Last HUDC privatised last month – Braddell View

HUDC – most who grew up after the 80s will have no idea what these 4 letters mean in relation to the local housing market. In their heyday, the HUDC or Housing and Urban Devleopment Company scheme consisted of selected flats were built  larger, better and fancier than their other public housing counterparts. They were a little like the executive condominiums (ECs) of Design, Build and Sell (DBSS) flats of their day, meant to bridge the gap between the public and private property markets.

BraddellViewMost of the HUDC projects have been privatised over the years, and the era officially drew to a close as the last of the 18 HUDC estate reached privatisation last month. Braddell View, the largest of all the HUDC estates consisted of 918 flats and 2 shops and will join the other 7,731 units which have been privatised since its implementation almost 40 years ago. The scheme ended in 1987 when demand for bigger public housing options diminished due to the availability of private housing which fulfilled the wants and needs of the ‘sandwiched’ classes.

Ironically, many now think that the government could do very well to re-establish a scheme in the same vein as the HUDCs to provide for families hoping to upgrade within the public housing sector, especially as the newer flats are often lacking in terms of space. The privatisation of Braddell View has taken almost 18 years due to the staggered timing of leases of land on which the property stands. What is left for these HUDC estates after privatisation? The rather lucrative possibility of a collective sale, quite naturally.

 

Positive growth for new private homes

There is hope for the private property market yet, as budding signs of recovery peeked through not only in the resale property segment but also blossomed a little in the new private homes sector.SeasideResidencesFor the third consecutive month now, the new private homes sector has shown positive growth with 977 units sold in February, more than double the 382 sold in January, and despite there having only been one new launch last month. The Clement Canopy which was launched in February, did however put 250 new units into the market, selling 207 at a median price of $1,343 psf. A total of 550 units were released last month, compared to the 108 in January. Part of muted response the month prior to last could however be put to the Chinese New Year festive season which fell in late January.

Demand for executive condominiums (ECs) have also increased with 329 units sold, up 78.8 precent from January. The best-selling EC last month was Sol Acres with 82 units sold at the average price of $782 psf. Industry analysts are already seeing a more positive market sentiment this year, an overall sense of confidence from developers and buyers. With the recent relaxation of the Seller Stamp Duty (SSD) rules and new upcoming launches such as Seaside Residences, and as confidence ignites confidence, the hope is for the momentum to move the industry along as the year proceeds.

 

Resale HDB market looking at a year of stabilisation

Transaction volume and prices of resale HDB flats dipped once more last month, following a rise in November. Prices of resale HDB units fell 0.3 per cent in December and 13.9 per cent fewer transactions were recorded in midst of the usual year-end quiet. A total of 1,364 resale flats were sold last month.

bishanloftecLarger units such as the executive flats and 5-room flats saw a bigger price decline of 0.9 and 1 per cent respectively. Prices of rarer 3-room and 4-room units dipped only 0.1 and 0.2 per cent. The steeper decline for the bigger flats could be due to declining private property prices, which may steer some buyers towards that direction. Smaller HDB flats are priced much lower than the same in the private property sector, thus the pool of buyers for these units are considerably more stable though now that singles can apply for 2-room flats directly from HDB, the pool could have diminished slightly.

5-roomhdbPrices of resale HDB units in non-mature estates fell the hardest at 1.2 per cent year on year, possibly due to competition from the rising number of private residences in the suburbs. In mature estates on the other hand, prices have risen 1 per cent. Overall, with prices fluctuation within the 1 to 2 per cent range, analysts consider the market stabilised after years of gradual decline since 2013. The market could be reaching a zero per cent change soon and with the current market levels remaining unchanged, buyers are beginning to take the opportunity to snap up units in the resale market when a suitable deal comes up. Resale transactions may rise up to 15 per cent this year.

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.

Prime land plots released for H1 of 2017

Out of the 5 residential sites which were released under the Government Land Sales (GLS) scheme‘s confirmed list for H1 of 2017 are 3 sites which may see heated competition from bidders – one on Jiak Kim Street where the Zouk nightclub used to stand, another on Fourth Avenue right next to the Sixth Avenue MRT station and yet another on Woodleigh Lane, near the new Bidadari township and Woodleigh MRT station.

rmaisonThese 5 sites are expected to yield up to 2,330 new homes, about 50% more than the 1,560 units yielded by land released in the first half of this year. Bidding on the last few sites released this year have gotten developers and property analysts excited about the potential volume and size of land plots to be released next year, but the authorities have kept it conservative thus far, having released only 10 sites on the reserve list. This includes 1 mixed-use site and 2 commercial sites.

It is possible that the Government is concerned about the stock of unsold executive condominiums (EC) currently in the market. In addition, most of the units sold this year were purchased by investors and not true home-occupiers. The Monetary Authority of Singapore has also recently flagged their concern about rising vacancy rates in the private property market. This combination of factors may have influenced their decision on how much land supply to release in 2017. Only 1 EC site was released on the confirmed list and another on the reserved list.

HDB flat prices rise slightly in November

A 0.2% rise in resale HDB flat prices may bely the fall in sales volume in November due to a possible trickle-down effect from heightened activity in the new Build-to-order (BTO) flat segment.

bidadariNovember’s launch of BTO flats was the largest in the year, with flats in Kallang/Whampoa and Bidadari garnering the biggest response from applicants. With flats in these areas oversubscribed, some may have decided to skip the wait and go for resale flats instead. The overall buying sentiment in the HDB market may have also received a boost from the launch.

In a year-on-year comparison, prices are however 0.7 lower than that in November 2015 while resale volume is 7.1 per cent higher. The figures are not surprising since resale HDB flat prices have been stabilising over the past year while sales volume is largely dependent on demand and the option of new flats. Flats in mature estates continue to command high prices and in that, the property cooling measures may not have had that kept selling prices high and most sellers are not in a hurry to let go of their flats, until the time when keys to their new flats are ready for collection.

NorthwaveECPrivate property prices may have declined in single-digit percentages, and while that narrows the gap between smaller non-landed private property units and more expensive public housing options such as executive condominiums (EC), resale flat prices have budged only slightly which may not be sufficient for those who fall between these price segments. Prices of resale HDB flats are expected to have up to a 0.5 per cent price rise in 2017.

 

2017 to welcome more land supply

Recent tenders on land plots have received more than positive responses from developers, plus the inventory of unsold units have diminished. This may mean the authorities are likely to release more sites in 2017 to replenish land supply.

fd1a3ab7647f44a684a37926cd526cb6The government held back on land sales in the earlier part of 2016 when unsold stock ballooned. But as buyers slowly returned to the market, investors picked up bulk sales and developers closed en bloc deals, competition for available land have been obviously heating up in the past months. If land supply continues to diminish, developers may be forced to bid even more aggressively and thus push up private property prices, in particular in the executive condominium (EC) market.

Some of the highest-bid land sites this year included a Martin Place plot which went to First Bedok Land for $595.10 million, and a mixed residential and commercial plot with a winning bid of $301.16 million by Qingian Realty. A white site on Central Boulevard was also sold to Wealthy Link for $2,568.89 million in November. There were 11 sites on the Urban Redevelopment Authority’s (URA) reserve list in H2 of 2016, with possibly up to 15 more added to the list by H1 of 2017.

The Ministry of National Development (MND) will however be more selective about where the new sites will be released, likely avoiding areas where large amounts of unsold inventory remain such as Redhill and Commonwealth.

Raised income ceiling for HDB grants – Help or Hurt

The income ceiling for the application of HDB grants was raised last year, and till date, the policy change has helped more than 1,500 household secure new or resale HDB flats. Previously, the income cap was $12,000 for executive condominiums, $10,000 per household  or $5,000 for singles. Following the adjustment in August last year, the income cap is now $14,000, $12,000 and $6,000 respectively.

Westwood ResidencesThe Housing Board has cited rising income and an increased demand for public housing as push factors for the change. Some property experts however feel that the move has hurt the private property market as these are potential private property buyers whom the market may have lost out on and whom may have cost taxpayer’s more burden. However, these buyers could also have been sandwiched between the public and private housing markets, unable to afford the latter nor the former without a CPF housing grant.

From the 11,833 new HDB flats and 6,464 resale flats sold within the last year, about 5 per cent and 15 per cent of the purchases would not have been made prior to the income ceiling revisions. The last time the income ceiling was raised by $2,000 was 5 years ago in 2011. The question remains if it is a matter of eligibility or affordability of existing public housing units which detracts a possible remaining group or groups of buyers who may still be unable to purchase resale units despite securing all possible grants.