Has lease decay started affecting HDB flats

Lease decay has set in for older HDB flats in Singapore, particularly as flats reach around 30 years of age and beyond. This refers to the gradual decrease in value and market demand for HDB flats as their remaining lease tenure shortens.

The effects of lease decay are most noticeable once an HDB flat's lease drops below certain thresholds:
- When an HDB flat has less than 35 years of lease remaining, it becomes difficult for buyers to secure a bank loan, reducing its appeal and impacting its resale value.
- As the lease falls below 30 years, both financing options and CPF usage become further restricted, further decreasing the buyer pool and lowering prices.
- Flats around or past the 30-year mark are already showing reduced demand and lower transaction prices compared to newer flats.
- Despite these concerns, market data shows continued demand for certain flats, especially those in good locations or with unique attributes, as demonstrated by ongoing million-dollar HDB transactions.

Homeowners, buyers, and investors need to be aware that lease decay will eventually affect every HDB flat due to the 99-year lease limit. The impact is not immediate for newer flats, but it becomes significant as flats age and approach these critical lease milestones. Government policies, such as the Lease Buyback Scheme, address some challenges of lease decay for owners of older flats.

If you are considering buying or selling an HDB flat, pay close attention to the remaining lease, as it is a key factor affecting value, loan eligibility, and future resale potential.