Negative HDB sales

In recent years, HDB resale volume has been declining in the aftermath of various government cooling measures like the Mortgage Servicing Ratio (MSR) and capping of the loan term for HDB loans. Arising from these policies, there have been cases of negative HDB sales.

What is exactly negative HDB sales? It means that after you sold your HDB flat, the resale price is sufficient to pay off the outstanding HDB or bank loan but not enough to repay fully the CPF refund with accrued interests. In this situation, besides having no cash proceeds from the transaction, you may even require to top up the shortfall in cash to your CPF account if your property is sold below market value.

Negative HDB sales

According to CPF rule, there is also a difference for those owners who bought HDB flats with HDB loans and bank loans.

For HDB flats bought with HDB loans

The sale proceeds (including the option monies) will be used to pay off the following, in this order:

1) Outstanding HDB loan

2) HDB resale levy (if any)

3) Required CPF refund

If the sales proceeds after paying (1) and (2) is not enough to make the required CPF refund, you do not need to top up the shortfall in cash, provided the flat is sold at market value.

For HDB flats bought with bank loans

The sales proceeds (including the option monies) will be used to pay off the following, in this order:

1) Outstanding bank loan

2) Required CPF refund

3) HDB resale levy (if any)

If the sales proceeds after paying (1) is not enough to make the required CPF refund, you do not need to top up the shortfall in cash, provided the flat is sold at market value.

So how do sellers determine the market value of their HDB flats to avoid negative HDB sales? With this question in mind, I called the CPF Board but the officer [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

Read my other articles on HDB:

  1. Wealth destruction from CPF Accrued Interest
  2. Devastating HDB Loan and CPF Accrued Interest
  3. CPF’s Home Protection Scheme (HPS)
  4. The Dark Side of CPF Housing Withdrawal Limit

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8 thoughts on “Negative HDB sales

  • September 6, 2017 at 4:15 pm

    Aiyoh, you think too much.

    If REALLY don’t want to affect CPF savings, then should use purely cash.

    We are born in the wrong generation, if you intend to earn fat profits from property. Since the mid-1990s, SG property market is considered mature and over long-term, the gains are tied hand-in-hand to inflation rate. This is particularly so for HDB & mass market condos.

    As overall inflation has been roughly 2%-3% over the last 20 years, hence don’t expect windfall profits that can cover mortgage interests + CPF accrued interest. ESPECIALLY if you buy resale. If you bought BTO (or direct from HDB) then still got chance to cover both costs.

    BTW, I thought the Terrace EC no need to pay Resale Levy??

  • September 7, 2017 at 5:08 am

    Hi Sinkie,

    I am not cash rich, so have to rely on my CPF savings.

    Yup, agree that it is difficult to make money from property, especially HDB flats. But with private properties, I still think the opportunity is there if you play the game right.

    Yes, The Terrace EC is exempted from resale levy.


  • September 7, 2017 at 7:41 am

    Actually it’s much easier to make money from HDB flats! Rental yield is also much higher than for condos. The trick is to watch for lease decay & not buying too old flats.

    In a mature property market & very low rental yield like in Singapore, can only have high chance of earning good returns if buy during low points in property cycle & sell when in a prolonged hot property market.

    However, it’s quite difficult (timing, convenience, disruption to daily living) if you’re just playing with your 1 & only home. And it’s quite pointless if you need to buy another replacement property to stay in. That’s why majority of Sinkies don’t play this game, and most of them actually stay in their 1st home until the end. Don’t get conned by the hundreds or thousands you see at condo showrooms & news reports of HDB upgraders etc.

    For condos, people just keep fingers crossed will get enbloc after 20-30 years. But this is pure speculation & chances are not that great if the condo is heavily build-up with tall blocks containing hundreds or thousands of units. Those successful enblocs with windfall gains are more for those with fewer units, less build-up, that the developers can take advantage to max out the redevelopment and maximize profits with new tall condos with thousands of smaller units selling at $1+M each.

    In other mature markets like US, savvy people go into property investment for yields. Price appreciation they take it as being same as inflation rate. Unless they are willing to wait for years for recession to buy at low prices. I know someone who has friends in the US, and in the last few years he invested in about 6 or 7 residential houses with his “business partners”. Each house cost on average US$80K to US$100K and rental yields of 10% to 15%. But their taxes, fees & insurance are higher than SG.

  • September 7, 2017 at 12:01 pm

    So are you taking HDB loan for your EC or bank loan?

  • September 9, 2017 at 2:54 am

    Hello Gerald,
    Thank you for sharing your story. When you buy the EC, do you need to pay the additional buyer stamp duty as you are still staying in your hdb flat?
    I am wondering and could not help but ask you this question.
    Thanks once again.

  • September 9, 2017 at 2:48 pm

    Hi Pei Yau,

    When you buy new EC, the rule requires you to sell your existing HDB flat.
    Hence, there is no additional buyer stamp duty because after selling my existing HDB flat, I am only left with the EC.


  • September 9, 2017 at 2:51 pm

    Hi Sinkie,

    Thank you for sharing. Indeed, with the slew of cooling measures, it is very difficult to invest in property nowadays. I am still learning the game and hopefully can build wealth with property in Singapore. I still believe in the value proposition of a new EC because it is a subsidized condominium. Only time will tel whether I am correct.


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