1 in 5 first-time HDB Flat buyers opt for resale

CLementiHDBIt has become easier for first-time HDB flat buyers to secure a new flat directly from the Housing Board (HDB) but some are still opting for one in the resale market. 95 per cent of new Build-to-order (BTO) units are now reserved for first-time buyers. But yet figures have shown that 1 in 5 first-time HDB flat buyers are still choosing to buy a unit from the resale flat market instead of applying for a new one.

The decline in resale flat prices, the growing pool of available resale flats on sale in mature estates and the fact that more young buyers are willing to pay dearly for older flats to get the space and location they desire could all be reasons for the high numbers of first-time buyers choosing to buy resale.  Younger families prefer homes in better locations, perhaps also to be closer to their extended families, and they now have more available stock to choose from. For buyers buying a flat near their parents, they can also receive a $20,000 housing grant.

ClementiHDBflat3,441 Singaporean families purchased a resale flat with the aid of housing grants last year – that is almost 20 per cent of the flat purchases made by first-time buyers. The remaining 80 per cent applied for 14,273 subsidised units directly from HDB. Young couples who are eager to start a family may also choose to purchase from the resale market in order to skip the waiting period of 3 to 4 years which comes with the acquisition of a new BTO flat. The now-enhanced CPF Housing Grants also mean first-time buyers can get up to to $50,000 in subsidies.

Will this then mean that resale flat sellers can price up as demand does not seem to have waned? Not necessarily so, as the option of new flats are very much available to first-time buyers. There have however been recent transactions in popular areas where records were set for resale units – such as $1.04 million for a 118 sq m resale flat on the 39th floor of Clementi Towers.

2017’s first BTO Launch expected to be over subscribed

Could it be a sign that the Housing Board’s first Build-to-order (BTO) launch this year was on Valentine’s Day and that this launch is also the first time families can apply under the Fresh Start Housing Scheme? Perhaps the parallels are pushing it, but the 4,065 new flats in Clementi, Tampines and Punggol will no doubt provide a good start for couples hoping to start a family.

CLementiHDBPhoto credit: HDB

Out of the 4000 plus units, 1,603 will be in Clementi, 638 in Tampines and 1,815 in Punggol. This latest launch will also feature a number of 2-room flexi units which are popular with singles who are now allowed to purchase selected flats directly from HDB, and senior citizens. In fact, these were the most heavily subscribed units in the current launch.

Units in Clementi are expected to garner the most interest, with its proximity to the upcoming Jurong Lake District and schools such as NUS High School of Math and Science, UniSIM, Ngee Ann Polytechnic and the National University of Singapore. Four-room flats in Clementi are expected to start at $432,000. In comparison, prices of 4-room HDB flats in Tampines are considered affordable considering its mature estate status with four-room flats starting at $299,000 (before grants are applied).

TampinesHDBPhoto credit: HDB

Application closes today and analysts are expecting a four to five times take-up rate for units in Clementi and Tampines while Punggol might be twice oversubscribed. There are 731 two-room flexi units offered in Punggol and the projected subscription for these units is 5 times that number. Despite it’s isolated locale, Punggol is growing to be a busy business and lifestyle cluster, and thus more appealing to singles and senior citizens choosing to live close to their married children.

2017 likely to remain quiet for property sector

matilda-sundeck-bto-flat2017 looks to be a pretty much run-of-the-mill year for the public housing scene, on the surface at least. It may be the year when the authorities make policy adjustments to keep the number of new BTO flats in line with demand from young families and to make them available sooner.

The National Development Minister, Mr Lawrence Wong, has indicated that one of his key goals by 2018 is to reduce the waiting period for a new flat to 2 to 3 years as opposed to the current norm of 3 to 4 years. This may help relieve some pressure from the resale flat market, though sellers may find it more difficult to then find buyers for their units unless they are well-located or are rarer unit-types such as 3-rooms flats or executive flats or maisonettes.

The next BTO launch will be in February with 4,100 flats being offered in Clementi, Punggol, Tampines and Woodlands. The Housing Board is looking at a total of 17,000 flats in their 2017 launches.

hdb-maisonetteThe private property market will need some transformation in order to keep up with competition from regional markets and changing buyer requirements. Some property players have already made changes by providing mobile apps for their agents as well as build a rating system so buyers can easily appoint an agent for their selling and buying needs, but perhaps more radical changes need to happen from the policymakers’ end in order to sustain a profitable real estate market while keeping the numbers realistic enough for true home seekers.

More go for Clementi HDB flats

HDB launches in mature estates have always been popular with applicants. And in their May launch this year, applicants are heading straight for the new BTO flats in Clementi. The application rate for 5-room flats in this HDB estate was at 13.1 per unit. 2,047 buyers vied for just 156 units. All this despite the Clementi flats being the priciest ones of the entire launch. 5-room units had price tags starting from $566,000. Property analysts have however expected such fervent response as the new flats were situated close to the MRT station and other amenities.

ClementiCrestHDB

Photo credit: HDB

But waterfront units at Punggol Northshore received quite a bit of attention as well, as the new town sees more development and potential growth. These flats featured the latest products by HDB – smart-technology HDB homes. Although not quite reaching the 13.1 rate for the Clementi flats, the 2.8 application rate for the Punggol flats (double the 1.3 rate for the last Punggol flat launch) already showed an marked increase in interest for flats in this area.

Overall, the recent launch had an application rate of 3.7 per cent, making it the most oversubscribed launch since July last year. Since HDB has reduced the number of launches this year, could future launches have similar reactions? How will that change the demand for resale HDB flats in the areas or estates surrounding the launch?