Here is a quick formula for you to valuate your own HDB flat:

1. For homes with lease more than 35 years:
Your buy price x (remaining lease/99 years) x 1.026^(Year sold – Year bought)
2. For homes with lease less than 35 years:
Your buy price x (remaining lease/99 years) x 1.026^(Year sold – Year bought) x 0.5

Example 1, you are a recent BTO buyer in the last ten years and you want to sell today:
You bought a new 4-room HDB flat for S\$350,000 in 2012, the value of your HDB in 2018 is as follow:
\$350,000 x (89/99) x 1.026^(2018-2008)
You should be able to sell your flat for S\$406,720 in 2018 today.

Example 2, you are a long-term BTO buyer for above ten years to 30 years and you want to sell today:
You bought a new 4-room HDB flat for S\$250,000 in 1988, the value of your HDB in 2018 is as follow:
\$200,000 x (69/99) x 1.026^(2018-1988)
You should be able to sell your flat for \$301,066 in 2018 today.

Example 3, you are a resale flat buyer who bought a resale flat in the last ten years and you want to sell today:
You bought a 30-year 4-room HDB flat for S\$400,000 in 2008
\$400,000 x (69/99) x 1.026^(2018-2008)
You should be able to sell your flat for S\$360,367 in 2018 today.

(Using formula 2 now) Example 4, you are a recent BTO buyer in the last ten years and your children wish to sell 65 years later for your retirement:
You bought a new 4-room HDB flat for S\$350,000 in 2012, the value of your HDB in 2077 is as follow:
\$350,000 x (34/99) x 1.026^(2077-2012) x 0.5
Your children will be able to sell the flat for S\$127,502 (future value) in 2067 (S\$60,100.94 in 2018 value): 83% reduction. This amount will be what VERS will likely compensate you for.

(Using formula 2 now) Example 5, you are a resale buyer in the last ten years and your children wish to sell 65 years later for your retirement:
You bought a 30-year 4-room HDB flat for S\$400,000 in 2008, the value of your HDB in 2072 is as follow:
\$400,000 x (5/99) x 1.026^(2072-2008) x 0.5
Your children will be able to sell the flat for S\$52,215 (future value) in 2067 (S\$9,845.03 in 2018 value): 97% reduction. This amount will be what VERS will likely compensate you for.

*Assumptions:
1) Inflation rate at 2.6% per annum
2) 0.5 coefficient in rule 2 is influenced by the mortgage loan rule restrictions. Resale buyer are unable to get a bank loan to purchase flats above the age of 64.
3) Valuation of course varies depending on location, amenities, flat conditions. This formula is just a general indication.
4) When HDB lease = 0, 0 payout

Alex Tan
STR Editor

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