Should you sell your HDB upon MOP?
Updated: Jun 30, 2021
Often along with Vienna in Austria, Singapore is mentioned as a country that has "solved" the affordable public housing problem that plagues many cities around the world. Our HDB flats are genuinely a Singapore icon and national pride that has always kept up with times to provide a world-class living environment for the people. As a regulated public housing, an HDB flat can only be put on the open market after you have fulfilled the Minimum Occupancy Period (MOP).
Singaporeans are an aspiring bunch always aiming to better their lives when opportunities open up for them. So when nearing the Minimum Occupancy Period (MOP) of their HDB Flats, many will have thoughts about their next housing plans as they enter into different seasons of their lives:
Changes in family needs - the need for a bigger space as the family expands, or right-sizing to a more manageable one when children move away.
The convenience to live closer to your ageing parents.
The need to move closer to schools.
The accessibility to the workplace.
The want for a more exclusive lifestyle - upgrade to private property.
After weighing out your needs and wants and have decided that it's indeed time to sell your current lovely home that you have had so many memories in, what's next?
Is it really as easy as putting up an advertisement or doing a weekend open house, after which you happily get your dream price and then it is SOLD!!
According to Sun Tzu in The Art of War, it is essential to know your enemy and yourself so that you are fully capable of making strategic moves and not being shaken in any situation.
So here are the 5 points to help determine your current circumstances when considering selling your HDB upon MOP:
What is the property market sentiment? Is it the seller's or buyer's market at that point of time?
How much are the same flat type transacting for within your area/cluster?
How much are some of your neighbours or nearby houses asking for? Is their listed price helping you to sell? Or a disadvantage to your interest in getting an ideal price?
Do you need a temporary "extension of stay" after HDB completion where you hand over the house keys to the new owner?
Any upcoming future-proofing plans in your vicinity? Is there going to be any infrastructure development like a new MRT Station, bus interchange, business hubs etc?
1. What is the property market sentiment?
Let's reference the current resale HDB market situation.
*Source: HDB website
After about seven years of decline, resale flats' prices rebounded in the second quarter of 2020 and ended the year with a 4.8% rise. It went an all-time high despite the forecast of a potential increasing supply of resale flats*.
*Mentioned on HDB Market Pulse published by OrangeTee in Feb, 2019. An estimated 50,000 flat could be reaching MOP in 2020 – 2021.
From the buyers' perspective, they see fewer age-related issues as these flats are just five years old, so they would be less worried about lease decay.
The COVID-19 pandemic also caused an impact on the prices:
Buyers resort to the resale market because of the delays in BTO construction timeline.
Private property owners turn to resale HDB to free up finances in view of the uncertainty.
Permanent Residents (PR) who previously had to shuttle between Singapore and their home country are now buying a house for own stay as travel restrictions continue.
As more people are spending more time at home in the new norm, they seek different spatial needs.
An overview of the current market sentiment and potential buyers will help us in our selling strategy.
2. How much are the same flat type transacting for within your area/cluster?
We need to know how much your neighbours eventually sold their flats for from the HDB website.
Any savvy seller or seller's agent will refer to this valuable open data to determine an acceptable price that you eventually will be happy to sell your house for. This
Any savvy buyer or buyer's agent will also use the same information to their advantage to put up an offer price.
3. How much are some of your neighbours asking for, and what is their pricing strategy?
Knowing how much others are asking for helps to determine your pricing strategy. One way is to check out property portals. Search for those property listings of the same flat type within a radius of one kilometre.
Click into the listing to look at the photos, video and listing descriptions to analyze their marketing strategy. Price wisely, so you won't miss out on potential buyers with a budget around your acceptance price.
The recent transacted prices in the area were around $670k to $680K. And you noticed there are listings generally asking for above $700K (Negotiable). In that case, you could price your unit at $690K (View to offer) because when buyers set the search parameters up to $700K, they can still find your unit.
The right asking price can invite potential buyers to view your house. A visit gives them a chance to come and see themselves in it and appreciate the value.
We have much to talk about regarding a good marketing strategy and successful case studies about listing at the right price. So if you have some time, we will be more than happy to share more after understanding your house's qualities.
4. Do you need a temporary "extension of stay" after HDB completion?
It is common for sellers to request for more time to handover the house after completion because of:
Waiting for the sales proceed or CPF refund to finance the next house
Sellers might need more time for their next house to be ready. The COVID-19 pandemic has caused disruptions and delays in renovation work due to the shortage of workers and social distancing measures at the workplace.
Completion or moving time might coincide with school exam periods.
Some buyers are agreeable to the extension of stay but will lower their asking price as a form of discount. There will also be buyers in need of the house urgently - getting married soon, currently renting and the lease is ending, and are willing to offer a higher price and hoping sellers handover the house timely on completion.
Case study: I have a teammate who sold the house at $30K above historical figures because the buyers needed the house right upon completion. With a good selling price in exchange for time, the sellers had to seek temporary housing ($6,600 for a 2-bedroom condo for 3months), and storage for their belongings and furniture (est. $500), moving and transportation (est. $600 for two trips, first move to the warehouse for storage and then from the warehouse to new house).
So when a good offer price comes along, are you ready and willing to sell your house without the need for temporary extension?
5. What are the significant infrastructure development plans in your surrounding area?
Knowing the infrastructure growth and development plans do help with your pricing strategy too. So are there any upcoming plans for your vicinity based on the latest URA Master Plan? Will there be any new MRT stations, integrated lifestyle hub, commercial development like the under-construction Hyundai Motor Group Innovation Center (HMGICS) in Jurong that could make it even more attractive for the buyers?
Sometimes, waiting a little longer for such developments to take shape can potentially make your HDB flat more valuable.
Ideally if you engage a real estate agent, he should be resourceful enough to dive into all kinds of data and share with you a thorough analysis. It would help if you know the entire game plan - to be utterly informed and aware of the whole timeline for your sale and subsequent purchase transaction, determine when is the best time to market and evaluate the risks and returns you might face.
Lastly, MOP is not an indication that it is the "best time to act". Nobody should land themselves in a situation where they rush to sell.
Many of us might have been conditioned to think that way because of all the advertisements, flyers and all kinds of media they might be reading online that just sugar coats and hype the perks of cashing in after MOP.
In reality, everybody's situation is different, and the MOP of your flat shouldn't determine the right time to sell a flat.
It would be best to base your decision on your family needs and priorities, financial health and market fundamentals, and a well thought out game plan.
Need a second opinion on your property wealth planning, want to know about the available best homes to buy or a chat to find out about marketing your properties? I am all ready to provide you with convenience and clarity towards making a well-informed property decision. Data driven. Pure facts. No hype.
Let's get on a Zoom or Google call to relieve you of all the worries boggling you down.
We can discuss:
An in-depth financial affordability assessment
Timeline planning for the sale and subsequent purchase
Highly relevant industry insights
A precise and investment road map that is tailored specifically for you.
A curated list of best buys in today's market with good growth potential and minimal risks
Selecting units with the highest potential in a new launch project
Tips on marketing strategy and getting a potential buyer for your property fast
Has your property stagnated in the price? What are the reason and options you have?
Move to what moves you and be enabled to live your aspirations. See you soon!
Chris is a real estate associate with OrangeTee & Tie and is an avid #iamanarchitourist who appreciates not just the beauty of architectural and spatial design, but the monetary value of owning a piece of it in realty.
Inspired to empower her clients to live who they are, she actively applies the Property Wealth Planning (PWP)™ methodology that has creatively expanded many of their real estate portfolios.