Resale HDB flat prices down 0.1%

March saw a very slight 0.1 per cent fall in prices for the resale HDB flat market, mainly for 3-room and 4-room flats. This is following a 0.2 per cent rise in February and a year of stagnant prices.

Analysts are not expecting resale flat prices to go anywhere anytime soon as the slowing economy and continued property cooling curbs continue. Buyers seem to be favouring slightly smaller 4-room flats over 5-room units and any spike in the price index could be occasional and non-indicative of the overall market outlook.

21c0a7bf81e440299d0bd4b956642daaResale flats in mature estates have always been  popular with buyers, but even this market segment has been hampered by global and local uncertainties. There is good news however. Sales volume of resale HDB flats have risen in March despite the fall in prices. There were 451 more units sold in March than the 1,200 in February. The launch of new BTO (build-to-order) flats in February may have also taken some attention away from the resale market, though the latter will always find a place in the consumers’ radar as some buyers may not be willing or able to wait for new flats to be built or they may prefer living in locations other than those in which new flats are being launched or built.

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.


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.


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?

Smart and kind HDB homes?

HDB is launching a new type of high-tech flats or smart flats at Punggol Northshore. And they are rather kind on the pockets too, with prices starting at $28,000 for a 2-room flat (after subsidies).

These 2-, 3-, 4- and 5-room flats at Punggol Northshore will be launched tomorrow and will feature the infrastructure to install smart systems such as energy consumption monitoring systems or alarm and alert systems for the elderly.

Punggol-northshore.jpg;wae44a5d811a611cfaPhoto credit: HDB

The smaller, and markedly lower-priced 2-roomers may be just the thing for singles and the elderly living alone. Sized at 36 sq to 45 sq m, singles who apply for one alone qualify for the Additional Housing Grant of up to $20,000 and Special Housing Grant of $10,000. That’s a total of $30,000 off the $88,000 price tag of a new 2-room HDB flat at Punggol Northshore. Previous launches at Sembawang and Yishun consisted of even cheaper 2-room flats starting from $10,000 and $15,000 after grants have been applied.

But these new smart-tech HDB flats could be the new way to go for future HDB flats moving forward. And the launch at Punggol Northshore is situated near the waterfront and boasts of a seamless connection to the LRT, these coupled with the fact that the 4- and 5-room HDB flats are cheaper than resale flats nearby at $130,000 and $170,000; the response for this launch could be more than positive.


Resale HDB flats – Sales go up as prices do down?

2014 saw a record low number of HDB resale flats exchanging hands. It could be due to the effects of the property cooling measures, in particular the TDSR (Total Debt Servicing Ratio) framework set by the Monetary Authority of Singapore,  just starting to kick in. Buyers were more wary and more careful in weighing their options while sellers were still unwilling to lower prices. The tussle was just beginning.

SeaHorizonECBut this year, it seems one side is starting to give, slightly; especially for those who need to sell their current flat within the stipulated time of collecting the keys to their new flat, or face forfeiting their deposit. Prices of resale HDB flats have dropped 0.8 per cent in March this year, and the number of transactions increase from 1,148 to 1,349., As the number of new BTO (Build-to-order) HDB flats which will be launched this year decrease, buyers may also begin turning to resale flats to fulfil their needs. Prices of four- and five-room flats fell the most at 1.1 per cent and prices have been dropping since a year ago.

Property experts continued to stick to their forecast of a 5 to 6 per cent drop in resale flat prices this year, and hope for a higher sales volume than last year. It all depends on how the market fares from now till June, just before the traditional lull period of the Hungry Ghost Month.

Prices of rare HDB flats such as ECs (executive condominiums) remained high however, in fact showing a rise of 1 per cent last month.

New HDB Rental quotas

The noose around the HDB market tightens a little more this year as further restrictions are put on it, this time around the rental sector. It will not be as easy to rent out your HDB flat anymore this year, especially if your potential tenant is a non-Singaporean citizen.

Every block of HDB flat can only have 11 per cent of its unit rented out, and only 8 per cent per HDB neighbourhood. The government says that the quotas are put in place to prevent the build-up of “foreigner enclaves” in HDB estates. Malaysians are the only exception to the rule as their close links to Singapore makes for easier and better integration into the Singaporean culture.

Woodlands HDBBefore panic sets in, this quota only applies to those renting out the entire flat. Those who are subletting only rooms are still subjected to existing rules. Thus far, only 1 per cent of HDB estates have reached the quotas, and the new regulation will not affect existing tenants until their rent period expires. Towns where quotas have been reached are Clementi, Jurong West, Queenstown and Sengkang.

Sales and rental prices may be affected in high-commercial-density areas such as Changi, Buona Vista and Woodlands. How will this affect the buyers and sellers in the resale HDB market? Will this mean an even deeper diminishing pocket of sellers and will it affect those who are depending on a rental income to keep a roof over their heads? Will this sieve out those who have been counting on making some profit through rental?

BTO supply shrink

2013 was the year for new properties, private and public. Bumper crops of new BTO HDB flats were launched almost every two months and an average of 4,190 units were offered up at each launch. In the first launch this year, the number was a reduced 3,139 units.

Although smaller in number, HDB is happy to offer eco-friendly features in their latest launch such as motion-sensor lighting and recycling chutes. New BTO flats were offered across Bukit Batok, Jurong West, Punggol, Woodlands and Serangoon. Prices ranged between $73, 000 for 2-room flats to $433, 000 for 3-Gen units. 3-Generation flats are mainly four-room HDB flats reserved for married applicants submitting purchase requests with their parents.

Bukit Gombak Vista

Photo source: HDB

National Development Minister, Mr Khaw Boon Wan, has announced last year that BTO supply will be reduced this year as demand has been mostly satisfied. The authorities are however considering offering more 2-room flats as singles aged 35 and above are now eligible to apply for new HDB flats. Previously they were only allowed to purchase off the resale market.

As expected, Wednesday’s launch saw the most activity in the 2-room flats department. 5, 000 of these smaller units will be made available through out this year. 455 studio apartments in Jurong West were also included in the current launch. There will be a decrease in the number of three- to five-room flats however.  It seems the authorities are working hard to cover all ground and assuring citizens a fair chance at owning a home.

COV prices no more?

In fact, some sellers are even letting their HDB flats go at below valuation. Once a highly-debatable amount, these cash-over-valuation (COV) prices are now almost all gone, or miniscule at the least. Although these amounts are set by the seller, above the HDB valued selling price, it is usually a good indication of how popular a unit is, and whether the seller was looking to earn some bucks from the sale. But recent mortgage rules have affected the demand for resale HDB flats and according to HDB, in October alone 105 units were sold at less than their HDB appraised price. This is a significant number, especially as its a good 6.7 per cent more than the earlier half of the year. .

Book Lay View HDBThe mid-year announcements by MAS of stricter mortgage terms such as the introduction of the TDSR (total debt servicing ratio) and shorter loan periods have left many buyers reconsidering their property purchase more carefully. In addition, Singapore permanent residents now have a 3-year wait before being able to purchase a resale HDB flat. In January, the median COV stood at $35, 000. In October, it has fallen to $12, 000. Many sellers who have held on to their COV asking prices, have had a long wait, and some have given up and reduced their COV prices.

Areas where a larger amount of new HDB flats are being launched, such as Punggol, Sengkang and Chao Chu Kang, are harder hit as the buyers of resale flats in these areas will be diverted. BTO (build-to-order) flats are considerably cheaper than their resale companion. As singles and young couples are now hampered by a lower loan percentages, 30 per cent of their gross monthly income, many are no longer able to afford high COVs, even if they truly liked the unit. And as the building of new HDB flats are happening in quicker cycles, many BTO flats which are now eligible to be placed on the resale market after their 5-year MOP (minimum occupation period) tenure, will have to compete with more new flats nearby. As some families are keen to move to be near their children’s schools or because of family situations, there may be more resale flats going at or below valuation. How does this impact the HDB flat market in 2014?