After cooling measures were announced in September, buyers are becoming more apprehensive about the property market, with a general sentiment that a correction will come soon with the onset of global recession.
RISING RESALE PRICES RAISE QUESTIONS ABOUT WEALTH PRESERVATION
We need to understand that the bullish market will not last, especially for HDBs. The sky-high prices of resale HDBs have been driven by sellers, who managed to cash out handsomely when demand for immediate housing surged post-pandemic.
These premiums will be eroded gradually as the 100,000 new flats launched from 2021 to 2025 are eventually injected into the resale market within the next decade.
Wealth preservation will be a question then. Will the high price you pay today for that resale flat with a shorter lease be worth more than a newer flat with a freshly completed minimum occupation period (MOP)?
The Prime Location Public Housing (PLH) model launched in November 2021 is another reminder to the public that HDB flats – especially those located in desirable neighbourhoods – are not speculative assets.
The PLH model encourages higher owner-occupation intent by having stricter conditions such as a 10-year MOP and tighter rent conditions post-MOP. It also deters buyers from investing in prime-location flats by requiring that they pay a percentage of the resale price to HDB.
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