Can Your CPF Disappear? HDB Negative sales and the pitfalls.

If you have been using your CPF to pay off your property, we have bad news for you.  In a stagnant or depreciating property market, we've seen cases of CPF that you've earned 'disappearing' from our client's accounts. If you are planning for your HDB to be your retirement plan, our advise is to think again. Read our article on why your HDB should not be your retirement plan.

No we are not just referring to the CPF accrued interest i.e. the funds that you would have earned, had you left that amount in your OA instead of using it for your mortgage payments. (Read the clarification on this on the Factually website. See Myth 2.)

Here's how it can happen.

CASE STUDY OF A NEGATIVE SALE

Recently, I did a consultation with a young couple who were planning on selling the first resale flat they bought i.e.;

  • a 4- room resale flat in Woodlands/ Admiralty, which they bought about 5 years back.
  • They bought it at the peak of the resale market and prices have declined since then. They bought the flat at $409 000 and their remaining loan amount was about $250 000.  The estimated flat price now based on recent transactions and valuation is $320 000.
  • The CPF used by both parties for mortgage payments amounted to about $190 000 and the accrued interest amounted to about $30 000.

To break even, i.e. to not lose any money, they had to sell the flat for about $495 000, which in the 2019 Property market, would be quite impossible, as that might mean a COV (Cash Over Valuation) of about $175 000 for the buyer.  ( Yes, there can still be COV in the HDB Market. Check out this article to understand how it works).

If the the couple sold their flat at market rate, this would mean a negative sale of $150 000. Since their accrued interest was about $30 000 ( and since some claim that accrued interest is negligible anyway), their CPF contributions of about $120 000 just disappeared into thin air. 

Can you imagine?? $120 000 of your hard earned CPF just disappearing like that. They were only left with $70 000 of their CPF to use for their next purchase.

How did $120 000 of their CPF disappear?  


  • There was a steep decline in their flat prices. The flat’s location was in Woodlands and combined with an influx of new flats in the area, the price of older flats fell.
  • To profit from the sale of your HDB flat, you would need a growth of at least 5.1% each year. ( 5.1% is derived from 2.6% HDB interest rates and 2.5% accrued interest rate). The HDB resale market has been stagnant recently.
HDB Resale Prices Index
HDB Price Falling 2019


What can you do to protect your CPF or your assets? 


  • Pray that the HDB Market improves. ( We’re not sure if this works but no harm trying right? )
  • Figure out if you have profited from your current flat. ( For flats that just reached MOP, you might want to check out this article to figure out what you can do next)
  • Figure out a suitable asset growth strategy, based on your age and lifestyle to see if investing in an asset which can appreciate would be suitable for you.  ( We don't recommend upgrading to everyone)
  • SMS/ Whatsapp/ Call us at 96918885 for a free consultation and a customised plan on what to do next. No obligations, we promise. We’ll customise a plan to suit your needs.
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Zubz Kadir is the founder of PropertyRocking.SG She believes that real estate is the biggest purchase one can make and such a decision should not be taken lightly. Knowledge can make or break a purchase. Zubz graduated from National University of Singapore (NUS) Bachelors with a Degree in Informations Communications and Sociology from the and a Masters of Mass Communications from Nanyang Technological University (NTU).

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