Resale HDB flat prices fall in August

Photo credit: HDB

Photo credit: HDB

Rather than a market rebound, the HDB flat market may have to be content with stabilising prices and sales volume. August saw a 0.7 per cent dip in resale flat prices, led by a 1 per cent fall in 4-room flats, over the past 3 months after a slight rise in July. 3- and 5-room resale flat prices also inched down 0.6 per cent while executive condominium (EC) prices rose 0.8 per cent. The price drop is seen in both mature and non-mature HDB estates.

The Hungry Ghost month may also have had something to do with the drop in sales prices as buyers tend to hold off buying during that month though units with lower selling prices may have transacted hence pulling the average median prices down slightly. Since the market peak in April 2013, HDB resale flat prices have since fallen 11.5 per cent.

Photo credit: HDB

Photo credit: HDB

Property analysts predict a level market for the rest of the year, with price sustainability at best and as long as the economic forecast remains unclear and overall property market sentiment weak, any price rebound will be unlikely. Sales volume has however been rising, a promising sign, though as more new HDB flats reach completion within the next couple of years, more flat owners will be pushed to sell within a specified time period and competition may once again push prices down.

Resale HDB market sees rise in sales

The number of resale HDB flats exchanging hands in April rose by 10.3%, a positive sign despite prices remaining level. The last time sales volume exceeded the 1,800-unit mark was in October 2012. 1,828 units were sold in April this year.

Though property analysts are wary about calling this a market rebound, the increase in transactions could mean an eventual decrease in the number of resale flats available. Depending on how far the price gap between private property and resale HDB flats goes, the diminishing stock of resale flats in the market may entice buyers to purchase sooner rather than later. And the increase in rarity could also mean the increase in prices.

Serangoon HDB flatFor the moment however, the buyers may still have the upper hand as most are buying only after having waited for prices to fall. The cash-over-valuation prices are almost all gone, and with the purchasing process adjusted, buyers are less likely to fork out additional monies above the valuation price. In addition, data pertaining to resale flat prices can now be more easily accessed, thus buyers are seldom willing to succumb to sellers’ high asking prices.

HDB flat prices have stagnated for almost a year now, though the fluctuation either ways has not been drastic. Last month for example, 3-room flat prices rose by 0.6 per cent though 5-room flat prices fell by 0.9 per cent. This could be an indication of what the buyers are now looking for. As the population and policies shift, the property market will also need to adapt quickly to their changing needs.

How deep is the property market well?

Property prices in Singapore have been falling since 2014, 10 consecutive quarters to be exact. In the first quarter of this year, HDB flat prices have stabilised at 0.1 per cent while private property prices have dipped 0.7 per cent. In 2015, HDB flat and private property prices fell an average of 0.4 and 0.9 per cent respectively.

Kingsford WaterbayPhoto: Kingsford Waterbay condominium 

HDB flat prices have begun to stabilise of late, though some property analysts are still expecting a further drop in the second half of the year as 25,000 new BTO flats reach completion this year. A good 30 per cent of these new-flat buyers are upgraders and home owners, not investors, which means they will be looking to sell their existing HDB flat in order to finance their new flat. This will bring a new slew of units into the resale HDB flat market. Though the demand for resale flats has not waned much, the rise in supply may put the ball in the buyers’ court.

 Photo: Clementi Gateway BTO flats

Similarly in the private property and EC (executive condominium) market, buyers will need to time their upgrading manoeuvre in order to manage cash flow, thus some may be in a rush to let go of their existing unit which could put further pressure on the market which will be seeing 21,906 new private condominium and 4,561 EC units enter its midst this year. How will the property sector perform in this crucial second quarter of 2016?

Mortgage cap continues to limit resale HDB flat market

One of the more impactful property cooling measures implemented in recent years have been the Total Debt Servicing Ratio (TDSR) framework and the mortgage servicing cap for HDB flats, which limits the percentage of one’s gross income which can be used to service a loan for a HDB flat to 30 per cent.

SengkangHDB

Resale flat prices have been deflating for 2 years now and looks like it will be flatlining this year. Since its peak in April 2013, resale HDB flat prices have fallen 11 per cent and many transactions are now closed sans Cash-over-valuation (COV). The second half of last year did however see a slight increase in prices. With the selling prices of recent transactions quite transparently and clearly reflected by HDB, buyers are now more aware of the current market climate.

The number of transactions in January fell 121 units from December, and prices fell 0.5 per cent. But this may be due to the busyness which January brings for buyers and sellers and property analysts are not overly worried about the HDB market as prices and sales volume are only expected to remain level this year. The stability may be a good thing this may be the much-needed rest period before a market rebound.

 

2016 – Property cooling measures to stay

Remember those days of astounding COV (cash-over-valuation) prices? Those days may be but a shadow of the current market environment today. More than half of resale HDB flats sold now are selling at prices close to market value and prices are now comparable to those of 2011.

Tampines HDB flatPhoto: Resale HDB flat for sale in Tampines.

National Development Minister Lawrence Wong has however said that it may be too early to lift the property curbs, most of which were implemented in 2013, during the peak of the property market. Since then, HDB resale flat prices have fallen about 10 per cent, according to the HDB resale price index.

Some of the most impactful measures include the Additional Buyers’ Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR) framework. For HDB loans, the mortgage servicing ratio was tightened to 30 per cent of the loan applicant’s gross income.

With the property cooling measures here to stay, this year’s resale flat prices may remain level, with some fluctuations should there be economic or interest rate changes. HDB’s announcement of their expected 18,000 new BTO units this year may dilute demand for resale HDB flats, though prices are not expected to fall much as most buyers will be those who do not wish to or are unable to wait 3 to 4 years for the new BTO flats to be built. The motivating factors for selling or buying a resale unit may be what lays the foundation for the final transacted price.

2016’s BTO flat supply to benefit first-timers

First-time HDB applicants will be the main group to benefit from this year’s ramped-up BTO (build-to-order) supply, according to the new National Development Minister, Lawrence Wong.

Punggol HDB EstatePhoto: Punggol HDB estate

The Housing Development Board (HDB) will be rolling out 18,000 new units over the course of the year, almost 3,000 more than last year’s 15,100 units. Last November’s mega-launch released 12,000 new flats in popular estates such as Bidadari to the public’s overwhelming response. Though the number of new BTO flats reaching completion within these 2 years will increase, 26,000 new flats were completed last year, the authorities maintain their stance in providing a balanced and stable supply of homes for Singaporeans.

With new priority schemes and higher income ceilings in place after last year’s elections, more first-time applicants have been successful in securing a unit within a shorter time frame. From 2011 to 2013, HDB had ramped up their supply and construction of BTO flats to meet the pent-up demand from the decade before.

Last year, the number of flats launched was reduced from 16,900 to 15,100 as the resale HDB flat market slowly stabilised. Those hoping to apply for a new BTO flat directly from HDB will be happy to hear of the increase in supply which will be spread out over various flat types and HDB estates.

Property market looking positive

Buyers, it seems, are slowly realising that property prices are not likely to fall any further, and are making their way back into the market once more. Both in the private property and HDB resale flat sectors, sales are picking up and the year might just close on a happy note.

Trilive KovanPhoto: Trilive condominium 

Resale private properties in particular are faring well, as they one up on newer launches in terms of price per unit of floor area. They are usually larger in size and while may not be cheaper in terms of the total quantum price, buyers consider them better value for money in the long run especially as more buyers of resale units are now owner-occupiers rather than investors. The latter often prefer smaller units in newer launches as they come at a lower overall selling price, though rental competition may prove tough in the market ahead.

More buyers now hunt for residential units near their workplace or schools and are less adverse to living in the suburbs, especially around a strong regional centre such as Jurong, Tampines or Woodlands.

TheTerraceECPhoto: The Terrace Executive Condominium

In the resale HDB flat front, transaction numbers are up 10 per cent from last year. Property analysts are expecting up to 19,000 transactions of HDB flats this year alone. Prices of resale flats are unlikely to fall any further in 2016, and may even pick up a little as demand returns.

Resale HDB flat prices hold steady

At this point of the property market cycle, prices holding steady could be a positive sign, indicating effectiveness on part of the cooling measures which did not crash the market but rather, merely realigned the prices gently. The change evolved over a long period of time, which is more palatable for sellers and the lowering prices may have also increased sales volume by enticing buyers.

BidadariPhoto credit: HDB

A 0.3 per cent fall in HDB resale flat prices indicate a slowly stabilising market. Although prices have been falling for 9 quarters straight, the last quarter showed the lowest rate of decline. In 2014, overall resale HDB flat prices fell 6 per cent. Industry analysts are expecting a smaller dip this year of 2 to 2.5 per cent. Some buyers may have been holding back on buying in the open resale market, in wait of November’s major launch of new Build-to-order (BTO) flats which includes prime units in Bidadari and Punggol Northshore.

Suburban resale private property prices are falling at a steeper rate of 1.3 per cent and if the prices fall even further and at a quicker rate than HDB resale flat prices, the gap between the 2 market segments will narrow. This could then draw a substantial pool of buyers from the resale flat market into the private property market, which could then give sales volume a boost and slow down the price decline in the private property sector.

Sims Urban Oasis

Photo: Sims Urban Oasis

Property developers are keeping a close eye on whether cooling measures will be adjusted, and pricing their units accordingly. We could also expect a more staggered schedule of new launches as developers become more careful about not cannibalising on one another’s market share. More so than before, it may be a matter of timing and opportunity.