Thinking of selling your HDB flat? Perhaps you’re thinking of putting up your flat for sale in the resale market, but you don’t know if now is a good time. That’s a reasonable concern, seeing that there are more than 20,000+ flats that will reach their Minimum Occupation Period (MOP) this year. 

In this article, we’ll be discussing how HDB flats that fulfil mop in 2021 will affect the resale market and whether it’s truly a cause for concern.

What is MOP for resale HDB?

Under HDB guidelines, homes will need to be occupied by their owners for a minimum period of time before they can be sold and put back on the market. It’s a policy meant to prevent price hikes of properties, as owners will not be able to buy and sell properties within a short period of time.

Different HDB homes have different MOP periods, but it’s safe to say that most HDB homes have a MOP of 5 years. 

Here’s a breakdown of the different MOPs for different HDB flats.

Flat purchased from HDB	5 years
Design, build and Sell Scheme (DBSS) flat bought from developer	5 years
Flat bought under SERS with portable SERS rehousing benefits	5 years
Flats bought under SERS	7 years from the date of selection of the replacement flat or 5 years from the date of occupation, whichever is earlier
Resale flat bought from the open market with CPF Housing Grant	5 years
Resale flat bought from the open market 1 room flat	No MOP
Flats bought under fresh start housing scheme	20 years

Why resell your flat after the 5 year MOP?

Many homeowners rush to sell their flats right after they’ve met the 5-year MOP requirement set out by HDB as there’s a general consensus that selling off your HDB flat right after it reaches its MOP can garner the highest, if not, attractive resale prices.

At just 5 years old, the flats are still in pretty good condition and are relatively new. All home features like windows, plumbing, or kitchen appliances are in place, and there’s no need for any major renovations.

Moreover, these flats have the longest possible remaining lease. With still many years left on the lease, resale flats that have just MOP-ed are attractive for homebuyers looking to stay for the long-term or even a legacy value for future generations. 

New owners can also enjoy a relatively new home rather than an older home in a mature estate.

With so many plus points, 5-year-old flats tend to command a healthy demand on the resale market. That’s why it’s strategic to sell your HDB flat after it meets its MOP requirement. 

Those looking to upgrade or make a considerable profit from selling their homes should consider selling their flats at this time.

What will the rise in MOP flats mean to the resale market?

As more flats reach their MOP, it could indicate that more flats would be put on sale in the resale market. With higher supply, by the basic laws of economics, prices of flats in the resale market could go down. 

For homeowners who have been anticipating selling off their flats once they’ve met the MOP requirement, this might not be the best of news. With a higher surplus of flats, there’s a chance that their profits would be lower than expected.

On the other hand, this might be good news to homebuyers looking for a resale flat. Those who don’t want to wait for a BTO might be able to get a resale HDB flat for a lower than expected price.

What does past data show?

The surplus in resale flats in the market might cause concern for sellers, but last year’s data suggests otherwise. 

In 2020, despite higher amounts of resale flats in the market, prices did not dip. In contrast, the high number of MOP HDB flats in 2020 helped stimulate demand, and HDB resale prices rose by 1.5% in the third quarter of the year – the highest growth rate in resale flat prices since 2012.

Although the economy was hit and recession was accelerated due to COVID-19 in 2020, property prices seemed to have maintained. 

Demand for properties matched the supply of both private properties and resale flats in the market. In theory, a surplus in resale flats would drive prices down, but it seems like this may not be the case as the market trends in 2020 could continue into 2021.

Why wasn’t the resale market hit severely?

There are various factors that maintain the prices of resale HDB flats. 

While more HDB flat owners have put up their flats for sale, many of them could have also contributed to other resale HDB homes’ demand as they look for a new place to stay. 

Together with the transition to working from home, there’s a greater demand for more spacious units. This might have encouraged singles to move out and purchase a flat on the resale market, thereby raising the demand for HDB resale flats. 

Another factor could also be due to the slow down in BTO construction due to COVID-19. 

Delays in building BTO flats could have driven many homebuyers to turn to the resale market instead so that they can move into their own home earlier. 

How will this translate for the property market in 2021? 

While it’s difficult to predict whether demand for resale HDB flats can match supply in 2021, sellers can remain hopeful that the prices of their resale HDB flats will maintain or even continue to grow.

The private property market is also likely to benefit from the high demand for housing in the coming year as aspiring homeowners look to upgrade their HDB flats to private homes. With over 20,000 flats expected to return to the resale market, demand for affordable private properties may increase. 

Are you thinking of upgrading to an Executive Condo (EC) from your HDB flat? Read about it in our guide here.

Want to learn more about HDB resale flats? Browse our guide to purchasing an HDB resale flat here.

With Singapore banks interest rates at their lowest in recent years, learn how you can optimise your home loan refinance in the current low-home interest rate environment.  

At FinanceGuru, we seek to help homeowners find the best Singapore home loan and help them achieve their financial goals. Learn more about how you can optimise your home loan and uncover potential ways to save you money and time. Get a non-obligatory assessment and loan product recommendations today.