Is HDB a good investment?

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I was always told "if you want to buy a house, buy a HDB." The government provides grants, and it is cheaper and bigger than a condo per sqft. Furthermore during those payouts more are given to those living in HDB. 

To buy a HDB or condo? It really boils down to whether you are buying the flat for own stay, or for investment. 

Take a look below, that shows the graph of the HDB Price index from 1990 Q1 to 2020 Q1 

Source: https://data.gov.sg/dataset/hdb-resale-price-index 

 We have seen that from 1990 to 2013, the price of HDB flats have been increasing. But it has been falling ever since.  

What happened in 2013? 
  1. All loans issued by banks and HDB for both HDB flats and ECs, have an MSR (Mortgage Servicing Ratio) of 30 percent, a decreased from 40 percent of a borrower’s gross monthly income. The MSR determines how much loan a buyer can get when purchasing HDB flat. In other words, buyers cannot get as much loan as before, and thus they are less likely to afford HDB. Demand for HDB decreased.

  2. HDB has shortened its maximum loan tenure to 25 years. This means the repayment amount for their loan every month increased, which makes it harder for buyer to buy HDB flat. 

  3. PR who want to buy resale flats have to wait three years after receiving their PR status. Previously they can buy resale flats as soon as they receive their PR status.  This further decrease the demand for HDB flats that year. 
As you can see the HDB hasn't been rising much ever since 2013, so with inflation taking into account HDB seems to be holding a depreciating asset year by year. Also as HDB grows older and towards their 99 year old lease, the price of HDB does not have room to appreciate much as the HDB might be returned to the state at the end of the lease, like houses with expiring leases at lorong 3 Geylang. 

Furthermore, HDB aim is to provide affordable housing to Singaporeans. 

Do you think HDB prices have more room to grow?


Sources: 
https://www.todayonline.com/singapore/hdb-shortens-homebuyers-loan-tenure-25-years 
https://www.channelnewsasia.com/news/singapore/lorong-3-geylang-expiring-leases-owners-permanent-housing-sla-13691006 
https://data.gov.sg/dataset/hdb-resale-price-index 

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