Why are so many people selling their newly MOP HDB?
In 2021, 13.4% of HDB flats were sold within one month of their MOP. Three reasons come up again and again.
- 01HDB flats fetch the highest resale value right after their 5-year MOP.
- 02Upgraders want to lock in the gains on their MOP-ed flat to finance a condo, or a larger, more central flat.
- 03Bigger households need more space for a growing family.
Kim Seng & Lynette
Kim Seng and Lynette live in a BTO HDB flat which has just MOPed. The flat is valued at around $550K. They both work and have a combined income of $11,000. Considering stable market conditions with asset appreciation just slightly above inflation, what is the best move to get a good outcome for the future?
- Age
- 35
- Home
- BTO HDB, just MOP-ed
- Combined income
- $11,000 / month
- Cash
- $150,000
- CPF
- $60,000 + $80,000
- HDB value
- $550,000
Do Nothing
Hold on to the HDB since it is quite comfortable.
Upside
- No effort required, and no pressure on their finances.
Trade-off
- CPF savings taken out to buy the flat keep accruing at 2.5% a year. The amount doubles every 28 years.
- No guarantee the flat holds its value.
- Missed opportunities to grow net worth and build an income stream.
By doing nothing, Kim Seng and Lynette are comfortable — but the flat's value will stagnate and start falling after the 10th year. They also give up the time they needed to build an income stream for the future.
Keep & Buy
Keep the HDB and buy a private property to invest in.
- 1BR condo
- $1,000,000
- 10% cash
- $100,000
- 35% CPF
- $350,000
- Stamp duty (cash)
- $24,600
- ABSD
- $200,000
- Loan $550K / 35 yrs
- $1,822 / mo
- Cash shortfall
- $387,600
Upside
- Generates an income stream and keeps the upside.
Trade-off
- With the profits still locked in the flat and ABSD on top, this one does not work on these numbers.
The ABSD is the dampener here — it limits their choices and eats the upside. It is still viable with more savings: the CPF contributions can service the loan even between tenancies.
Sell & Buy
Sell the HDB and upgrade to an EC or condo.
- Sell HDB
- $550,000
- Buy 3BR condo
- $1,500,000
- CPF returned
- $390,000
- Cash proceeds
- $138,000
- 5% cash
- $75,000
- 20% CPF
- $300,000
- Stamp duty (CPF)
- $44,600
- Loan $1.125M / 30 yrs
- $4,158 / mo
- Cash top-up
- $1,958 / mo
- Left after reno & legal
- $65,000 cash + $45,400 CPF
Upside
- A better property with more room to appreciate.
- Can move nearer to preferred schools.
Trade-off
- A new mortgage to service — though on stable jobs, $1,958 a month in cash is manageable.
The straightforward upgrade. The gains come out of the flat and go straight into an asset with more room to grow, and the family gets the space they were short of.
Sell & Buy Two
Sell the HDB and buy two — or a condo and a commercial unit.
- 2BR condo
- $1,200,000
- 1BR condo / commercial
- $800,000
- Structure
- Decoupling, so no ABSD
- Loan $900K / 30 yrs
- $3,327 / mo
- Less rental income
- -$1,700 / mo
- Net cash top-up
- $427 / mo
- Second loan $600K / 25 yrs
- $2,218 / mo
- Left over
- $88,000 cash + $31,000 CPF
Upside
- One flat becomes two private properties, with cash and CPF still left over.
Trade-off
- Two mortgages to service — but with the rental income, the cash top-up is very small.
They multiply the portfolio from one HDB flat to two private apartments, still hold cash and CPF, and only Kim Seng tops up $427 a month once the rental income is offset.
Monies taken out to pay for a property purchase must be paid back to CPF. As long as you do not sell, that money keeps earning 2.5% a year — with an extra 1% on the first $60,000 — even on a fully paid-up flat. It doubles after 28 years.
These figures are Jesslyn's worked illustration for one example household, based on stable market conditions and asset appreciation slightly above inflation. They are not a valuation, a loan approval or financial advice, and your own numbers will differ. Any move should be checked against your current CPF balances, loan eligibility and the prevailing stamp-duty rules at the time.