Many Singaporeans in their sixties own more home than they now use. The children have moved out, the stairs are harder, and most of their wealth sits in the walls. The Straits Times looked last Sunday at why so few of them move, and why the word matters. Downsizing sounds like loss. Advisers prefer rightsizing: matching the home to the life being lived now, which can mean smaller, but can also mean nearer a clinic, a lift or the grandchildren.
One retiree it spoke to, a former journalist in his sixties, sold his private apartment for an HDB flat. He had been paying about $2,000 a year in property tax and close to $6,000 in management fees. In the flat he pays less than a tenth of that, and he finds the basic services better.
What a smaller flat releases
Roov's HDB records for the twelve months to August put numbers on the move. In mature towns such as Ang Mo Kio, Bishan, Queenstown and Toa Payoh, the median 5-room flat resold for $875,000 and the median 3-room for $440,000. Moving from one to the other releases about $435,000 before costs. In non-mature towns the gap is narrower: $690,000 against $445,000, or about $245,000.
From a private home the sum is larger. The median private condominium resold for $1,710,000 over the same period, against $750,000 for a 4-room flat in a mature town. Selling one to buy the other releases about $960,000, before stamp duty, agents' fees and the move itself.
The catch: cheap per square foot usually means a short lease
The Straits Times noted that people who downsize can end up paying more per square foot for the smaller home. Our records show that is true, but not where you might expect.
In newer towns it holds. In Punggol a 3-room resold at a median $749 psf against $639 for a 5-room; in Sengkang, $743 against $574. Those 3-rooms are young, with about 88 years of lease left, and small new flats carry a premium per square foot.
In mature towns it runs the other way. There a 3-room resold at a median $592 psf against $673 for a 5-room, because the 3-rooms are old: their median remaining lease is 53 years, against 68 for the 5-rooms. In Toa Payoh the median 3-room had 45 years left and resold at $534 psf; the median 4-room, much of it newer stock, had 89 years and fetched $1,027.
So a cheap 3-room in a mature estate is usually cheap for a reason. For a buyer in their sixties the short lease may not matter much for living in the flat, but it matters elsewhere. CPF use is restricted when the remaining lease does not cover the youngest buyer to age 95, and banks lend less against short leases, which our guide to BTO against resale explains. The flat will also be worth less to whoever inherits or buys it next, and an older flat leaves less lease to draw income from later.
In a mature town the fair comparison is not psf. It is the price of the flat against the years of lease it gives you. Bishan is the exception worth knowing: its 3-rooms and 5-rooms resold at almost the same psf, about $750, so a smaller flat there costs roughly what its size suggests, and the move from a 5-room at $986,500 to a 3-room at $530,000 released about $456,500.
The schemes that pay you to move
Some of that equity can be turned into retirement income, and the Straits Times summarised the main routes. The Silver Housing Bonus gives eligible citizens aged 55 and above a cash bonus of up to $40,000 per household when they right-size to a 3-room or smaller flat, provided they put up to $60,000 of the proceeds into their CPF Retirement Account. For owners who want to stay put, the Lease Buyback Scheme lets those aged 65 and above sell part of their flat's remaining lease to HDB and keep living in it, with the proceeds topping up their Retirement Account for a monthly CPF LIFE payout.
Private owners moving to an HDB resale flat no longer face the 15-month wait after selling: the government lifted it in July, as we reported at the time. The 30-month wait still applies to a new BTO flat, to CPF housing grants and to an HDB concessionary loan, the Straits Times noted.
If you buy the smaller home before selling the larger one, you may own two for a while, and the stamp duty then depends on who you are and what you buy. IRAS provides remissions and refunds in some of these cases when the first home is sold within six months, so check its current conditions before you sign. The stamp duty calculator and our stamp duty guide set out the duties by buyer profile.
Choosing the smaller home
Rightsizing is also a move to a new neighbourhood, and at this stage of life the neighbourhood does more of the work than the floor plan. The retiree in the Straits Times piece counted a coffee shop, a bus stop, a clinic and a supermarket within a few minutes' walk. Roov's location tool shows exactly that for any address: the nearest MRT, the bus stops and the services at each, and the clinics, wet markets, supermarkets and malls within walking distance.
Then run the numbers in order. The stay or sell tool weighs keeping the current home against selling it; the sale proceeds calculator shows what an HDB flat leaves you after the loan and the CPF refund; and our guide to buying an HDB resale flat covers the other side of the move. What you can borrow matters less to most rightsizers than to younger buyers, but a loan taken at 60 runs to a shorter tenure, so check it if you need one.
Not everyone should move. Some families will do better staying, for the grandchildren, the neighbours or the room they still use. Our piece on Tampines' bigger flats looked at the households going the other way, into larger homes for three generations. And with HDB resale cooling while private keeps climbing, a private owner selling now captures a wider gap between the two than a few years ago.
The decision is personal. The numbers are not, and they are worth knowing before the conversation over dinner.