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Your Singaporean’s Inheritance – A New HDB Flat |
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We went on a trip recently and met a Singaporean family of four. The father, a successful, middle aged businessman was telling us about his intention to grant each of his three children a piece of real estate as inheritance. Despite his generosity, he would first encourage his children to get their new HDB flats. His reason was that the only significance difference between a Singaporean and PR/Foreigner is the formers’ right to buy new flats direct from HDB. Albeit such outlandish display of egos, there are some truths in that statement. Although I felt that there is more truth in that statement 10 years ago than now.
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If you bought a 5-bedroom HDB flat in new estate like Woodlands or Sembawang in 1999, it would have cost about $200,000. 10 years later the resale price of such flat is $380,000. For those who went down this route then, the gain is 90% plus unbeatable mortgage rate albeit our current economic situation. If you do the math right, you would have paid up the mortgage in less than 10 years. I did mine in less than 5 years at the age of 34. On the other hand, those who opted for condos then know where they stand now. Unless you are the lucky few who sold yours in the high of 2007, you are probably as stressed out financially as the average Singaporean now. While there was much hype about those who made a killing in real estate during the good times, the sad truth is that private properties in mediocre locations like Sunrise Avenue and Woodvales have not seen much appreciation in values over the pass 7 years. Whatever increase in values are overridden by rising cost of borrowings. I would not go into details on the computations as I already did so in the earlier article: “Singapore Property Prices and Mortgages - Reality Checks”. Blame the media for their unevenness in reporting.
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Put it this way, give up your right to purchase a new HDB flat now while you’re still eligible, is liken to giving up your birth right to your inheritance. You can always use your inheritance to pay for your dream home later.
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