Hougang goes private

Being a mature HDB estate means Hougang could be saturated in its housing and population. But this gungho town is certainly not satisfied to wait by the sidelines, in many ways. Real estate-wise, private properties are inserting themselves in a big way in this area made up of mainly HDB flats. Opening up the path for home buyers hoping to live in the HDB town, private properties are entering a market which has probably been long waiting for new players.

Riversails condominium.

Riversails condominium.

New projects in the area is expected to bring 2, 319 additions to the 12, 457 private homes already in the area. Current private condominiums and executive condominiums (ECs) include recent launches such as Boathouse Residences, Riversails, Parc Vera and Heron Bay. Prices of condo units in Hougang range from $840 to $920 psf, a considerably manageable entry-level pricing for upgraders and investors. Besides, R’ST Research director Ong Kah Seng considers the existing pool of HDB upgraders within the estate itself a ready audience for new properties. Nearby Punggol is establishing itself as a hub for waterfront living, but the buyers it attracts are mainly those from far-flung estates.

Resale home transactions within Hougang itself has been steady since Q3 of 2011. It has not gone above 200 units in a quarter, and this could be because the accessibility and availability of schools and amenities in its vicinity have kept residents close to home. Resale prices were also maintained at a $835 to $1,000 psf constant.

Midtown Residences at Hougang.

Midtown Residences at Hougang.

With the rise of popularity with mixed-use developments, its no wonder the latest Midtown Residences launch has appealed to investors. This project is situated near the Hougang MRT station and bus interchange and prices were sold at a premium of $1, 220 and $1, 660 psf. Although quite a bit higher than the average resale home prices of properties in the proximity, the location means units will command higher rents. Following in the footsteps of other mixed-use projects like Bedok Residences, Watertown and The Hiller, and perhaps also King Albert Park Residences, could it be the era of these multi-purpose commercial-residential developments?

The Curious Case of Bedok: Are We Paying More for Less, and Is This A Sign of Things to Come?

Bedok, a heartland estate on the Eastern side of Singapore, is currently a hot favorite among property buyers, as demonstrated by the long queues at the most recent Bedok Residences launch. While Bedok is still not yet in the leagues of top prime locations such as Bukit Timah and Bishan, the estate located on the eastern side of Singapore is proving to be a force to be reckoned with, given its ability to command strong consumer demand amid the news of a pending economic downturn. With these factors at play, could it be the case that Bedok’s housing prices are still currently undervalued?

1. Is Bedok Fast Becoming an “Elite” Town?

It is common knowledge that HDB home prices in a neighborhood can rise for a number of reasons – the building of a new MRT station, new shopping center, or even a change in perception of the “prestige” accorded to those living in the neighborhood. Often flats command a higher price because of it is considered to be an “upper-class” neighborhood.

Although Bedok may still be regarded by many as a HDB heartland for the middle-class, public housing buyers seem to be moving away from HDB flats in Bedok – a possible result of higher asking prices from Bedok flat owners, and their willingness and ability to “hold” for a longer period until they can get a good price. The total number of HDB flats sold in Bedok has been on the decline, falling more than 32% during the period from Feb 2010 to Feb 2011:

 

Reflecting the changing landscape and preference of private home buyers for flats in the Bedok area, the drop in HDB transactions in Bedok is accompanied with a sharp increase in the number of condo transactions in the area, rising more than from 31 from a year ago to 137 by February 2011.

2. A Look at the Numbers

Although the number of HDB flats sold in Bedok have dropped dramatically over the past year, buyers of flats in this estate are paying significantly higher prices as compared to a year ago. Both the lowest and highest transacted HDB prices in Bedok for the same period were accompanied by substantial YOY (year-over-year) price increases:

 

The HDB flat in Bedok with the lowest transacted price in Feb 2011 was $228,000, reflecting a 8.6% appreciation from the previous year. On the other end of the spectrum, the HDB flat in the same estate with the highest transacted price showed a 15.6% YOY appreciation, up from $552,000 to $638,000, with both demonstrating substantial price appreciation.

3. Paying More for Less?

As expected, the rise in Bedok’s HDB flat prices were accompanied by higher PSFs, both on the low as well as higher end. PSFs on the low-end increased 22.4% YOY from $254 a year ago to $311 in Feb 2011. On the other hand, in PSF for Bedok HDB flats on the higher end showed a modest increase of 1.41%, reflecting the trend of higher PSF prices for smaller flats.

4. How Bedok Fits into the Overall Housing Picture

As many locals still aspire to the increasingly elusive Singapore Dream of owning a condo, the increased demand for smaller units even in heartland estates such as Bedok seem to reflect the unwillingness of many to let go of the Dream, and living in a smaller suburban condo may be an acceptable compromise for those belonging to this group. As average wages have not risen as fast as property prices in Singapore, buyers still have to look for a property within their means, leaving a smaller flat as the only solution. The lower condo management fees for smaller units may also make these units seem more value for money, as they also carry lower monthly fixed costs.

However, buyers of smaller units, both HDB and condo, should be reminded that smaller living spaces have important implications down the road. Young couples may find the limited space may deter their plans for multiple children down the road, and reduce the quality of life for those who value having their own personal space. Additional costs, such as paying for self-storage facilities, may prove to be unforeseen expenses that buyers of small units may not have initially anticipated.