These are some of the new schemes that Prime Minister Lee Hsien Loong announced in his National Day Rally speech last month to help older flats retain their value for a longer period.
Lee had said that HIP would be extended to cover more HDB flats, and each apartment is expected to be upgraded twice during the 99-year lease under the new HIP II scheme. The second upgrade takes place when the flats are about 60 to 70 years old. Fresh gives owners of older HDB flats the chance to vote for the government to buy back their flats before their rental contracts run out.
Khaw, who was Minister of National Development from 2011 to 2015, added: "The importance of this is that we really support the value of your old flat … As long as we are in government, this is what we will do."
One of the questions asked was how the reimbursement conditions would be at Vers, because Prime Minister Lee had said that it would be less generous than that for Selective En bloc Redevelopment Scheme (Sers).
Sembawang grassroots leader Geraldine Yong, 22, asked how the appreciation of the flat would be done when it came to Verse.
Mr. Khaw pointed out that, although a flat is a valuable asset as long as the economy continues to grow, it begins to decline at some point. "When will that turning point be? Year 80? Year 70? Year 90? I do not know," he said. "There are no market statistics for that."
He also explained why flat prices are now rising at a slower pace compared to the past.
"In the generation of your parents and grandparents we were lucky because we were transforming from the third world into the first world, so our economic growth was very strong … That's why you hear your grandparents buying a flat for $ 30,000 to $ 35,000, and can now sell for around $ 400,000, so it's an asset that has been valued to a considerable extent.
"Your generation will benefit less from the same strong growth, because the economy is now growing by 2-3 percent, which is very good for a mature economy … We can expect appreciation, but not as quickly as the experienced by your parents and grandparents, "Mr Khaw said.