When is the best time to sell an HDB flat? Right after the Minimum Occupation Period (MOP) has been served, if the hordes of owners selling their flats within a year of reaching the MOP are any indication.
According to HDB data, the proportion of BTO flats sold within a year of meeting the MOP doubled between 2016 and 2020.
This trend is expected to continue thanks to strong demand for new resale flats, thanks to the fresh rounds of BTO construction delays. As construction delays endure, more are pushed to rent or look for a home on the resale market. When we think of prices, we think of HDB resale appreciation.
Homeowners might be wondering just how much money they can make on the resale market if they sell their BTO flats right after the MOP is fulfilled. Based on the data for BTO flats that received their Temporary Occupation Permit (TOP) in 2015 and fulfilled their MOP in 2020, here’s what we found.
HDB Resale Appreciation: Which HDB Towns Saw Most Price Growth After Their MOP?
In this article, we’ll take a look at 3-room, 4-room and 5-room BTO flats as these are the most common flat types. We took the median price for resale prices for transactions made within a year after the flat’s MOP was fulfilled.
Here’s a summary of the HDB towns which saw the most and least price growth between their BTO sale and resale prices. This way we can see which BTO flats see the most HDB resale appreciation when they have MOP-ed. Scroll down the article to see a detailed breakdown of the cost and percentage growth for each flat type.
We’ve observed that the performance of each neighbourhood depends largely on the flat type. It is thus important to check the resale data for specific flat types and not just the area when trying to gauge price growth.
Based on the data, 3-room BTO flats enjoy the highest increase in price between the time they are purchased from the HDB and when they are sold shortly after attaining their MOP. In fact, 3-room flats in the top five HDB towns enjoyed explosive price growth of more than 100%.
For instance, Choa Chu Kang appeared in the top five towns for 3-room and 4-room flats, but was the third-worst performing town for 5-room flats. Likewise, Toa Payoh appeared in the top five for 4-room flats but in the bottom three for 3-room flats, which could hint at the area’s popularity among families with kids looking for a mid-sized home.
Here are other trends we’ve observed:
1. Across All Flat Types, Non-mature Estates Top the Lists for Most Price Growth
Within the top five HDB towns for each flat type, there were many established non-mature towns such as Bukit Panjang, Sengkang, Hougang, and Woodlands. Still, these non-mature neighbourhoods have a good mixture of amenities, including parks, schools and medical facilities.
New BTO flat prices in these neighbourhoods tend to be relatively affordable due to their location in non-mature estates, yet the abundance of amenities can provide an attractive living environment to resale buyers who wish to move in immediately. Plus, the available HDB grants make buying a home even more affordable.
That’s why we see the most HDB resale appreciation in non-mature estates. This trend was particularly pronounced for 3-room flats, which saw the most explosive price growth.
Browse all HDB flats for sale in Bukit Panjang, Sengkang, Hougang, and Woodlands on PropertyGuru.
2. Preference for Larger Resale Flat Types in Both Mature and Non-mature HDB Towns
As work from home arrangements endure, we continue to see a preference for space over location.
For 4- and 5-room flats, there was a mixture of estates in mature towns and established non-mature towns represented in the top five. This could indicate that buyers of such flats were willing and able to pay higher prices for these larger flats, especially if they were in a more attractive location.
This preference has driven the intense HDB resale appreciation observed in 2021, as more turned to larger, city fringe homes in mature estates.
In particular, one mature town which appeared strongly in the top five across all flat types was Queenstown, which commands very high resale prices due to its sought-after city fringe location.
However, estates located at the end of MRT lines or in areas perceived as less accessible did not perform well. Punggol, Jurong East, and Tampines appear prominently in the bottom three for 4- and 5-room flats, with HDB resale appreciation for the freshly MOP-ed flats not being as high as that of their counterparts in mature estates.
The non-mature estates of Punggol and Jurong East are still undergoing heavy development. Resale buyers might not be as willing as new BTO flat buyers to wait years for the area to be developed. On the other hand, Tampines might be too far east of Singapore for buyers to see it as a choice area to live in.
3. Mature HDB Estates See the Least Price Growth, HDB Resale Appreciation, Likely Due to High BTO Starting Prices
On the other hand, there were quite a few mature towns in the bottom three HDB towns, including Bedok and Geylang. This is likely to be because the initial BTO prices set by the HDB in mature estates tend to be higher to begin with.
Even with the available HDB grants, these homes remain relatively pricey, especially for young couples just starting out their careers.
If you’re the owner of a soon-to-MOP BTO and want to sell it, or if you’re a prospective buyer seeking an HDB flat with a long lease, check out PropertyGuru’s database of listings.
HDB Resale Appreciation: Prices of BTO HDB Flats Before and After MOP (2015 vs 2020)
Based on data for 3- to 5-room HDB flats which received their TOP in 2015 and MOP in 2020, here are the median price increases for each flat type.
Pros and Cons of Buying a Freshly MOP-ed BTO
Buying a freshly MOP-ed resale HDB flat can be a good way to gain access to a relatively new HDB flat without having to wait several years for it to be constructed. Such flats will have been renovated five or six years ago, enabling the buyer to move in immediately without incurring much renovation costs.
Unlike BTO flat purchasers, resale flat purchasers do not have to go through a balloting process, giving them more control over the area and unit they can buy. For those who eschew the BTO route, there are HDB grants available for resale flats to make such a purchase more manageable.
This year, more than 31,000 units will meet their MOP, the highest number recorded since 2007. We’re expecting a flood of flats to continue selling on the resale market, which could explain the record-high resale prices.
Freshly MOP-ed resale HDB flats tend to enjoy high demand due to their long remaining lease. In turn, these flats tend to command high prices.
In April, resale prices increased for the 22nd month in a row. According to the PropertyGuru Singapore Property Market Report Q2 2022, HDB resale flat prices will hover at the current peak or see small gains in Q2 2022. HDB resale appreciation will continue, though not at the blistering pace seen in 2021. Until the BTO supply is restored, prices are likely to continue rising in the near future.
Buyers who are concerned about rental income might want to consider purchasing private property. Private property can be rented out in its entirety without having to fulfil a MOP. Also, rental prices of private property are comparable to those of freshly MOP-ed flats in some sought-after mature towns.
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This article was written by Joanne Poh. A former real estate lawyer, she writes about property and personal finance and spends her free time compulsively learning languages and roller skating in carparks.