New social security rules buoy resales of Singapore’s older flats

Central Provident Fund changes catalyse transactions involving ageing HDB units

Resales of older government-subsidised flats in Singapore have been on the upswing since changes were enacted on rules governing properties covered by the Central Provident Fund (CPF), according to a new report by OrangeTee & Tie.

Around 564 Housing and Development Board (HDB) flats aged 40 and above were transacted from May to June 2019, compared with 403 units in the same period in 2018.

The transaction volume for HDB flats in the age range of 30 and 40 hovered at 1,219 units during May and June, an uptick of 10.4 percent from the same period last year.

The Singaporean government has been allowing property seekers since May to use their CPF and procure larger home loans for properties whose remaining lease can cover the youngest buyer until he or she is 95 years old.

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“The year-on-year increase (in Q2 sales of older flats) is commendable and could signal that the recent policy changes may have started to take effect in helping to spur demand for older flats,” the report stated.

Of the total resale transactions in May-June, 44.9 percent were aged 30 and above, up from 40.6 percent in the same period last year.

The second quarter of the year usually sees buoyant resale transactions—they gained 5.6 percent year-on-year in Q2 2019—but the new CPF rules could be a big driver this time.

“Apart from a seasonal effect, the recent CPF changes may have been a major catalyst that spurred buying demand last quarter,” stated OrangeTee in the report.

The total volume of HDB flats transacted in the second quarter rose 29.8 percent quarter-on-quarter in Q2 2019, the first quarterly increase since Q3 2018.