The process of selling a larger existing flat and buying a smaller flat is called rightsizing. Almost 75% of Singaporeans or 867,000 households live in 3-, 4- and 5-room HDB flats. This represents substantial home equity that can be unlocked as a source of retirement funds. The government has also drawn attention to the concept of “aging in place”, where people can age in place within a familiar environment and community.
This exercise seeks to identify the HDB towns with the largest price gaps between larger and smaller HDB resale flats that represent the proceeds an elderly household can reap if they choose to rightsize within the same town. For the sake of simplicity, gross proceeds were computed based on the median resale price of the larger flat type in 1Q2015 less the median resale price of the smaller flat type within the same HDB town.
Rightsizing two sizes down from a 5-room flat to a 3-room flat yielded an average proceed of almost $267,000. Moving to a flat that is one size smaller could still generate respectable proceeds averaging $118,000 for households with an existing 5-room flat and $139,000 for households with a 4-room flat.
Bukit Timah stood out as the overall best HDB town for households looking to rightsize as it offered some of the highest proceeds in all three of the possible rightsizing options covered in this exercise (see table). On the other hand, Sengkang offered some of the lowest proceeds for rightsizing households.
Marine Parade offered households living in 5-room flats a good chance of reaping proceeds of up to $407,500 by moving to a smaller flat type, while Sengkang, Serangoon and Woodlands offered much lower proceeds up to only $154,500. For households dwelling in 4-room flats, Bukit Merah offered the heftiest proceeds at over $365,000 compared to Bukit Panjang which offered less than $53,000.
Proceeds from right-sizing as at 1Q2015*
This article appeared in The Edge Property Pullout of Issue 686 (July 20) of The Edge Singapore.
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