Fall of private home rents put dampener on market

Hana CondoFor the 6th month in a row, private home rental rates have fallen with an even sharper 1.3 per cent drop last month. In the HDB market, rental prices have however edged up by 0.2 per cent. The overall decline in rents is smaller in this market, at 3.7 per cent for the entire year of 2016. In the private property market however, for the whole of last year, rents have fallen 6.2 per cent and in a year-on-year comparison with January 2013, almost 20 per cent.

Not in particular good news for those who have been counting on rental yields to help with their multiple property mortgages. Plus a probable interest rates hike this year, the market could be looking at more sellers putting their property in auction sales or banks being more active in their mortgage auction sales. This could however work in the favour of buyers who have been looking for a home to live in. The closing price gap between private housing and higher-end resale public housing may also cause some contention and competition, with location and floor area possibly being the deciding factor for many.

KatongRegencyNot only has rental rates fallen, so has leasing volume. The number of condominium apartment leases fell to 3,691 last month, down 2.2 per cent from November’s 3,775 units. Last December’s leasing volume however is 17.1 per cent higher than in the same period in 2015. Overall, the rental market is weakening and investors can no only rely on rental yields to help tide them over.

Resale HDB market looking at a year of stabilisation

Transaction volume and prices of resale HDB flats dipped once more last month, following a rise in November. Prices of resale HDB units fell 0.3 per cent in December and 13.9 per cent fewer transactions were recorded in midst of the usual year-end quiet. A total of 1,364 resale flats were sold last month.

bishanloftecLarger units such as the executive flats and 5-room flats saw a bigger price decline of 0.9 and 1 per cent respectively. Prices of rarer 3-room and 4-room units dipped only 0.1 and 0.2 per cent. The steeper decline for the bigger flats could be due to declining private property prices, which may steer some buyers towards that direction. Smaller HDB flats are priced much lower than the same in the private property sector, thus the pool of buyers for these units are considerably more stable though now that singles can apply for 2-room flats directly from HDB, the pool could have diminished slightly.

5-roomhdbPrices of resale HDB units in non-mature estates fell the hardest at 1.2 per cent year on year, possibly due to competition from the rising number of private residences in the suburbs. In mature estates on the other hand, prices have risen 1 per cent. Overall, with prices fluctuation within the 1 to 2 per cent range, analysts consider the market stabilised after years of gradual decline since 2013. The market could be reaching a zero per cent change soon and with the current market levels remaining unchanged, buyers are beginning to take the opportunity to snap up units in the resale market when a suitable deal comes up. Resale transactions may rise up to 15 per cent this year.

2017 likely to remain quiet for property sector

matilda-sundeck-bto-flat2017 looks to be a pretty much run-of-the-mill year for the public housing scene, on the surface at least. It may be the year when the authorities make policy adjustments to keep the number of new BTO flats in line with demand from young families and to make them available sooner.

The National Development Minister, Mr Lawrence Wong, has indicated that one of his key goals by 2018 is to reduce the waiting period for a new flat to 2 to 3 years as opposed to the current norm of 3 to 4 years. This may help relieve some pressure from the resale flat market, though sellers may find it more difficult to then find buyers for their units unless they are well-located or are rarer unit-types such as 3-rooms flats or executive flats or maisonettes.

The next BTO launch will be in February with 4,100 flats being offered in Clementi, Punggol, Tampines and Woodlands. The Housing Board is looking at a total of 17,000 flats in their 2017 launches.

hdb-maisonetteThe private property market will need some transformation in order to keep up with competition from regional markets and changing buyer requirements. Some property players have already made changes by providing mobile apps for their agents as well as build a rating system so buyers can easily appoint an agent for their selling and buying needs, but perhaps more radical changes need to happen from the policymakers’ end in order to sustain a profitable real estate market while keeping the numbers realistic enough for true home seekers.

Fewer new HDB Flats to be launched in 2017

sembawanghdb-flatMore applicants have been successful in securing a suitable and preferred unit from the Housing Board (HDB) directly since the authorities ramped up supply a few years back. Come 2017, the supply flow of new Build-to-order (BTO) flats will be reduced by 1,000 units from 18,000 this year to 17,000. Some of the latter launches this year, in particular those in non-mature estates such as Sembawang and Yishun, have already seen lower application rates and the 10,000-unit stock of balance flats from previous launches is also rather high.

81d36c494a88405a9dbd5dad5c28924aPart of the reason for the trim could also be the slowing economy and the reduced pace of family formation. But unlike the long 3- to 4-year wait typical of most BTO flats, these newer launches could be launched by 2018 and be ready for occupation by 2020. With the declining local populus, tighter immigration policies and a rapidly ageing population, the Singaporean government is feeling the increased urgency in encouraging millennials to form new family units.

Most of the younger generation of Singaporeans prioritise acquiring a home and having children in that order. Being able to provide them with a home quickly will no doubt be crucial in the push for Singapore’s birth rate. The National Development Minister, Lawrence Wong, has however promised that the supply of new BTO flats will continue, albeit being adjusted according to demand, across both non-mature and mature HDB estates to provide applicants with a range of choices.

HDB flat prices rise slightly in November

A 0.2% rise in resale HDB flat prices may bely the fall in sales volume in November due to a possible trickle-down effect from heightened activity in the new Build-to-order (BTO) flat segment.

bidadariNovember’s launch of BTO flats was the largest in the year, with flats in Kallang/Whampoa and Bidadari garnering the biggest response from applicants. With flats in these areas oversubscribed, some may have decided to skip the wait and go for resale flats instead. The overall buying sentiment in the HDB market may have also received a boost from the launch.

In a year-on-year comparison, prices are however 0.7 lower than that in November 2015 while resale volume is 7.1 per cent higher. The figures are not surprising since resale HDB flat prices have been stabilising over the past year while sales volume is largely dependent on demand and the option of new flats. Flats in mature estates continue to command high prices and in that, the property cooling measures may not have had that kept selling prices high and most sellers are not in a hurry to let go of their flats, until the time when keys to their new flats are ready for collection.

NorthwaveECPrivate property prices may have declined in single-digit percentages, and while that narrows the gap between smaller non-landed private property units and more expensive public housing options such as executive condominiums (EC), resale flat prices have budged only slightly which may not be sufficient for those who fall between these price segments. Prices of resale HDB flats are expected to have up to a 0.5 per cent price rise in 2017.

 

Raised income ceiling for HDB grants – Help or Hurt

The income ceiling for the application of HDB grants was raised last year, and till date, the policy change has helped more than 1,500 household secure new or resale HDB flats. Previously, the income cap was $12,000 for executive condominiums, $10,000 per household  or $5,000 for singles. Following the adjustment in August last year, the income cap is now $14,000, $12,000 and $6,000 respectively.

Westwood ResidencesThe Housing Board has cited rising income and an increased demand for public housing as push factors for the change. Some property experts however feel that the move has hurt the private property market as these are potential private property buyers whom the market may have lost out on and whom may have cost taxpayer’s more burden. However, these buyers could also have been sandwiched between the public and private housing markets, unable to afford the latter nor the former without a CPF housing grant.

From the 11,833 new HDB flats and 6,464 resale flats sold within the last year, about 5 per cent and 15 per cent of the purchases would not have been made prior to the income ceiling revisions. The last time the income ceiling was raised by $2,000 was 5 years ago in 2011. The question remains if it is a matter of eligibility or affordability of existing public housing units which detracts a possible remaining group or groups of buyers who may still be unable to purchase resale units despite securing all possible grants.

 

Resale HDB flat market remains stagnant in November

Resale HDB flat prices have remained stagnant for the past couple of years, indicating that the market has stabilised. Though prices have increased by 0.2 per cent last month, sales volume has gone the opposite direction with a 5.3 per cent drop. The minimal rise is likely to be caused by buyers ready to complete transactions before the quiet festive year-end holiday season.

hdb-flat-rentalBetween permanent residents having a longer wait before they can purchase HDB flats and a closing gap between private non-landed homes and resale flats, the market is not looking a rebound anytime soon. As more new flats are being completed and more HDB flat owners receive keys to their new units and demand remains quiet, the scale between sellers and buyers may tip towards the latter.

Sellers of HDB flats in mature estates may fare better as prices here have increased 0.8 per cent in November. Location and proximity to schools, transport nodes and amenities remain the crucial factors in sealing deals. 1,585 resale flats were sold in November, down from 1,673 in October. In a year-on-year comparison however, 18,005 units have been sold, up from 2014’s 17,318 and likely to be comparable to 2015’s 19,306 units. The market stagnation is expected to continue well into 2017, especially as the authorities have not shown any signs of lifting the property cooling measures.

Last BTO flat launch of 2016 brings over 10,000 new units

Photo credit: HDB

Photo credit: HDB

Bringing 2016 to a close, the Housing Board (HDB) has truly brought in the goods with their last and biggest BTO and SBF flats launch this year with over 10,000 units.

The flats in this launch are expected to be particularly popular with applicants as they are in the popular up-and-coming Bidadari estate and also the mature estate of Bedok and Kallang/Whampoa. 5,110 new BTO units will be spread out between these 2 estates while the remaining 2,194 will be in Punggol. Close to 3,000 flats unsold from previous launches will also be put up for sale this time round. This includes executive flats and 2-room flexi units.

Photo credit: HDB

Photo credit: HDB

Earlier launches this year have included units in mature estates such as Ang Mo Kio and Tampines as well. Units in Bidadari have been favoured by young couples and families as it is in a good location in the city fringes, well-served by public transport and near a few schools. The Bidadari development, though new, will be considered a matured one as it is essentially part of the larger Toa Payoh estate. Although singles are now allowed to apply for new flats directly from HDB, they are restricted to only 2-room flats in non-mature estates.

Photo credit: HDB

Photo credit: HDB

Prices of the new BTO flats in the current launch range between $135,000 for a 2-room flat in Bedok to $503,00 for a 5-roomer in the same estate. A 4-room unit in Kallang is priced at $497,000. Prices stated are before the application of grants or subsidies.

The application deadline for this launch will be at 2359 hours on Monday, November 28. The next launch is scheduled for February.