Mortgage cap continues to limit resale HDB flat market

One of the more impactful property cooling measures implemented in recent years have been the Total Debt Servicing Ratio (TDSR) framework and the mortgage servicing cap for HDB flats, which limits the percentage of one’s gross income which can be used to service a loan for a HDB flat to 30 per cent.

SengkangHDB

Resale flat prices have been deflating for 2 years now and looks like it will be flatlining this year. Since its peak in April 2013, resale HDB flat prices have fallen 11 per cent and many transactions are now closed sans Cash-over-valuation (COV). The second half of last year did however see a slight increase in prices. With the selling prices of recent transactions quite transparently and clearly reflected by HDB, buyers are now more aware of the current market climate.

The number of transactions in January fell 121 units from December, and prices fell 0.5 per cent. But this may be due to the busyness which January brings for buyers and sellers and property analysts are not overly worried about the HDB market as prices and sales volume are only expected to remain level this year. The stability may be a good thing this may be the much-needed rest period before a market rebound.

 

DBSS flats fetching profits

DBSS – these 4 letters have previously caused quite the debate about whether these HDB flats are priced so high the only ones winning are the developers. Since 2011, the Design Build and Sell Scheme (DBSS) has been suspended.

CityViewBoonKengPhoto: City View @ Boon Keng DBSS HDB flats

Now, it seems buyers of these previously-launched private developer-built HDB flats are reaping in the profits, with recent reports of a 5-room DBSS flat at City View @ Boon Keng selling at $855,000. The unit is slightly above the mid-point of a 40-storey block and has a floor area of 109 sqm. The unit was originally priced at $627,000 in 2008. That makes a profit of $228,000.

Though the $288,000 profit is only a third of the launch price (the project previously launched at prices between $349,000 to $727,000), it is quite a reasonable sum considering the current dulling market.

With unblocked views of the Kallang river, card-access lift lobbies, bay windows, it’s city-fringe location and walking proximity to the Boon Keng and Bendemeer MRT stations, it’s easy to see how these units could have fetched such high prices. And more units might enter the market soon as they reach the end of their MOP (minimum occupation period).  In fact, industry players are expecting resale prices to possibly reach the $1 million mark, similar to HDB units at Pinnacle @ Duxton.

 

 

 

 

 

 

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.

Garden homes – New Bidadari HDB estate

Bishan was once set on cemetery grounds, but now it is a booming township with HDB flats, private condominiums, landed homes, schools, malls, libraries, sports complexes and MRT stations. Properties here are in high demand and HDB flat prices alone have blossomed more than thrice what their original owners purchased them for back in the 80s.

Bidadar HDB flat_EditPhoto credit: HDB

Thus the same fact that an all-new HDB estate, Bidadari, is built on a former cemetery site would probably not deter buyers, with this estate holding similar potential for growth. Besides a 10ha Bidadari Park featuring a new Alkaff Lake, named after the Alkaff family which built the Alkaff Gardens in 1929 which was closed after World War II, the area is also centrally located in Toa Payoh town which gives it the clout of good location and living environment.

Schools nearby include the Cedar Primary School and Cedar Girls’ Secondary School, and St. Andrew’s Primary, Secondary schools and Junior College.

Bidadari HDB flats 2

Photo credit: HDB

These new Bidadari HDB flats however may not come cheap, with prices about 20 per cent higher than other launches. For a gauge, a Build-to-order (BTO) launch at Punggol Northshore in May this year had four-room flats going from $284,00 to $350,000. There are 3 projects in the launch – Alkaff CourtView, Alkaff LakeView and Alkaff Vista.

Other BTO projects included in the launch are Waterfront I and Waterfront II @ Northshore and Northshore StraistView in Punggol, Hougang Rivercourt in Hougang, Fernvale woods in Sengkang, Teck Whye Vista in Choa Chu Kang and West Quarry in Bukit Batok.

Applications are open now till 26 November.

Moderation of HDB flat prices modest

HDB flat prices rose 50 per cent between 2009 and 2013. With the property curbs in the last 3 years, prices have fallen 10 per cent. The government are considering the decline moderate and have mentioned that it is not yet time to completely reverse the process and policies despite recent figures showing a stabilisation of resale flat prices and a rise in sales volume.

Yishun HDB

Photo: HDB flat in Yishun

The most effective cooling measures thus far have been the 2013 implementation of the mortgage servicing ratio limit. The loan amount home buyers were able to take to service a HDB flat loan was capped at 30 per cent of their gross income. On top of that, there was a 60 per cent Total Debt Servicing Ratio (TDSR) which was also introduced in 2013 to prevent borrowers from over stretching themselves with the number and amount of loans payments.

Industry experts are mostly in agreement about a sudden and drastic switch in policies which back backfire on the industry and property market. But some have felt that certain measures such as the ABSD (additional buyers’ stamp duty) could be lifted in phases to encourage property investment. The current rule requires foreign property buyers to pay an additional 15 per cent of the price of a property here while Singaporeans have to do the same but at 7 and 10 per cent for second and third subsequent properties.

The new National Development Minister Lawrence Wong has however mentioned that adjustments may be possible, depending on global and local economic situations.

 

Resale HDB flat prices hold steady

At this point of the property market cycle, prices holding steady could be a positive sign, indicating effectiveness on part of the cooling measures which did not crash the market but rather, merely realigned the prices gently. The change evolved over a long period of time, which is more palatable for sellers and the lowering prices may have also increased sales volume by enticing buyers.

BidadariPhoto credit: HDB

A 0.3 per cent fall in HDB resale flat prices indicate a slowly stabilising market. Although prices have been falling for 9 quarters straight, the last quarter showed the lowest rate of decline. In 2014, overall resale HDB flat prices fell 6 per cent. Industry analysts are expecting a smaller dip this year of 2 to 2.5 per cent. Some buyers may have been holding back on buying in the open resale market, in wait of November’s major launch of new Build-to-order (BTO) flats which includes prime units in Bidadari and Punggol Northshore.

Suburban resale private property prices are falling at a steeper rate of 1.3 per cent and if the prices fall even further and at a quicker rate than HDB resale flat prices, the gap between the 2 market segments will narrow. This could then draw a substantial pool of buyers from the resale flat market into the private property market, which could then give sales volume a boost and slow down the price decline in the private property sector.

Sims Urban Oasis

Photo: Sims Urban Oasis

Property developers are keeping a close eye on whether cooling measures will be adjusted, and pricing their units accordingly. We could also expect a more staggered schedule of new launches as developers become more careful about not cannibalising on one another’s market share. More so than before, it may be a matter of timing and opportunity.

More BTO flats expected in 2016

2015 might have been the year the government slowed down the release of new BTO (Build-to-order) HDB flats to 15,000 as demand was deemed to have been fulfilled by the massive roll-out in the previous years; but 2016 might see a reversal as new National Development Minister Lawrence Wong announced last week that HDB will be building more new flats next year.

Clementi Crest HDB flat
Photo credit: HDB

Though the number of new flats will not be as massive in comparison to the 2011 to 2013 period when more than 22,000 flats were rolled out per year, the figure of just under 20,000 will still be considerable. This is largely to fulfil the increase demand that is expected to come with the recent policy changes. The income ceiling for BTO flat applicants have been increased from $10,000 to $12,000, which may mean that more families now qualify for a BTO flat. Add the new $20,000 Proximity Housing Grant which encourages families with parents or married children to live near to one another, and the numbers might increase significantly as well.

As the resale HDB flat market has only just stabilised after a year or so of declining prices, will this increase in HDB flat supply dampen the mood in the resale market? Probably not in the near future as demand for resale flats are still mostly in the mature estates, and most new flat owners are still serving out their 5-year MOP (minimum occupation period).

There will be a major sales launch of new BTO flats in November and the response to this will be used to temper the projection for next year.

HDB rolls out new smartphone app function

Taking a walk around a HDB estate and see a block you wouldn’t mind calling home? Now you can instantly call up relevant information and data such as resale prices by just using your smartphone.

Mobile@HDB Screen GrabThe Mobile@HDB app was launched in 2011, but has just recently had a revamp on 7 Oct. The mobile app is free and the latest augmented reality function uses GPS to identify blocks within a 200m radius to help users find out resale transaction details within a 2-year period. Although there is a 20m to 100m degree of error, property agents and home seekers will still no doubt benefit from this real-time app function.

HDB is hoping to make the home-seeking and purchasing process easier with their website and app revamps. Besides the augmented reality function, the Mobile@HDB app also has a concierge function which allows users to get a queue number remotely (as long as they are within the HDB vicinity, e.g. at the Toa Payoh MRT station which is near the HDB Hub) and even get a push notification when their number is called; and also check on their HDB appointments. Now more can be done without having to physically be at the HDB service centres.

Since its most recent update, the concierge function has been used 300 times and the augmented reality function 5,000 times. Users can look forward to an easier and breezier home search, and hopefully HDB will continue to improve on their customer service.

Photo credit: HDB