Don’t Let Your HDB Become a Retirement Trap – Take Action Today!
Are You Confident Your HDB Will Secure Your Future?
Many Singaporean HDB owners believe their property is their most valuable asset, but the truth can be surprising. As a 99-year leasehold property, your HDB may not grow in value as you expect. Instead, it might become a financial burden as it ages, leaving you unprepared for retirement.
Is your HDB building wealth or draining it?
Understanding this now can mean the difference between a comfortable retirement and financial struggles, especially when comes the time when you retire.
Your HDB: Asset or Liability?
Financial expert Robert Kiyosaki said, “An asset puts money into your pocket, while a liability takes money out.” Even if your HDB is fully paid off, ongoing costs like utilities, maintenance, and mortgage payments continue to drain your resources. Over time, these hidden costs can turn your home into a liability, eroding your wealth rather than building it.
When Does Your HDB Start Becoming Your Liability?
Although your HDB may currently show an increase in value, as it ages, its appreciation slows or depreciates. Using HDB loans and CPF for payments can result in losing out on mortgage and CPF compounded interest.
Consider a case study: Blk 645 Punggol Central's price trend and breakeven point after factoring in a 2.6% HDB loan and 2.5% CPF interest.
Let's say you purchased a 5 room HDB at Blk 645 Punggol Central at $370,000 in 2008. If you can turn back the time at which Sell Point will you sell your HDB or will you keep staying?
Most people will say Sell Point C because it's the highest transacted price. Well, let's break it down.
| Purchase Price | $370,000.00 |
| 10% Downpayment | $37,000.00 |
| Stamp Duty | $5,700.00 |
| Total Initial Capital Invested | $42,700.00 |
| Sell Point | Sell Year | Yrs Hold | Sell Price | Gross Proceed | Principle paid | Loan Interest | CPF Interest | Nett Profit | ROE |
|---|---|---|---|---|---|---|---|---|---|
| A | 2012 | 5 | $592,000 | $222,000 | $39,145 | $40,843 | $4,951 | $170,505 | 224% |
| B | 2019 | 12 | $432,000 | $62,000 | $104,328 | $85,140 | $29,973 | -$58,813 | -42% |
| C | 2024 | 17 | $700,000 | $330,000 | $157,913 | $110,500 | $62,706 | $151,094 | 78% |
Sell Point A
- If you sell at this point. You might not get the highest selling price, but you paid the least loan and CPF Interest. Therefore your ROE is the highest among the 3 Sell Points.
(Note: I did not use the highest selling price as a reference at Sell Point A because you cannot predict when it will be the peak. Nevertheless, the focus was on interest paid.)
Sell Point B
- Assuming you sold at a bad time and made a loss with -42% ROE. This example shows that HDB prices do not always follow an upward trend. We are currently still on the upward trend since COVID-19 due to the supply crunch. However, how well will your HDB price hold when HDB is bumping up supplies and as your flat ages?
Sell Point C
- The market turned around since Covid-19 and you got a lucky break and sold at the record price after hold 17 years. But as your loan interest and CPF compounded interest built up, your ROE is lower than if you sell at Sell Point A. We have a lucky break, but even with inflation in place, the cost of land and construction helping with pushing up property prices. We cannot deny the fact that HDB is still a leasehold property. Their value will depreciate due to lease decay.
- Well, the good news you are also building capital as the CPF interest paid can be used for your next purchase. However, if you compare it to Sell Point A, you can purchase a newer property which might give you better growth, have a longer loan tenure which you have in lower installments, and make your money work harder for you.
Calculate Your HDB's Breakeven Point – Do the Math
To truly understand the financial impact of your HDB, you need to calculate its estimated breakeven price. Factor in mortgage payments, CPF interest, and the costs of homeownership. The reality? Your property must increase in value by 2.1% each year just to keep up. Can your HDB meet that expectation?
Let’s crunch the numbers together. Use our quick formula: [Purchase Price] + 45% (20 years x 2.1% annual increase + 3% stamp duty) = Breakeven Price.
If you’re unsure whether your HDB is growing in value or losing it, it’s time for a Property Health Check.
Turn Your HDB into a True Asset in 3 Easy Steps
Don’t let your HDB become your biggest liability. With the right strategy, you can turn it into a powerful tool for building wealth. Here’s how with our 3 Steps Asset Progression Framework:
1. Evaluate - Property Health Check and Financial Check for a clear understanding of your financial situation for best housing options and Exit Strategies
2. Swapping - Swap to a better property which gives you a better gain
3. Expanding - Split your property using Creative Financing Strategies to more properties for rental income
Real Success Stories
Mr. Lim engaged us for a property consultation session in 2016. They saw their property value decrease year by year since the 2013 peak. They were worried if they could recover their capital for their flat at Blk 167B Punggol East, after going through their Property Health Check and working out their finances. I advised them to switch to a property that has more growth potential as their flat was at risk of having negative sales.
We made a switch from HDB to an
Executive Condominium (EC)
Today their EC is looking at more than $1 Million in Gross Profit
Mr. Lim is now ready to go into Step 3 of the Asset Progression Framework which is expanding his Property Portfolio and securing a financially free retirement.
What happens if he decides to stay on in his HDB?
If Mr. Lim decided to stay on and only sell in 2024 at $660,000 he could have made $240,000 more. But compared to what he did in 2016, that is, selling his HDB and switching to an EC he would have made $760K less. Of course, he could still switch in 2024 however his next home options will be lesser due to lower capital and shorter loan tenure due to age hence resulting in higher loan instalments.
Which option will you choose?
Take Control of Your Financial Future – Act Now!
Please don’t wait until it’s too late! The longer you hold on to an underperforming HDB, the more you risk losing! Book a Property Health Check today and discover how to turn your HDB into a wealth-building asset!
(Just 1 hour of your time can change your financial future!)
Why Work with Me?
I’m Steven Chia, a seasoned real estate consultant with years of experience helping Singaporean families secure their futures. I’ve seen too many people suffer from poor planning – my goal is to make sure you’re not one of them. Let’s work together to ensure your retirement is as comfortable and stress-free as possible.
Take the first step – Schedule your consultation today!
How Much Do You Need For Retirement?
Have you felt the inflation?
When Economic Rice is not so economic. Recently I got a plate of economic rice with one vegetable dish, one toufu, and one meat and it cost me $6.30 at a food court in one of our General Hospitals.
I couldn't help but think how much would I need for retirement 20 years later.
So I asked ChatGPT and this is what I got.
If you retire 20 years later in 2044, it is estimated that each person will need $2,235 per month for basic needs.
And if you live till 85 years old, you will need $2,235 x 12 months = $26,820 x 20 years = $536,400 per person.
That is provided you have a good medical insurance plan, no lavish lifestyle, and no pampering yourself with good food and good holidays, or even just giving your grandkids some occasion treats.
Nevertheless, you decide the lifestyle you want during retirement. But for me, having more is always better.
Make working after retirement a choice and not because you have to.
STOP Letting Your HDB Be Your Retirement Trap!
Plan Your Retirement Early By Registering For
A Property Health Check Today!
Why you should register for a Property Health Check
- Estimate the valuation of your property (Without visual assessment)
- Nearby Amenities - Understand the selling point of your location
- Block Price Trend - How your block price trend performed
- Street Similar Property Trend - Know how much the buyer is willing to pay for the properties along the same street
- 500M Similar Property Trend - Know how much your neighbour within a 500m radius sold their price and you are able to fetch the same price or higher
- Recent Transaction - Understand how much buyers are willing to pay for different level
- Free 1 hr consultation for property visual assessment and market asking analytics for Pricing Strategy you can adopt