Will a Home Improvement Programme increase the value of your HDB flat?

Does a Home Improvement Programme by HDB actually increase the value of a HDB flat? Get to know how the HIP affects your HDB flat!

What is the Home Improvement Programme (HIP)?

First up, what is HIP? This programme helps resolve common maintenance problems such as spalling concrete for flats built before 1986. This means these flats are around 30 years in history by now.

Also, during the National Day Rally 2018, it is announced by Prime Minister Lee that there will be an expanded programme dubbed the HIP II, which will give all HDB flats a second round of upgrading when they reach their 60 to 70-year mark.

The purpose of these upgrades is to keep HDB flats safe and livable. The HIP will proceed when at least 75 per cent of a block’s eligible Singapore Citizen households have voted in favour of the HIP.

There are three main components of HIP. They are (1) Essential Improvements, (2) Optional Improvements and (3) Enhancements for Active Seniors (EASE). Under the essential improvements, the upgrades are done for public health, safety, or technical reasons.

Will a Home Improvement Programme increase the value of your HDB flat?_Home Quarters SG_KC Ng Keng Chong

HIP upgraded bathroom source: The Straits Times

They include repairing spalling concrete, replace waste / soil discharge pipes, replacing pipe sockets with a new clothes drying rack and upgrading the electrical load. Under the Optional Improvements, residents can choose whether or not to upgrade existing bathrooms, install a new decorative door or grille gate, or even a new refuse chute hopper. 

Under the EASE program, if there are elderly family members living in the unit, residents can choose from a range of elderly-friendly fittings, such as slip-resistant treatment for bathroom floor tiles and grab bars within the flat.

What about the costs of the HIP?

Secondly, let’s take a look at the cost. For Singaporean households, the Essential Improvements are fully paid for by the Government. The Optional Improvements are heavily subsidized up to 95%, so residents pay an estimated amount of between $630 and $1,575, depending on their flat types. For EASE, the full range of items will cost around $2,500. After government subsidies of up to 95%, Singapore Citizens pay between $125 and $312.50, depending on their flat types

Residents can use their CPF to pay for these costs, in full, if they choose to. However, Singapore Permanent Resident (SPR) households have to pay the full upgrading cost. Because of this, for HDB owners that are looking to sell the unit after the HIP is announced but the bill has not yet been paid, SPR households may be discouraged from buying it. They will need to pay the full sum which could add up to a 5-figure sum when they are the owners.

Duration of the upgrading

Thirdly, how long will the upgrading takes? The construction period for a typical precinct comprising eight to 10 blocks will take about 1.5 to 2 years. The actual renovation works in each flat will take 10 days or less, depending on the improvements selected.

The implication here is that there is only an estimated date that is release when HIP is announced and thus, if buyers are looking to renovate the unit, they will either choose to forgo the heavily subsidised bathroom renovation provided by the government or renovate the rest of the house leaving the bathrooms, door and gate to be renovated later. This will be a huge inconvenience if the buyers do not have an alternative place of residence and will need to move into a ready unit fast.

So, will the HIP increase the value of the HDB flat?

From experience, they help the flat retain its value as its 99-year lease runs down but does not serve to increase the value of the HDB unit. If it occurs before or during the works, it might attract Singaporean household buyers that are keen to enjoy a heavily subsidized new bathroom, chute hopper, door and gate as these are items that usually will be replaced after the sale anyway.

But will turn off SPR households that will need to fork out more money than the resale price of the unit when they are being billed the HIP cost by the government or those buyers that wish to move into a ready unit soon and do not want to put up with the inconveniences.

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That’s it for this article! Stay safe everybody, and remember, call Home Quarters and start packing!

2013, the fateful year that caused HDB prices to plunge 10%!

What happened in 2013 to cause HDB prices to plunge?

2013. The year in which we experienced a 10% drastic drop in HDB prices in Singapore. What happened in 2013, what is the impact on resale HDB flats during then and have we actually recovered from the shock today? Such a catastrophic situation for HDB prices to plunge affect our HDB homes and 70% of Singaporeans that live in them. It definitely sent shockwaves across the nation during then.

On 11 January 2013, a joint press release issued by the Ministry of Finance, Ministry of National Development, Monetary Authority of Singapore and Ministry of Trade & Industry states that the Mortgage Servicing Ratio (MSR) is being reduced.

The Mortgage Servicing Ratio determines how much loans a buyer can get for a HDB flat. The smaller the percentage the lower the loan a buyer can get. For loans from banks, it was lowered from 40% to 30%. For loans from HDB, it was lowered from 40% to 35%. What this suggests is that HDB buyers are not able to get as much loans as compared to before.

Together with the MSR reduction, Singapore Permanent Residents (PRs) who own a HDB flat will not be allowed to rent out the entire flat. On top of that, PRs who own a HDB flat must sell their flat within 6 months of purchasing a private property in Singapore. This rule is likely created to deter PRs from using HDB for rental income and then move on to stay in private housing, or perhaps do not even stay in Singapore.

After the announcement, the transaction volume did not immediately go down. In fact, it increased about 20.8% and the resale price also increased 0.5% from Q1 to Q2 of 2013.

Introduction of other measures to stabilize the HDB resale prices

On 27 August 2013, the government introduced two measures to further stabilize the HDB resale market. In my opinion, that was really the last nail in the coffin for HDB resale prices. After what happened that cause the HDB prices to plunge so much, the measures were much needed.

One, they are reducing the maximum loan term from 30 years to 25 years. This means that HDB buyers will need to pay a higher monthly loan repayment due to the shorter loan term. In addition, for HDB loans, the MSR is reduced from 35% to 30%. Like we mentioned previously, this means that HDB buyers will not be able to get as much loans from HDB. This rule affected more Singaporeans. Most Singaporeans take up a HDB loan when buying a HDB flat.

Two, they ruled that PR households to wait three years from the date of obtaining PR status, before they can buy a resale HDB flat. The demand of HDB resale flat, which was previously made up of a significant number of PR households, will be greatly reduced with the new measure. HDB resale flat is the only type of HDB that a PR household can buy as they cannot apply for a new flat.

2013, the fateful year that caused HDB prices to plunge 10%!_Home Quarters SG_KC Ng Keng Chong

It was hugely shocking as the measures’ take effect immediately on the day of the announcement at 5.30pm. There was no grace period given. This stranded many PR buyers that were in the middle of a deal.

After this announcement, the transaction volume immediately plunged to 13.4% and the resale price also sharply dropped by 0.9% from Q2 to Q3 of 2013. From Q2 2013, Prices continue to drop quarter-on-quarter until Q3 2015 before stabilizing. The total drop in price was about 11.6%. The median price of HDB flat in Q2 2013 is S$460,000, a 11.6% drop means that if you buy a HDB flat in mid 2013 for S$460,000 then by end 2015, your HDB flat will be worth S$53,360 lesser than what you paid for.

Effects of the measures in 2020

The impact of the 2013 HDB measures introduced is still being felt today, coupled with the economy slowdown in growth rate. The HDB resale prices have been falling consistently from Q3 2013 till today, with only 4 quarters registering quarter-on-quarter positive growth. However, the growth never exceeded 0.5%. The median price of HDB for the full year of 2019 is S$400,000.

Compared to the historic prices of HDB, only those buyers that have bought a HDB before year 2011 (with median price of S$418,000) will make a profit or break-even. This is not taking into account other costs such as housing loan interest and CPF accrued interest. That is why sellers of HDB flats often face a negative sale situation.

This means that the money received after they sell their unit is not enough to pay for the HDB loan or bank loan, even taking into consideration CPF. If they bought a resale HDB flat after 2011, or used huge portion of their CPF to pay for the HDB flat, the effects are felt especially acute.

Looking forward, as HDB flats are supposed to serve as a primary home for Singaporean citizens and also PRs, prices will be consistently monitored to be kept low in order to allow it to be affordable to the masses. In the last 4 – 5 years, prices have been stable for resale HDB flats.

In the short term, we foresee that there will not be seeing any significant increase in the price of resale HDB flat unless we experience an economy boom in Singapore that significantly bring up the income level of the masses.

MSR most likely will stay on although the government have recognised the effect of inflation and have since increased the income ceiling eligibility of new flats from S$12,000 to S$14,000. The new executive condominium income ceiling was also increased from $14,000 to $16,000 on 11 September 2019.

What’s next in it for you?

Looking at the measures that were implemented, we can see that government policy changes definitely play a big part in influencing the price of our HDB flats. In fact, government policy impact all type of properties and not just HDB.

As a home seller selling your home in order to upgrade or right size into another home because your current home is no longer suitable for your needs, do you know if you fall under the negative sales scenario? If you do, what can you do if you are still keen to sell the place? Will we see such a situation of HDB prices to plunge greatly again?

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But if you have an agent that can take you through the process carefully, you will be able to find a new residential unit that could serve as your home for a long time. That is where Home Quarters can help. Sit down with Home Quarters to go through the current price of your HDB and what you owe on loans and CPF.

Whatsapp message or call KC from Home Quarters and begin finding your new home today: +65 8809 2889! Or drop us an email, commenting on our YouTube or contacting us through our Facebook and Instagram pages!

He is extremely knowledgeable about everything to help you find your new home today. Watch KC, your friendly neighbourhood agent here in action: If you would like to schedule a virtual viewing when buying your first property, that is also possible – you can read all about what you need to look out for during a property virtual viewing here.

That’s it for this article! Stay safe everybody, and remember, call Home Quarters and start packing!

3 Tips To Selling Your Housing Unit In Record Time!

Tips To Sell Off Your Unit Quickly

#1 Appraise the demand for the unit before selling your housing unit

So, you want to sell your housing unit quickly. Firstly, we have to assess the demand for the unit that is being sold. We can approximate the demand of a unit through its past transactions.

If the unit is a HDB flat, we start by looking at the “resale flat price”. We check how many units and price of each unit are being sold in the last 6-month and 12-month period in the HDB town or even down to the street level.

3 Tips To Selling Your Housing Unit In Record Time!_Home Quarters SG_KC Ng Keng Chong

HDB Resale Flat Price Source: HDB

For private residential units, we look at Urban Redevelopment Authority (URA)’s Private Residential Property Transactions where you can search by the appropriate project name. Primarily, this is used for condominiums and apartments. We can also search by property type and postal district. This is used for landed properties or cluster housing.

3 Tips To Selling Your Housing Unit In Record Time!_Home Quarters SG_KC Ng Keng Chong

Private Residential Property Transactions Source:URA

Next, we also look at the resale data. We see how many units of the particular type of house that you are selling. That will give you a gauge if there are buyers interested to buy the unit that you are selling.

If there are multiple transactions in the condominium or HDB estate, it is a good indication that there would be strong demand for the unit that you are selling. However, it could also mean that there are not many units available for sale in the area. To check if this is true, we move on to our second tip.

#2 Evaluate your competition

Check if there are many of your neighbours that are putting up their unit for sale. If there are, and your research also shows low demand of the unit from past transactions, it would mean that the actual demand for your particular type of unit is low.

So, where and how do we check if your neighbours are selling their unit? Generally, you can do this by going to popular multiple listing portals and select filters based on your unit type, your area or your condominium. Of course, do keep in mind that there might be a few repeated advertisements of the same unit.

If there are many similar units that are up for sale, we will classify the level of competition as “high”. Buyers have more choices if they are looking in the area, and in order to stand out, you need to have a unique selling point that can entice the buyer to choose your unit over the rest. In order to perform better than the competition and sell the unit, marketing is key.

#3 A Strong Marketing Matrix For Your Unit

At Home Quarters, we emphasize on customized marketing strategies that will showcase your unit to the right audience. In this aspect, there is no one-size-fits-all solution.

We would position the unique selling point of the unit and re-package the advantages to the potential buyers in the area. In this way, we can reach buyers that are looking for the unit perfect for their needs. For example, if the family-friendly unit is close to good schools, and are looking for a unit in the East, we would be activating our precise digital audience targeting methods.

It is not about just producing an amazing video, but the ability to promote this particular video featuring your unit, to the correct audience that will get the house sold! Of course, there are other factors that will affect how fast a unit get sold. This includes price, lease tenure, and layout. We would work out these details on a case by case basis.

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If you have questions or if you are thinking about properly showcasing your house for sale, whatsapp message or call KC from Home Quarters and begin finding your new home today: +65 8809 2889! Or drop us an email, commenting on our YouTube or contacting us through our Facebook and Instagram pages!

If you would like to schedule a virtual viewing, that is also possible – you can read all about what you need to look out for during a property virtual viewing here before COVID-19 end.

Reach out to us any way you like and we love to help you out and answer any questions you have to sell your house so that you can move on to the next big thing in life.

That’s it for this article! Stay safe everybody, and remember, call Home Quarters and start packing!