Is It Affordable to Upgrade Your HDB to a Private Property Property?

To own a condo in Singapore is a big-ticket purchase for many. With that in mind, should HDB owners even consider upgrading to a private property? 

Before we answer that question, let’s look into one main problem that HDB owners are facing - HDB prices going stagnant. HDB prices are currently growing at a measly 0.98% annually. However, with the 2.5% CPF accrued interest that owners need to pay, many HDB owners are facing a negative loss. The reality is, the gap between HDB and private property prices have widened greatly.

Let’s look at a case study to better understand this. In 2010, Mr and Mrs Peter Lim bought their first home - a 5 room flat in Punggol - for $265,000. After 9 years, they sold their flat in 2019 at $668,000, making a profit of over $400,000 and a total sales proceeds of $512,000. They then bought a 3 bedder condominium for $1.5 million, paying the downpayment of $375,000. As you can see, they did not spend any cash from their personal savings, and even had $137,000 left for their family’s emergency fund. This case study illustrates quite clearly - upgrading from a HDB to a private property does make sense, and can be done with $0 cash outlay.

In fact, many new launch condos now offer a deferred payment scheme, which is an even more attractive option for home buyers and investors. A deferred payment scheme allows buyers to pay just 20%-30% upfront for a brand new private condominium and then pay nothing for the next 2 years. Repayment of the remainder starts as normal after 2-3 years. This provides greater flexibility for home upgraders - they can move into their new house early and have ample time to sell their existing HDB.

Making the right choice to grow your asset wealth today might not give you an immediate cash-rich plan, but it is a strategic wealth planning decision that will greatly benefit your children & yourself in the near future.

Are you looking to grow your wealth through your HDB with little to even no additional cash? We are Pamela & Shirley from Wonderhomes.sg! Click comment below or drop us a PM & we will get back to you soonest!