What is a HDB Negative Sale and why should you care?

Or in other words, “Why did my flat price increase but I did not get ANY cash from selling my flat?”  

It’s a strange situation to think that you don’t get ANY profits from selling your flat – despite putting thousands of dollars in it every year, but yes it is happening AND it can happen to you. 

Putting money into a stagnant property is like pouring into a leaking bucket - HDB Negative sale

Is your own property a leaking bucket? 

How does a negative sale happen? 

A hdb negative sale happens when the flat prices increases at a rate that is slower than the amount of interest you paid to HDB (2.6%) or the bank (check with the bank for the amount you paid, 1.3 – 3%) AND  the CPF accrued interest of 2.5%.

To get any cash profit from the sale of your flat, its roughly estimated that your flat needs to have an annual capital appreciation that is more than the HDB interest rate and the CPF accrued interest rate i.e. an annual capital appreciation of 5.1%. If this doesn’t happen, your returns may get locked into your CPF. In addition, because of the minimum sum requirements,  usage for the next flat might also be limited (*this happens if you are planning to do downgrade after 55)

Singaporeans have the assumption that they can easily cash out on their HDB flats as source of retirement income when they sell their bigger flat and downsize to a smaller one. However this has not been the case recently.

Because of the stagnant market, quite a number of HDB homeowners have discovered that they do not get any cash profits from the sale of their flats and they are sometimes unable to down grade to a smaller resale flat due to the lack of funds. Their only option is sometimes a limited lease 2 room BTO from HDB, which takes times since it can only be purchased at BTO launches and SBF sales, although there are more options at ROF selections now.

What is a negative HDB sale

This is the sales cycle of HDB prices since 1989. If you are counting on holding on your flat until the next wave, you might be waiting for a very long time. Will your flat reach the 40 year depreciation dive then? 

Who has profited the most from their HDB?

  1. People who bought flats in the good old days and flats have appreciated 200 – 300%.  This is fairly common for those who purchased flats 20-30 years ago. However, it would be illogical to think that HDB flat prices can increase to more than 1 million. 
  2. People who pay for their flats in cash. If cash was used to pay for the flat, the returns would also be in cash. They are also not subjected to 2.5% accrued interest in CPF.
  3. People who focused on growth properties (Both HDB and private). There are some people who selected their home based on how the property can appreciate.
  4. People who accepts that their own home can never be an investment, but a rental property definitely is.  

How does this affect you?

What should i do if my flat is experiencing a negative sale? 

There is no one size fits all step for everyone experiencing a negative sale. If your flat has reached MOP or is about to reach MOP, you can read more about your options here.

 It's important to understand what you are going to do next before rushing to sell your flat.  While some people can benefit from asset progressions and focusing on growth properties. Some might benefit from cutting their losses and fully paying off their loans. 

We provide free consultations for those who are unsure about what to do next. Please text us at 96918885 to book an appointment today.

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

Can the CPF that you earned disappear? Sadly yes.  

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.


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.