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070923 How Will The New HDB Classifications (Standard, Prime and Plus) Affect You_

How Will The New HDB Classification (Standard, Prime and Plus) Affect You?

profileJustin Oh

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Recently, it was announced that there will be a new classification framework for HDB flats starting in the second half of 2024.

HDB BTO Flats from that point on will be categorised under Standard, Plus or Prime, a shift away from the existing mature and non-mature classification.

Source: Giphy

So what?

Whether you are looking to enter the property market now or in the future, here are some immediate and future impacts of the new framework.


TL;DR: HDB Classifications Standard, Prime and Plus – How Will They Affect You?

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Possibly Drive Up Resale Flat Prices in the Near Term

With the new HDB classification on the horizon, some realtors speculate that the announcement would increase the demand for existing resale flats. This is because the new rules will not apply to existing flats and hence have fewer restrictions.

New plus and prime flats will have a 10-year minimum occupancy period (MOP). However, existing flats in the same locations may not have such a restriction, hence making them more attractive to buyers.

The counter-argument here is that existing (old) flats have an increased rate of lease decay which may keep prices down.

Be that as it may, it is important to note that resale prices have increased more than 30 per cent since 2020 despite lease decay always being a factor. Thus, it is more likely that we will see a bump in price for resale flats with fewer restrictions in the near term.

Discourage the Use of HDB Flats as Property Investment

When the new HDB classification is implemented, plus and prime HDB flats will have the same 10-year MOP as PLH flats.

Add on the three to four-year wait time for construction, and we are looking at a lock-in period of about 15 years give or take.

For Singaporeans who are in need of a home, the new HDB classification is a great initiative as it deters property investors from flipping HDB flats for quick profits and competing with them.

Slow Down Wealth Accumulation via Property

On the flip side, however, the new classification may lead to an eventual slowdown of wealth accumulation via property.

According to Nicholas Mak, Chief Research Officer at Mogul.sg, buyers under the new classification will be able to buy a flat cheaply. However, they will also have to sell it a bit cheaper than if there were no restrictions.

As a result, the amount of “windfall” they can make will be lesser and hence slow down their wealth accumulation as compared to the previous generation who were able to flip properties much more easily.

More Choices for Singles

Lastly, the new HDB classification framework also brings some good news for singles. With the old classification of mature and non-mature being replaced, singles can buy a 2-room HDB flat in any location.

While this gives singles a wider selection, netizens were indifferent as there are still bigger obstacles at hand such as the minimum age requirement of 35.


Impacts of The New HDB Classifications: Standard, Prime and Plus

Ultimately, the new HDB classification is seen as a long overdue overhaul to the mature and non-mature estate framework. The impacts of it are a step in the right direction for future homeowners, and might help choicer locations become more affordable with more grants.

But for those who want to flip HDB flats to accumulate wealth, it will soon become harder to do so.

What are your thoughts on the new classifications? Share your thoughts with us below!

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About Justin Oh
Your average Zillennial who is obsessed with anime, games, movies and of course, personal finance. Join me as I break down personal finance into easily digestible and fun bits!
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