Reviewing CPF use for purchase of shorter-lease flats

By Cecilia Chow & Timothy Tay / EdgeProp | August 25, 2018 8:00 AM SGT
Besides the Voluntary Early Redevelopment Scheme (VERS), the other silver lining for owners of ageing HDB flats is the announcement by Minister for National Development Lawrence Wong, who said in his blog post on Aug 20 that his ministry was looking into allowing buyers of shorter-lease flats to use more of their Central Provident Fund account for their purchase, “without compromising their retirement savings”.
This will help buyers who wish to purchase flats in older locations, says Eugene Lim, key executive officer of ERA Realty Network. It will also benefit sellers of older flats, as there would be more prospective buyers, he adds. “This is a very welcome move that is targeted at addressing the growing concern among HDB flat owners about their depleting leases and the difficulty of selling these flats, owing to the limitations placed by CPF on the use of CPF funds by prospective buyers.”
Tiong Bahru, the oldest HDB estate, with a mix of low-rise conserved blocks and high-rise flats, was redeveloped under the Selective En bloc Redevelopment Scheme (Picture: Samuel Isaac Chua/The Edge Singapore)
With VERS and the Home Improvement Programmes (HIP 1 and HIP II), “buyers will indeed begin to look at older HDB flats from a different perspective”, adds Lim. “The government has provided clarity of direction and a wide option of choices that cater to different needs. This is likely to provide a much-needed positive nudge to the otherwise lukewarm HDB resale market that in recent months seems to be heading nowhere, owing to uncertainties that have not been addressed.”
The HDB resale price index has been falling since 3Q2013, with only a slight uptick in 2Q2018, notes Ray Teo, PropNex Realty branch district director. Meanwhile, the URA private property price index has increased over the past four quarters. Besides the depleting lease of these older flats, the other issue is the supply of new build-to-order flats rolled out by HDB, he says. “These new BTO flats draw the bulk of demand,” he notes. He, however, sees HDB flat prices stabilising and perhaps, recovering a little in the light of the recent announcements.