Government to strike a balance in HDB market

With the resale HDB flat market holding firm and prices of resale flats still high, the government has promised to look into shortening the wait for new HDB flats while monitoring the effect of exorbitantly-priced resale flats especially in the downtown areas.

Pinnacle DuxtonThe current wait for applicants of a new BTO (build-to-order) flat is now 3 to 4 years, with some having to wait as long as 6 years. But the wait may soon be shortened to 2 – 3 years, according to National Development Minister Lawrence Wong. For now, applicants who need a flat sooner are opting to ballot for units under the Sale of Balance Flats (SBF) scheme, usually from a pool of units in developments which are nearing completion but have yet to be sold.

Foreigners may be surprised by the high prices for public housing in Singapore (in most countries, public housing areas are rundown and hardly in demand). And while Singaporeans can be proud of a solid and stable public housing sector, the fact that prices were skyrocketing over the past decade, and could potentially happen again if not kept in check, has the government on their toes.

tampinesgreenhdbThe recent discussion about the high resale value and potential value-appreciation of HDB flats in downtown areas such as at Pinnacle@Duxton has resulted in proposals to have different resale market rules for these units – such as a longer MOP (minimum occupation period), higher resale levies and shorter lease periods. As of now, 18 resale units of the 174 transactions at Pinnacle@Duxton have been sold at $1 million or more.  Keeping the public housing system fair will take some skilful tweaking as the population and economic landscape of the future is vastly different from that of 40 years ago.

Resale DBSS flats scoring high prices

Recent transactions of 3 DBSS (Design, Build and Sell Scheme) units at Park Central in Ang Mo Kio has almost reached the $1 million mark. For public housing, this is certainly a bit of a coup for the property situated near the Ang Mo Kio MRT station. But compared to normal 5-room HDB flats in Ang Mo Kio Ave 1 went for as much as $880,000, the $980,000 selling price for a 5-roomer at Park Central which just reached its 5-year MOP (minimum occupation period) in July this year sounds perfectly normal for this district.

parkcentralThe DBS Scheme was suspended in 2011 due to the soaring prices, culminating in Centrale 8 in Tampines, developers have been setting for these projects, which are privately developed though they are technically public housing. DBSS units can be sold once the 5-year MOP is reached. Some other DBSS projects which entered the resale market this year were City View @ Boon Keng, Natura Loft in Bishan and Parc Lumiere in Simei. A unit at the former was sold earlier this year at a record-breaking $1.1 million. One of the first DBSS projects which became eligible for resale in 2014 was The Premiere in Tampines.

Now could be the time for DBSS to take their time in the limelight as new HDB flats are incorporating more design features and condominium-like facilities and facades. Property analysts are expecting the DBSS gloss to lose its shine in about 10 years’ time.


MAS relaxes income cap on loans

Interest rates have been flying low for sometime now. At less than 2%, home loan rates are even lower than the 2.6% offered by the Housing Development Board (HDB). Though the latter offers stability despite inflation, the small difference is considerable for the large purchases real estate surmounts to.

And though there has been talks of rate hikes, a sharp increase has not yet happen and while interest rates have plunged to near-zero in 2011 and not surged since then, many have been favouring the floating-rate loans which are pegged to the Singapore Interbank Offer Rate (Sibor). But at the same time, the property cooling measures rolled out in waves by the Monetary Authority of Singapore (MAS) and Inland Revenue Authority of Singapore (IRAS) have restricted the ability of many to refinance their previously high-interest home loans.

MAS has since adjusted the total debt servicing ratio (TDSR) framework as of 1st September, and more home owners and new buyers will find that they now qualify to refinance their loans or service a less taxing one. Now all home owners are exempt from the 60 per cent income cap. Previously, the monthly repayment amount for total household debt can only be of and less than 60 per cent of the household income.

As the goal of this regulation is to prevent a property bubble and to stop buyers from overextending themselves and running into debt, property investors may still find themselves restricted by the rule, but now with the change, less so. The loan threshold may be surpassed if they pass the bank’s credit checks and they also have to commit to repaying at least 3 per cent of the outstanding bank loan within a 3-year period. This may still keep errant property investing in check while allowing those we have done their risk calculations carefully an opportunity to plan their financial growth.

The property market has been gradually cooling for a few years now and while no change downwards or upwards has been sudden nor drastic, and although the authorities say this is in no way a relaxation of the property cooling measures, this is nevertheless a good start on the pathway to building a more structured and robust real estate industry.

Consumer awareness crucial for property industry

The local property industry landscape has been changing quite a bit over the past few years, in particular for the consumer. The authorities have been working on transparency and consumers now have more information at their finger tips, and perhaps even more as net prices of de-licensed projects’ will soon be available as well.

singapore-property-authoritiesCurrently, the Housing Development Board (HDB) and Urban Redevelopment Authority (URA) both provide property statistics and data on their websites. The Singapore Residential Price Index (SRPI) by the National University of Singapore (NUS) Institute of Real Estate also provides month-on-month transaction-based information for private non-landed residential properties.

ardmorethreeThere are however some caveats to take into consideration. URA’s quarterly price index for example, does not include the discounts and incentives which developers sometimes provide. Only the net-price will be recorded, thus consumers will do well to take this into consideration when viewing statistics and median monthly transaction prices. The change will take effect this month, which means the price index may have some downward pressure put on it as current figures may be inflated. De-licensed projects which have obtained their Certificate of Statutory Completion and thus do not come under the Housing Developers Rules, such as OUE Twin Peaks and Ardmore Three, are known to provide incentive schemes to their buyers such as 15% discounts and Additional Buyer’s Stamp Duty (ABSD) rebate.

A recent case of a property agent who handled and misappropriated cash handed to him by his client also brings to light that consumers may not be entirely aware of what they are entitled to or what their agents are allowed and disallowed to do. In brief, it is against the law for property agents to handle any cash on behalf of their clients.

Tengah – HDB’s future model estate

There was Punggol, then Bidadari, and now Tengah. It looks ike HDB has big plans for the decade ahead and with 30,000 new BTO flats and 12,000 private homes in the pipelines, this new HDB town estimated to be the size of Bishan, will be setting new heights for future HDB estates. Though the new flats here will reach only a maximum of 15 storeys due to its proximity to the Tengah military airbase.


Photo credit: HDB

HDB is developing Tengah according to the government’s green and sustainable-living dictum, with a 700ha forest fringe surrounding the estate and a 5 kilometre forest corridor linking the town to the island’s western and central catchment areas. Living with nature will be the focus of this new township, it will also feature a host of community fairways, gardens, green play areas, walking and cycling paths and a car-free town centre.

hdb-bto-flats-roh-programmePhoto credit: HDB

The first of the Tengah flats to be launched will be in 2018 and transport-wise, the Jurong Region Line which is to be completed within the next decade, will be the town’s main connection to the rest of the island. The eco-friendly township will consist of 5 districts, namely – Park District, Plantation District, Garden District, Brickland District and Forest Hill District. Each district will be differentiated distinctively while still incorporating green features. The idea behind this is integration instead of replacement – keeping the identity of the current scrubland that Tengah is, spanning Jurong East, Choa Chu Kang and Bukit Batok.

Resale HDB flat prices fall in August

Photo credit: HDB

Photo credit: HDB

Rather than a market rebound, the HDB flat market may have to be content with stabilising prices and sales volume. August saw a 0.7 per cent dip in resale flat prices, led by a 1 per cent fall in 4-room flats, over the past 3 months after a slight rise in July. 3- and 5-room resale flat prices also inched down 0.6 per cent while executive condominium (EC) prices rose 0.8 per cent. The price drop is seen in both mature and non-mature HDB estates.

The Hungry Ghost month may also have had something to do with the drop in sales prices as buyers tend to hold off buying during that month though units with lower selling prices may have transacted hence pulling the average median prices down slightly. Since the market peak in April 2013, HDB resale flat prices have since fallen 11.5 per cent.

Photo credit: HDB

Photo credit: HDB

Property analysts predict a level market for the rest of the year, with price sustainability at best and as long as the economic forecast remains unclear and overall property market sentiment weak, any price rebound will be unlikely. Sales volume has however been rising, a promising sign, though as more new HDB flats reach completion within the next couple of years, more flat owners will be pushed to sell within a specified time period and competition may once again push prices down.

New HDB flats in non-mature estate prove popular

BuangkokWOods1Usually it’s the new HDB flats in matures estates which receive the most applications. But in Wednesday’s launch of 4,841 new Build-to-order (BTO) HDB flats, it were the units in Buangkok woods in Hougang which caught the most attention. In the same launch were units in the mature estate of Tampines and also in the non-mature estates of Sembawang and Yishun. The price difference between 3-room HDB flats in the 2 estates differ by about $20,000 with those in Tampines starting from $202,000 and $185,000 in Hougang.

The lower prices may have been the deciding factor for HDB flat seekers. Units in Yishun were starting from $156,000. As of Wednesday evening, the Hougang flats were already seeing 6 applicants for every 10 units while the 2 projects in Tampines had 2 to 3 applicants for every 10 units.

ValleySpringYishunHDBIncluded in the launch were 2-room flexi flats, which are much sought-after by singles who are now allowed to purchase new flats directly from HDB but only in non-mature estates. As per other HDB flats, they have 99-year leases or shorter ones for the elderly. These popular property-types were almost completely subscribed for within the first day of the launch.

For young families and couples looking for a flat in mature estates, the next launch might prove worthy of the wait, with 2,910 units in popular HDB towns of Bedok, Kallang/Whampoa and Bidadari. The last on the list will probably be of most interest to buyers.

Applications for the current launch will close on Tuesday, 23 August 2016.

Resale HDB flat prices rise in July

Resale HDB flat prices have been stabilising for sometime now, and last month showed a 0.7 per cent rise in prices despite a fall in sales volume. Most buyers were in the market to take advantage of the lower prices, perhaps before an official market price-rise occurs. Three-room flat prices rose the most at 0.6 per cent, with five-roomers following at 0.5 per cent and 0.4 per cent for four-room flats.

HDB flat Jurong WestThe public housing market may be seeing some changes in August as 4,800 Build-to-order (BTO) flats are made available for application in Hougang, Sembawang, Yishun and Tampines which could direct buyers’ attention away from the resale segment. Buyers were mostly those looking for good market deals, and home occupiers might be more interested in the new HDB flats instead. The new executive condominium flats coming into the market may have also diluted interest for similar resale units as prices in this segment fell 0.4 per cent.

HDB SERS West CoastHDB is also revving up its Selective En Bloc Redevelopment Scheme (SERS) where 8 blocks in West Coast Road will be the next recipient of the scheme. Residents will be relocated to surrounding blocks and mature HDB estates will see improvements such as upgrading of toilets, lifts and installation of elderly-friendly features.

Property analysts are expecting the number of resale flat transactions to fall this month as the Hungry Ghost Festival begins, but prices are expected to remain level for the rest of the year.