Implications of Accrued interest snowballing

I guess you’ve read about how using your CPF ordinary account funds for your property funding will incur ACCRUED INTEREST which would affect your profits when you are selling. This would affect HDB flat owners more in my own opinion. Why? Lets discover why today!

Lets go over some facts. (these are backed by figures and not just some scenario that we just made up.


Firstly to recap, accrued interest compounds at a rate of 2.5%, eats into your cash profits during cash-out. superimposed CPF acc int


HDB is “AFFORDABLE HOUSING FOR THE PEOPLE”, not as an investment vehicle to make profit. Yes, i know many people made profit selling upon completing their minimum occupancy period or they had the luck to ballot for some projects that are more desirable (e.g. Duxton@Pinnacle, some BTOs at Dawson). Putting all these aside, most of us bought “normal” HDB flats in normal locations (e.g. Punggol, Serangoon, Bedok, etc). So Normal HDB flats would undergo this NORMAL cycle of valuation.

Of course one might say “but private property also 99 year lease, it will also depreciate like that what! ,Right?” Nope, private properties are not subjected to HDB rules that the age of the unit might affect how much percentage of CPF you can use to fund the flat. In short, your pool of buyers get significantly smaller. And of course the enbloc potential, we’ll come to that in FACT 3 later.

It will depreciate over time. And if you bought in an area with lots of supply, how high would the capital appreciation be?

Lets put it in super simple terms, if there’s a shortage of durians, the price would go up right? But if there’s a over-supply of durians? They will start to lelong and prices drop. Take a look at the supply at the chart below by MND.

total number of new residetial units from 2016 to 2019




ENBLOC potential, ahhh, this is a HOT topic from 2017 till now. But sadly it dosen’t apply to HDB, or i should say RARELY applies to HDB flats. If you happen to have one, consider yourself very very lucky!


Just 40,000 flats picked for SERS since 1995

Out of around a million Housing Board flats in Singapore, only 4 per cent have been selected for the Selective En bloc Redevelopment Scheme (SERS) since it began in 1995.

This translates into 40,000 units.

They are located on 80 sites. Of these, 73 have been completed – meaning that all residents have moved out, according to data from the HDB.

These are typically sites where the land has not been well utilised and has good redevelopment potential, National Development Minister Lawrence Wong said last Friday.

There must also be suitable replacement sites available for residents. The Government’s financial resources will be considered as well.

Under the scheme, the HDB will acquire and demolish old flats. Affected residents are compensated based on market rates. They are also guaranteed a replacement flat in new blocks, with a fresh 99-year lease.

Depending on their eligibility, residents also get a fixed sum in the form of a Sers grant – $15,000 for singles and $30,000 for families.

Sers residents will be given priority if they are to opt for a new flat in a Build-to-Order or Sale of Balance Flats exercise.




This list is not comprehensive, objective is to provide a short article to let homeowners know the implications. We base all analysis on facts and figures from authoritative sources.

FACT 1: CPF compounds at a rate of 2.5% per year, eats into the potential profits you hope for.

FACT 2: HDB flat is not an investment tool. It’s purpose is to provide affordable housing. Will depreciate over time to reach 0 value.

FACT 3: High supply of new BTOs built every year, there is limited price upside.

Less and lesser profits + Depreciation to Zero value + High supply of brand new BTO = ?

We at PropertyDiscovery.Today are not condemning HDB flats. It’s a good buy considering the SIZE,  location, the housing grants you could get. If you are the type that hopes to make profit with real estate investment, HDB flat is not the tool for it. HDB flats are not for investment purposes.

However, if one is contented to buy a BTO, stay in it for the lifetime, not bothered about the value dropping when flat age gets older and might not get enbloc, for $300,000 with grants thereabout price tag it’s not a bad bargain.


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