Singapore home prices remain muted

As long as the property cooling measures are here to stay and global economics remain shaky, home prices may hover at the current levels.

ArdmoreIIIAnd as the government continues to roll out more new build-to-order (BTO) flats while keeping the loan ratio capped at 30 per cent, demand for resale HDB flats may continue its lacklustre run. Although there was a 0.1 per cent rise in HDB prices in Q2, prices were mainly flat and private home prices dipped further by 0.4 per cent, that is following a 0.7 per cent fall in Q1. Some property players have viewed the private property market as possibly reaching the bottom of the cycle.

Since the last market peak in 2013, HDB and private home prices are now 9.8 per cent and 9.4 per cent lower respectively. There have been some signs of recovery in Q2 as private property prices in the core central region (CCR) rose 0.2 per cent. Developers have also been actively seeking out sales by offering creative payment schemes and keeping sales volume to a respectable level.

Considering the average length of a property lull being 8.4 quarters, this cycle may already have reached the end of its run. Will a prolonged cycle mean an even sharper and more drastic rebound when the measures are loosened? How will the market then respond to that and will there be any drawbacks?

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.

2016 – Property cooling measures to stay

Remember those days of astounding COV (cash-over-valuation) prices? Those days may be but a shadow of the current market environment today. More than half of resale HDB flats sold now are selling at prices close to market value and prices are now comparable to those of 2011.

Tampines HDB flatPhoto: Resale HDB flat for sale in Tampines.

National Development Minister Lawrence Wong has however said that it may be too early to lift the property curbs, most of which were implemented in 2013, during the peak of the property market. Since then, HDB resale flat prices have fallen about 10 per cent, according to the HDB resale price index.

Some of the most impactful measures include the Additional Buyers’ Stamp Duty (ABSD) and Total Debt Servicing Ratio (TDSR) framework. For HDB loans, the mortgage servicing ratio was tightened to 30 per cent of the loan applicant’s gross income.

With the property cooling measures here to stay, this year’s resale flat prices may remain level, with some fluctuations should there be economic or interest rate changes. HDB’s announcement of their expected 18,000 new BTO units this year may dilute demand for resale HDB flats, though prices are not expected to fall much as most buyers will be those who do not wish to or are unable to wait 3 to 4 years for the new BTO flats to be built. The motivating factors for selling or buying a resale unit may be what lays the foundation for the final transacted price.

Punggol flats selling for record prices

Punggol used to be equated with faraway and ulu (colloquial word meaning remote). But some HDB flats which have just reached the end of the MOP (minimum occupation period) of 5 years have just made a killing in the property market.

Treelodge@Punggol HDB

Photo credit: HDB 

A recent sale of one 5-room HDB flat in Punggol transacted at $760,000, which is a record high considering Punggol is still under development and is still considered a non-mature estate. But the high price was warranted, considering it was one of the only 14 loft-type units available in Treelodge@Punggol which is in turn HDB’s first eco-friendly development. It was also on a high floor somewhere around the 16th to 18th floor and had a much larger floor area of 147 square metres.

Punggol-northshore.jpg;wae44a5d811a611cfaPhoto credit: HDB

As most of the flats selling in Punggol are new, most are just slightly older than 5 years, they are commanding high prices. Prices are rising as demand increases. 3-room flats at Treelodge@Punggol were selling for $520,000 to $548,888 in October this year and at yet another popular project, Coralinus, 4-room flats went at around the same price.

But as HDB injects more BTO units into the estate, with Northshore Residences I and II, the estate might see a sudden rise in population and perhaps also market competition in 3 to 4 year’s time.

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.

HDB resale flat market stabilising

While last month’s price decline in the HDB resale flat market may be slight at 0.3 per cent, a quick rebound may yet to be. Minor fluctuations may still occur, but prices seem to be stabilising. The number of flats changing hands also seem to be on the increase, up 3.9 per cent from August.

Punggol HDB EstateThe property cooling measures however continue to impact the property market with falling prices and sales volume in the private property market. While the effect is less apparent in the HDB resale market, prices have gone down by 8 to 9 per cent since its peak in 2013. Property analysts are expecting more gradual fall for the rest of the year, at a less-than-1 per cent monthly decline.

November’s mega-launch of 12,000 BTO (Build-to-order) flats may however take a toll on the resale market as buyers may hold back on buying from the resale market. On the other hand, most recent policy changes in public housing may also help buyers qualify for and attain a resale flat more easily. Income ceiling for resale flats have been raised from $10,000 to $12,000 and families who wish to purchase a resale flat near their parents or married child can apply for a $20,000 proximity grant.

The resale market has take some time to cool, but considering it has fallen from its 3,649 units sold in May 2010 to 1,504 in September 2015, all eyes and ears may be on when the authorities are likely to relax the property cooling measures.

HDB resale flats – Market recovery soon?

The number of HDB resale flats which exchanged hands in the last 2 months have increased by more than 8 per cent. A sign property analysts are taking as a positive.

Photo credit: The Singapore Tourism Board.

Photo credit: The Singapore Tourism Board.

With a consecutive 2-month rise in prices, at 0.1 per cent in June and 0.2 per cent in May, the HDB resale market seems to be showing signs of bottoming out and a turn for the better may come quite soon. In the months prior, when the property cooling measures just began to take effect, it were the four- and five-room flats which suffered the biggest hit in price drops. But recent market figures seem to show that prices in these segments have risen by 0.3 and 0.5 per cent of late, followed by a 0.7 per cent in executive flats (EC) prices as well. The three-room HDB flats segment however have seen a 0.2 per cent fall in prices.

In the year ahead, as the government reduces the supply of new BTO flats, buyers may have to turn to the resale market instead, which may in turn positively affect the number of sales and prices. However, the rebound, though happening, may be slow as buyers may be more selective of their choice of units and there may be more put into the market as BTO flats reach completion and those who have secured a new flat may be pressured to sell within a stipulated 6-month period of getting the keys to their new units.

High turnout at High Park Residences Launch

The sales gallery for High Park Residences was filled to the brim as 8,000 people came to view and 500 deposits were made for the 1,390 units. The previous prediction for the number of units to be developed in the site near Thanggam LRT station and the new Seletar Mall was only 1,130 but the developers, CEL Development, Heeton Homes and Kim Seng Heng Realty, had planned for a higher number of smaller units in order to churn out a larger number of new homes.

HIghpark ResidencesMost of the sales were for the two-bedders which are sized between 53 to 68 sq m (up to or smaller than the size of an older resale three-room HDB flat) and priced from $398, 000 for the record-setting smallest 36 sq m studio apartment in District 28. There were also three-bedders available at 81 to 92 sq m, and various other unit configurations such as four-, five-bedroom apartments, 10 semi-detached houses, 4 bungalows and 9 commercial units. But at the weekend launch, affordability was the key word, with most units under $400,000 being snapped up quickly.

Though the quickest sales were of these smaller units, property analysts are hopeful that the area will be developed for families in the future and as it will be some time before the next private residential property enters the market in this area, High Park Residences may hold its place in terms of demand and pricing for some time.