There comes a point in time after the steamboat dinner, after everyone is sick of mahjong and ban luck, and there's nothing good on TV, that the conversation turns to Singaporean issues.
Political gossip and careers are popular, but housing will always rear its head.
NUS study conducted on resale prices
Representing one of the biggest investments a Singaporean can make, property naturally attracts many different opinions, each making less sense than the last.
But a new study published by the National University of Singapore (NUS) and shared on Feb. 13 may shed some more light.
According to Channel NewsAsia, the study looked at the depreciation rates of resale houses.
Historical resale transaction prices were used in their calculations.
These were further divided into three categories:
- HDB flats
- Private freehold properties
- Private leasehold properties
It examined a period of 20 years, from 1997 to 2017.
And what they found was surprising.
Rate of depreciation
All houses naturally depreciated as they aged, at similar rates for all three types.
HDB flats depreciated 1 percent faster.
At around the 10 year mark, things change.
Private freehold properties depreciated less than HDB and leasehold, which depreciated at similar rates. Still expected.
But at the 20-year mark, HDB flats actually depreciated less than even private freehold and leasehold properties.
HDB flats depreciated at a rate of 3 percent, compared to the other two at 10 percent each.
And at the 30 year mark and above, HDB prices declined at a slower rate than private properties.
Reasons why
So what could be the reason?
According to the study's co-author, Professor Sumit Agarwal, one reason could be the subsidy grants of up to S$50,000 that first-time buyers of resale HDB flats get to enjoy.
This makes it easier for people to buy these flats at the asking price, or close to it.
Another co-author, Associate Professor Sing Tien Foo, cited the lack of maintenance work done on private properties aged 30 years and older.
In contrast, HDB flats may benefit from the government's Home Improvement Programme, which helps to mitigate the effects of ageing.
So is private always better? This study gives some food for thought.
And as more time passes, more historical data would be available and longer term comparisons can then be made.
Related story:
Top image from HDB's Facebook page
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