HDB resale market – Prices down, Sales up

15, 914 resale HDB flats were sold last year, compared to 14, 220 in 2013. Though the numbers were up in the terms of transaction volume, prices dipped slightly. Prices of resale flats in non-matures estates such as Punggol and Sengkang fell 8.3 per cent while those in mature estates such as Queenstown and Bishan saw a 3.1 per cent decline.
Pinnacle@Duxton_2015The largest drop were in the four- and five-room flats sectors. Prices of three-room flats remained the same while a 1.8 per cent increase may have cheered up some executive flat sellers. Recent additions to the resale market, flats at The Pinnacle @ Duxton, did extremely well, with 2 units already sold at $900,000 and $918,000. Property analysts are expecting four- and five-room flats here to hit the $1 million mark soon. With it’s prime location and unique design, plus it is only five-years young, that may not be such an impossible task.

Overall, the projected decline this year for the HDB market will mirror that of last, at a single-digit fall of 5 to 8 percent. And perhaps buyers will be buoyed by this news and have a good run this year as well. Industry experts are expecting a stable transaction level in the first 2 months of 2015, followed by an increase in activity in March after the Chinese New Year break.

New life at Jurong Lake district

We’ve all heard about the various prestigious “Lake districts” of popular cities across the globe. Now, Singapore could finally boast a few of their own as waterfront living takes on a whole new spin. Sentosa Cove, Marina Bay, Punggol waterway and now Jurong Lake.

Lake Life ECAt the Lake Life EC (executive condominium) in the Jurong Lake district, almost 1,200 applications were registered when it was launched 2 weekends ago. And with one in three applicants being a first-time home buyer, it shows the demand for and power of these hybrid properties. An EC is sold under the HDB scheme but after 10 years, it becomes private property, making it value for money in the long run.

Though EC buyers may qualify for the HDB grants and subsidies, it largely depends on their income ceiling, which has been raised to $12,000 per household. Prices of these flats are also considerably higher than other HDB flats, new and resale.

As the price gap between private homes in the city centre and city fringe continue to narrow, and as suburban private properties rise in price, ECs may become the property of choice for growing households and young couples. How the scale tips may eventually affect the effectiveness and purpose of this hybrid property. Are ECs here to stay? Or could they possibly become obsolete?

Rise in HDB Resale flat sales

As HDB resale flat prices continue to decline for the eighth month in September, buyers are taking the opportunity to suss out the best deals. The number of sales transactions for HDB resale flats rose to the highest since April this year. A total of 1, 469 flats were sold in September, up 10.7 per cent from August and almost 20 per cent from the same month last year.

St George Towers

Photo credit: HDB

It comes as no surprise that the larger flats saw the largest fall in prices. Five-room HDB flat prices fell 1.6 per cent, followed by three- and four-room flats dipping 0.2 per cent and ECs (executive condominiums) 0.1 per cent. The recent numbers also revealed the fact that buyers are willing to accept a smaller price difference between the selling price and the average market value when previously, they had expected larger margins before committing to a deal.

Some of the factors contributing to the drop in HDB flat prices could be:

The first and last two factors in the list may have more lasting effects that expected. And it may change the value and purpose of HDB flats. But would the change be all that bad? Or will it help refocus investments into the private property market?

Married couples opt for HDB Parenthood Priority Scheme

It may or may not increase the likelihood of young Singaporean couples starting a family sooner, but more married couples are purchasing new HDB flats under the Parenthood Priority Scheme (PPS).

In the March sales launch alone, 32 per cent of Build-To-Order (BTO) flats were taken up by applicants under the PPS scheme. There is almost 100% possibility of all PPS applicants getting a flat. 3, 898 flats were launched in March in non-mature estates such as Sengkang, Punggol and Bukit Batok. A total of 12,000 applicants applied for BTO flats in the latest launch.

Compassvale Cape Mar2013

HDB’s next launch will be later this month, in Choa Chu Kang, Hougang, Jurong West, Sembawang and Woodlands. WIth 4, 850 new flats plus 3,000 balance flats from previous launches planned, response from PPS applicants may be even more than March’s 32 per cent. Other schemes which the HDB provides include the:

  • Multi-Generation Priority Scheme (MGPS)
  • Married Child Priority Scheme (MCPS)
  • Third-Child Priority (TCP) Scheme
  • Tenants Priority Scheme (TPS)
  • Ageing-in-Place Priority Scheme (APPS)
  • Studio Apartment Priority Scheme (SAPS)

It should be noted that for the hotly debated Executive Condominiums (EC), the priority schemes do not apply. And for previous Design Build and Sell developments, developers are required to give priority to buyers applying under the Married Child Priority (MCP) Scheme and the Third-Child Priority (TCP) Scheme.

Topiary Executive Condominium in Fernvale.

Topiary Executive Condominium in Fernvale.

Under the MCPS, applicants who are a first-time married couple and who have at least one child below the age of 16 qualify for up to 30% of BTO and 50% of SBF (sale of balance) flats in each launch. This scheme began in January 2013 and many have since successfully secured a HDB Flat by applying under this scheme. Whether this will help population growth and fertility rate remains to be seen, but at least it has helped Singaporean couples secure a home more quickly and without the pain of waiting endlessly.

Previously married couples had joined engaged couples applying under the Fiancee scheme. However unmarried couples made up close to 50% of the applicants under this scheme, which lessened the chances of those who are already married or already have a child securing a flat.

No quick-fix to managing HDB flat prices

So says National Development Minister Khaw Boon Wan.

Ever since the Government announced that new HDB flats will come at a lower price, HDB flat owners have been expressing fears of losing their nest egg should prices of flats drop. But as new flats are limited to only certain groups and limited in terms of type and location, will there necessarily be a drastic drop in resale flat prices and are we worrying too early? Though the number of resale flat transactions have decreased, prices continue to remain high. And there will always be those who wish to choose a flat of their liking in a location they prefer, as opposed to trying perhaps numerous times in the HDB ballot queue.

HDB Flats THinkStockMr Khaw reassured Singaporeans that while prices of HDB flat will only drop “a few per cent over the next few years”, but in the same breath said that the prices of HDB flats cannot keep rising forever. “If housing prices keep rising,it won’t be good. When I came into the MND (Ministry of National Development) two years ago, that was my target”. And much has been done since then, with the ramp up of BTO flat supply, changes in income ceiling, limits on HDB flat sizes, increase in number of allocated flats for both first and second-timers, and even allowing singles to buy new HDB flats.

During the recent Our Singapore Conversation (OSC) dialogue, the idea of selling back new flats only to the Housing Board was faced with much opposition. Homeowners naturally worry that their homes will lose  their value and cut them off from the profit they can earn by selling it in the open market. Mr Khaw admits that resale flat prices are difficult to manage as they are largely subjected to the market demand. SLP International executive director Nicholas Mak speculates that one way of gently letting resale HDB flat prices drop is to decrease the prices of new HDB flats in the same estate.

Forestville Executive Condominium.

Forestville Executive Condominium.

Recent debate also surround the Executive Condominium (EC) scheme\. While some have said that those who can afford an EC should not receive subsidies from the Government, the scheme was specifically initiated to help those who may not qualify for other HDB subsidy schemes. Thus should ECs still be considered a value-added profit-making asset for their owners?

Suburban condominiums may be in for a downturn

The recent property measures seemed to have been forgotten, but its effect may just be taking root. Despite all the suburban homes which developers have been launching and selling this first quarter, it may be headed towards a limp finish.

Urban VistaOnly 1,544 resale homes were sold up till March 12, maybe hitting 2, 200 by the end of the month. But this is a far cry from the 3, 647 homes sold in the last quarter of 2012. In 2011, 3,761 homes were sold on a year-on-year comparison. Recent private residential apartment launches such as Sennett Residences, D’Nest and Urban Vista may pick things up by the scruff of the neck and pull numbers up after all. Since their launches, 1,400 new homes have been sold, including three other property launches.

So new homes seem to be doing well. But resale homes may be at the opposite end of the success spectrum. Most owners are keeping their current private home, what with the increased ABSD (Additional Buyers’ Stamp Duty) and tighter loan limits which were part of January’s property cooling measures. And it seems they are not so quick to lower their prices as well, unlike developers who have dangled discounts and other incentives to new home buyers.

What the ABSD has done is to increase the stakes for property owners who are looking to buy their second home. There will now be a 7 per cent stamp duty. And owners of completed homes may not see the urgency to offload their current property, perhaps only with the exception of those looking to downgrade. But until resale HBD flat prices drop, they may not act so quickly as well.

Activity will not wane in the private property market, but instead, it seems like it may be the battle between new and resale. Which will you go for?

Families benefit from new priority scheme

Before, it’s not often unheard of young couples having to wait years before getting the keys to their new flat. Some even have to wait to get a HDB flat, and then wait some more to live in their selected flat. But now, with a new priority scheme aimed at helping young families with children, the waiting time may be considerably shortened.

HDB's January BTO sales launch. Photo of Keat Hong Colours BTO Flats by HDB.

HDB’s January BTO sales launch. Photo of Keat Hong Colours BTO Flats by HDB.

And more are taking advantage of this, it seems. Up to the full 30 per cent of HDB flats allocated for them in January’s Biuld-to-Order (BTO) sales launch were taken up by applicants who qualify. This means, out of all the young families with children who applied for a flat, almost all will receive one. Named the Parenthood Priority Scheme, it was introduced early this year as part of the government’s push for marriage and parenthood. The scheme stipulates that up to 30 per cent of each HDB BTO launch will be set aside for married couples with children under the age of 16. It is aimed at helping couples set up families more quickly.

Success, however, is limited to the non-mature HDB estates such as Choa Chu Kang, Hougang and Yishun. Mature estates of Ang Mo Kio, Kallang/Whampoa and Tampines saw married applicants with kids applying for almost 80 per cent of the number of flats available. Understandably, mature estates are more popular with HDB flat applicants, regardless of category. These areas often already have established schools, amenities and means of transport, plus applicants may be applying for such areas in order to live nearer to their parents.

Flat allocation under HDB's Parenthood Priority Scheme. Photo by HDB.

Flat allocation under HDB’s Parenthood Priority Scheme. Photo by HDB.

Many applicants are hoping that this new scheme will increase their chances of successfully balloting for a flat, since quite a number have been waiting endlessly for one. For the rest of the applicants, it may be good news that HDB is planning to launch a ‘balance flats’ sale sometime later in the year and it may the lucky year of the snake for some.

2013′s Property Heave-Ho

It looks like there is going to be some push and pull in the property industry this year. And big hoorays for that.

Heron Bay Executive Condominium in Upper Serangoon View.

Heron Bay Executive Condominium in Upper Serangoon View has a number of Dual-key units.

Push: Singles may finally have the opportunity to buy new HDB flats. National Development MInister Khaw Boon Wan said his ministry is looking into implementing this new policy within this year. Without doubt, there may be restrictions, but at the very least, there is an option where there was no room to budge before. The minimum age is unlikely to be lowered to below 35, and singles buying new flats may be able to do so only for strict ‘owner-occupier’ purpose. The fact that 3,800 of the 18,000 singles who bought resale HDB flats actually did get married eventually may have helped.

Pull:  And perhaps a number of immediate issues popped up within the last couple of months which made the authorities think twice about making rules and sticking by them. The executive condominium (EC) market for one. It has dawned on them that some buyers have been ‘taking advantage of ECs to profit’. In the spirit of returning the EC scheme back to its original motivation of helping out ‘sandwiched class’ families who may need the space but are unable to pay for private property, Mr. Khaw has told Parliament that the Government changed the EC rules as soon as they realised what some buyers had caught on to. He referred to the fact that now EC units will be capped at 160 sq metres and only multi-generational families can apply. Apparently some families were immediately renting out their dual-key units.

Stay tuned for a lot of change.