HDB Flats

Steep rise in Resale HDB Flat COV

The storm that brewed in the public housing market last quarter came in the form of COV prices. Rising from $45, 000 to as much as $67,800 in popular mature estates such as Toa Payoh and Tampines, January’s cooling measures may just have been the breakwater to calm the waves. The cooling measures have only just been implemented, and the first three weeks of 2013 saw steady median COVs and demand for resale HDB flats.

Mirage new HDB BTO Flats in Choa Chu Kang.

Whether these price waves will crash and subside or overtake the cooling measures, may be dependent on the supply of flats as well as whether there are changes in the eligibility of singles in applying for new HDB flats. Although National Development Minister Khaw Boon Wan has mentioned that this year may be the year rules change, it still awaits implementation.

The lack of supply of resale HDB flats is also partly due to the fact that most HDB owners see their flats as a good source of rental income, and as long as that option is open, and the rental demand is high, they may be unwilling to forego their HDB flats, thus decreasing the number of available resale flats in the market.

Some reasons which may have driven buyers to look for resale HDB flats:
1. They are willing to pay for a favourable location
2. They want to move into a new home quickly
3. They are looking to upgrade within the public housing category to a bigger space

On the other side of the coin, industry analysts have brought up the point that demand for resale HDB flats are driven largely by those who are ineligible to purchase new HDB flats, mainly permanent residents (PRs) and singles. Does this mean then that these groups of buyers are actually able to afford resale HDB flats and thus there may not be a need to change things around and allow them to purchase new HDB flats? Or will a change of rulings mean lesser HDB flat owners may now benefit from the rise in value of the properties over the years? Will this largely decrease the potential pool of buyers of resale HDB flats or will the demand continue to be present, perhaps minus COV (cash-over-valuation)?

More HDB Flats at lower prices

By the 20th year into the 21st century, Singapore’s largest property developer, the HDB, has made a promise to deliver cheaper HDB flats and quicker.

Depot Heights – New BTO Flats in one of HDB’s many sales launches throughout the year.

Tapping on the flourishing construction industry, the Senior Minister of State for National Development, Lee Yi Shyan has stated that they hope to increasingly rely on mechanisation to reduce on-site construction time. HDB has launched more that 52, 000 flats in the last 2 years, and 20, 000 more are expected within the next few. How will the quality and floor area of these new flats compare to the older ones and are we to expect any improvements?

What does this mean for the property market? Will it affect the private residential property sector and what does it signify about the population growth rate of the nation-state? Will the now-defunct Design-and-build scheme be reinstated as the demand for HDB flats is expected to increase by 2020? And as singles could possibly enter the playing field albeit with stipulated criteria, what changes are expected of Singapore’s real estate market by then?