Singapore's 99-Year Time Bomb

Singapore states that home ownership in Singapore is about 90.9% in 2016. As 31 March 2015, statistics provided states that 82% of the resident population in Singapore lives in leased accommodation or what we commonly know as HDB flats. A simple breakdown tells us that 8.9% of the population, made up of wealthy Singaporeans and overseas investors, owns private property. The last 9.1% of the population do not own any form of property or lease agreements. We can add this 9.1% to the 82% of HDB flat owners to conclude that 91.1% of the resident population do not own a property.


HDB flat owners are not owners. The document an owner signs is a 99 year leasehold tenancy agreement. What a HDB flat "owner" really owns is a right to reside in an apartment owned by the Government of Singapore. Acquiring a 5 year gym membership allows one the unlimited use of the gym in accordance to the gym rules and regulations but does he owns the gym? No. Thus, a gym member does not have the rights to move, add or remove fitness equipment. 

Though a HDB flat leaser has more flexibility with customising their flats, a leaser has to reinstate the structure of his or her flat to the original form if any alteration, such as hacking of walls, is done to the flat, if the leaser returns the flat to the landlord, which is the HDB. Should the leaser sells the flat to a buyer in the open market and the buyer accepts the structural changes of the house, no reinstatement is necessary as it is a simple case of another tenant taking over the existing lease of the previous.

Despite some flexibility a HDB flat lease holder enjoys, further evidence of tenancy include the lack of owner rights, such as non-financial related eligibility criteria, the prohibition of operating an Air Bnb, the right to customise external features and approval required from the landlord to sublet etc.

HDB flat owners are not home owners. It is clearly stated in official documents or websites this is a temporary leasehold arrangement. At 9.1% of private property ownership, Singapore has one of the lowest home ownership rates in the world, not among the highest as it claims.

The notion of selling a HDB flat

As stated earlier, the process of selling a HDB flat in the open market is actually a transfer an existing rental agreement one from tenant to the other. It is akin transferring a gym or country club membership. When a new tenant takes over a lease agreement, he or she takes over the remaining duration of the lease. Thus the value of the lease should not appreciate. In fact, it should be sold lower than its original base price like any transfer of ownership of a depreciating asset, with car lease transfer as an occasional exception - when COE value can potentially appreciate faster than the depreciation of the car itself. The closest resemblance of a variable mechanic like the COE is the cost of land. However, is the appreciation of land prices correctly reflected by the exponential appreciation of the hundreds of units sited on top of it? Think about it.

The biggest property bubble in history

In 2014, the Minister of MND confirmed the value of the flats will be zero at the end of their 99-year lease. Thus, if one is to purchase a lease agreement of a 50 year old flat with half of the lease remaining, the value of the transfer should never be higher than the original purchase price. Even if land appreciates 50 folds over 30 years, the total increase of land value should be divided by the number of units of the block, then pro-rated to the years of lease remaining. The sale of a HDB flat lease under such a situation should be near its original price, or 2- 3 times the original price at best, instead of appreciating 20, 30 folds we have witnessed over the past 3 decades. 

The government is trying to avert the biggest property bubble in history using SERS. However, as space runs out, it put further stress on HDB's race against time. What is going to happen when HDB fails to clear out a glut of HDB flats with a third of their lease remaining? Will Singaporeans continue to play daft by paying top dollar for these flats or be wary of being caught holding the ball when the music stops? If demand drops dramatically, how much will sellers be pressurized to drop their asking prices?


At around $800 - $1000 a month for a fresh 99 year lease of a BTO flat, HDB provides top class, affordable, rental public housing to the majority of the residents in Singapore. However, its continual insistence to cast the illusion of ownership on their consumers will only further aggravate the problem of their vastly overvalued fast depreciating assets. Meanwhile Singaporeans are paying their rental by emptying their retirement account. It will require the willingness of the government to recognise the problem and rally the nation to find and accept radical solutions together to advert a 99 year time bomb.


  1. hi mate,

    as an assurance if you think otherwise, i am no squirrel of the mighty s'pore gahment or out to harm anybody. that's the difference between me and the lasup squirrels from the home affairs.

    as for HDB, dun say like that...i still have an upcoming apartment coming. i hope to sell for a small profit after 5 years. in general, i can't understand the property prices in s'pore. frankly, the most expensive property is in shenzhen, china, ASIA, after san fran.
    HK is very expensive cos' it's next to shenzhen, china. in SEA, s'pore is surrounded by neighbouring mooslim countries where property prices is a fraction of s'pore's. i scratching head...???!!! even in OZ and NZ, both are coupled, and Auckland's property is more expensive than OZ, some say... proximity may be the core reason. do you get the whole picture? rgds.

  2. I think your point here is about government advertising leasehold as home ownership. Trying to make not so good thing sound nice like marketing strategies but they do indeed put a roof over our heads.

    I'm neither pro nor anti pap but I think leasehold is the right way to go in land scarce sg. Otherwise rich can always pass down the line forever while poor forever remains poor.

    Just my 2 cents of thoughts.

    1. Unfortunately, you completely missed me point.

  3. What point have I missed?

    I do understand that we pay high prices of depreciating HDB flats by emptying our retirement accounts.

    But one can choose not not empty retirement accounts by buying a not expensive home?

    Just trying to be not so negative here but I'm not positive either.

    1. The whole point of the post is the incorrect framework being used by HDB to value the remaining tenure of a lease agreement.

  4. it all sounds like propping up prices. same as some of the worthless tech companies in Nasdaq. but frankly, i hope prices remain stable as i have family and friends owning HDB flats and apartments. btw, my friend in perth told me economy is not doing well...what is your take?

  5. This is a major problem indeed. it remains to be seen what the sg govt will do to fix this problem. Will they extend the lease when the 99 years is up? will they make the dwellers pay more money after the 99 years? who knows. Policies in sg change so fast that it's hard to keep up.

    overseas sinkie