Who’s the most expensive of them all?

Hong Kong. When it comes to housing affordability. According to Demographia, a United States-based urban planning research unit, Hong Kong has emerged as one of the most expensive cities out of 367 metropolitan areas in 9 countries. Second on the list was Sydney, followed by Vancouver, Melbourne and Auckland. Singapore was 5th on the list.

Hong Kong property

Photo: Apartment in Viking Garden, Hong Kong 

In Hong Kong, median home prices are almost 19 times the median annual gross household income. It is the largest year-to-year increase in pricing over the 12 years in which the research was conducted. A small shoebox apartment below 500 sq ft would cost almost US$75,000 (or S$1.1million) in Hong Kong. That is almost double the price of such an apartment unit in Singapore. In the United States, only 9 metropolitan registered highly affordable housing prices, with San Jose, San Francisco, Los Angeles and San Diego being some of them. 14 other cities in the United States remained under the affordable level, with Buffalo, Cincinnati, Cleveland and Rochester tied in first place.

SF FlatPhoto: San Francisco apartment

With the US interest rates rising this year however, property analysts are expecting some change in the global property markets. Hong Kong’s property bubble may burst should the authorities do good on their promise to meet housing supply demand.

In Singapore, housing prices are 5 times that of the median annual gross household income. Although still considered ‘severely unaffordable’ under Demographia’s rating scale, HDB has been making efforts in the last couple of years to increase supply and reduce demand for public housing. For now, the price of a new HDB flat is still $150,000 to $180,000 lesser than a resale unit in the same area.

 

Resale HDB flat prices stabilising

HDB resale flat prices fell a mere 1.5% last year, buoyed by a 0.2% rise in the last quarter of 2015.

Skyline Bukit Batok HDB BTO FlatPhoto credit: HDB

With the lowered prices of resale HDB flats, there may be an increase in sales volume this year as buyers have found many of these sans-COV (cash over valuation) resale units more affordable. Price-wise, property experts are looking at a 1 – 2 per cent movement, with prices staying quite stagnant this year. More young couples and upgraders may also be moving into the private property market as the total quantum prices of units have come down to a much more palatable level.

According to Minister for National Development Lawrence Wong, resale flats are mostly selling at market value, with prices comparable to that of 2011. Some of the property cooling measures which have been implemented since that which have taken effect, and which may continue to do so include the mortgage servicing cap of 30 per cent, the 25-year maximum loan tenure limit, and a 3-year waiting period for permanent residents before they are allowed to purchase resale HDB flats. Demand may also have waned as singles are now able to purchase new 2-room BTO flats directly from HDB and 18,000 new flats are to be rolled out this year with the first launch in February.

Though this may point to the market bottoming out by end of 2015, two consecutive quarters of price increase is required before a clear sign of a market rebound can be confirmed.

Higher chances for Singles applying for new HDB flat

The year might be looking up for singles hoping to secure a new HDB flat.

Fernvale Woods HDBPhoto credit: HDB

Before July 2013, singles were only allowed to purchase HDB flats from the resale market. For two and a half years now, 2-room new BTO HDB flats have been accessible to them though the number of applicants vying for a unit have been overwhelming and the wait have been long for some.

But since the most recent launch, the number of applicants have whittled down to 7.5 per unit. When the scheme first began in 2013, there were 57.5 applicants going for a single 2-room unit. These new 2-room flexi flats are the result of merging the 2-room and studio apartment schemes, and are designed mainly for the elderly and priced to help them and families in the lower income group. Singles who earn less than $5,000 then were also allowed to apply for these flats. The income ceiling has since been raised to $6,000 mid last year.

Bidadari HDB flat Alkaff

Photo credit: HDB

Singles are however restricted to new 2-room BTO flats in non-mature estates, which means they are not eligible for the new flats in Bidadari, which is considered a mature estate. Nevertheless, this option has helped many singles own their own space, to have a bit of privacy they can call their own in this growing city. The pricing of the new 2-room flats are considerably lower than those sold in the resale market, and most of the latter are much older and may not be suitable for the needs of singles who are looking for an affordable home.

Though there will still be competition for new 2-room flats, property experts are expecting the number to fall to a comfortable 4 or 5 applicants per unit.

 

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.

Are new HDB BTO flats truly affordable?

The next HDB sales launch will be in about 2 months’ time. Considering the response from the November mega-launch, the February launch will be greeted with much cheer as 4,150 BTO units from Bidadari, Bukit Batok and Sengkang will be offered this time round.

Bidadari HDB mapPhoto credit: HDB

The Bidadari flats received the most number of applicants in the most recent sales exercise. Even though the 5-room flats here were price at $544,000 (excluding grants), they were oversubscribed with 259 applicants vying for 151 units. Despite Bidadari’s history as a former cemetery, it is the only mature estate in November’s launch and its prime location added to its popularity. There were also 2-room flexi units offered in the exercise and were well-received as always. A number of these short-lease 2-room flexi flats were kept aside for senior citizens and they can make use of HDB and CPF grants to purchase them.

But these Bidadari flats were not the most expensive of new BTO flats launched. In May, 5-room BTO flats launched in Clementi cost between $576,000 to $725,000. Even then, there were almost 14 applicants to one unit. Have Singaporeans truly become more affluent or are they simply getting used to property prices here, even public housing? Prices of the next BTO launch will be watched closely, especially as the economy is expected to slow down considerably next year.

 

HDB resale flat market stabilising

While last month’s price decline in the HDB resale flat market may be slight at 0.3 per cent, a quick rebound may yet to be. Minor fluctuations may still occur, but prices seem to be stabilising. The number of flats changing hands also seem to be on the increase, up 3.9 per cent from August.

Punggol HDB EstateThe property cooling measures however continue to impact the property market with falling prices and sales volume in the private property market. While the effect is less apparent in the HDB resale market, prices have gone down by 8 to 9 per cent since its peak in 2013. Property analysts are expecting more gradual fall for the rest of the year, at a less-than-1 per cent monthly decline.

November’s mega-launch of 12,000 BTO (Build-to-order) flats may however take a toll on the resale market as buyers may hold back on buying from the resale market. On the other hand, most recent policy changes in public housing may also help buyers qualify for and attain a resale flat more easily. Income ceiling for resale flats have been raised from $10,000 to $12,000 and families who wish to purchase a resale flat near their parents or married child can apply for a $20,000 proximity grant.

The resale market has take some time to cool, but considering it has fallen from its 3,649 units sold in May 2010 to 1,504 in September 2015, all eyes and ears may be on when the authorities are likely to relax the property cooling measures.

Raised Income ceilings for HDB and EC flats

In the months ahead, the HDB market may see some significant changes.

In his National Day Rally speech on Sunday, Prime Minister Lee Hsien Loong announced a raise in income ceilings for new HDB flats as well as ECs (executive condominiums). The income ceiling for HDB flats could be raised from $10,000 to $12,000 and for executive condominiums, from $12,000 to $14,000. Just four years a, the income ceiling for ECs was raised to $12,000 but apparently income levels have risen since then. The government are also making it easier for lower-income households to purchase 2-room flats. The Special Housing Grant (SHG) will be raised from $20,000 to $40,000, giving them the financial support they truly need.

Forestville Executive Condominium.

Forestville Executive Condominium.

And to promote stronger familial ties plus cater to the growing group of young families who prefer to live near their parents, a new Proximity Housing Grant will help buyers who wish to live near their parents or married children secure their new flat.

This could be good news for buyers and home-seekers, as more applicants may then find themselves eligible for a new BTO flat or EC. But will there be more applicants now vying for available units. And how will this move  possibly affect the resale HDB flat market?

 

Reduced BTO flats = Increased resale flat demand?

The number was 16,900 and now it is 15,000. The Housing Board has revised the number of new BTO (build-to-order) flats to be offered this year as the resale HDB flat market has shown signs of stabilising.

In the previous year or two, the increased supply of BTO flats has meant that more who qualify to apply for a flat directly from HDB have been able to secure one fairly successfully, which has reduced the demand for resale flats. Recent launches have even been undersubscribed for some segments – three-room flats in Sembawang and four-room flats in Bukit Batok. Second-timers have also been more successful in securing units in this year’s BTO launches and the pool of available units in the Sale of Balance Flats (SBF) has been growing.

BIdadari HDB

Photo credit: HDB

Prices of resale HDB flats have fallen 7.4 to 12.4 per cent since its peak in 2013. But the last quarter has indicated once more, a rising demand  for resale HDB flats, partly due to the lowered prices and the sense of the market bottoming out.

The next HDB BTO sales launch will be later this year in September, with 4,860 flats up for offer in Bidadari and Punggol Northshore, both of which are increasingly popular spots for young couples and families.