Fewer resale flats entering HDB market

A good number of new HDB flats have reached or will soon reach the end of the minimum occupation period (MOP), and despite the expected slew of relatively new resale HDB flats entering the market, the situation is contrary.

CIty View Boon KengPhoto: City view @ Boon Keng (credit: Hoi Hup Realty Pte Ltd)

Some units in prime locations and prime developments such as the Pinnacle @ Duxton and City View @ Boon Keng may have fetched record prices, but most owners are not in a rush to put their units up for sale as the resale market is currently slow.

In 2010, 1,338 units were sold within a year of reaching their MOP, about 13.7% of the number of newly eligible flats. By last year, there were only 388 such transactions, at about 6%. Though private property prices have fallen, the gap between public and private housing remains considerable; and with a slowing market, resale flats may not be able to command the prices of before.

Pinnacle @ Duxton was awarded the 2011 Urban Land Institute (ULI) Global Awards for Excellence. Image by HDB.

Pinnacle @ Duxton. Image by HDB.

The upperhand-tussle between buyers and sellers have been ongoing for the past 4 to 5 years, and the undercurrent uncertainty of late have not aided the situation. It may be a matter of “who blinks first” as buyers and sellers both wait out this iffy period. More flat owners are instead beginning to sublet their flats after meeting the MOP. The next big move which might shake things up would be possible changes to the property cooling measures.

HDB Flats – Mature vs Non-mature estates

Bukit Batok HDB - WestplainsThis year, in response to the high demand for new HDB flats in popular and mature estates, the Housing Board will be including more mature-estate-based BTO flats in their sales launch.

In February’s sales launch, they have already included some in Bidadari and Bukit Batok. Bidadari is considered a mature estate, part of Toa Payoh and the units in the previous launched have flown off the shelves because of its prime location. It is part of a mature estate yet holds the exclusivity and unique nature-friendly environment and freshness of a new estate. 1,594 new Bidadari BTO flats were offered up in this month’s launch and 1,655 more in Bukit Batok. 921 units were also available in Sengkang.

Alkaff Oasis Bidadari HDBAs per the response to last year’s Bidadari sales launch, the five-room and 3-Gen flats, with a starting price of $550,000, in this new estate received the most eyeballs.

Although mature estates often have a space constraint and are unable to absorb more new blocks, HDB is looking at allocating half of their 18,000 units to be launched this year to mature estates. In May’s launch, the public can look forward to new units in Ang Mo Kio, Bedok and Bukit Merah. Most will be 3- and 4-room flats, there in Ang Mo Kio, 2-room flexi and 3-generation units will also be available. This may be good news for smaller families or singles and senior citizens hoping to live near their parents or children.

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.