Rising resale HDB flat sales

There’s possible cheer on the resale HDB flat front with a 28% increase in the number of resale flats sold in the last 3 months up to June 30; and a slowdown in the dip of the resale price index at 0.4 per cent. Previous quarters saw a 1.4 per cent decline.

Are resale HDB flat prices going to drop as more new HDB flats are made available to the buying public?

Are resale HDB flat prices going to fall further as more BTO flats become available for occupation next year?

Obviously the lowered prices and announcements of reduced new BTO (build-to-order) HDB flat launches have drawn buyers back into the fold. The HDB estate of Jurong West saw the most number of resale flat transactions with 423 units being sold. This is closely followed by Tampines with 364 units at Sengkang with 341 units.

Property analysts are however wary about a quick and complete recovery. For the rest of the year and perhaps the next year as well, HDB flat prices are expected to stabilise at best. As home buyers are still restricted by the property cooling measures, and as more BTO flats become ready for occupation, more resale units may be expected to enter the market, and heat up the competition. Buyers have more options and can afford to be picky about their selection. Some sellers are already finding it difficult to find a buyer for their current flat which they are required to sell within a stipulated time upon receiving the key for their new BTO flat.

With the upcoming General Elections (GE), what can be expected of the property market?

EC’s potential attracts buyers

Most who qualify for an executive condominium (EC) are likely to apply for one when weighing the potential of an EC against a private condominium. And that perhaps fulfils the purpose of these public-private housing hybrids, which is to help citizens make a progressive step into the private property market. EC’s are public housing which become private housing after 10 years. This means buyers are able to enjoy the perks of a private residential apartment including the facilities and the eventual potential appreciation in value in the open market as a private property. There is an income cap however, at $12,000 in gross household income and the minimum occupation period (MOP) of 5 years still apply as they are essentially public housing provided by the Housing Board (HDB) on the onset.

The Vales

Their popularity has risen immensely, reflected in the often-sold-out launches. At the Forestville and Sea Horizon ECs by MCC Land and Hao Yuan Investments, up to 95 per cent of their units have been sold. Both properties are expected to receive their temporary occupation permits (TOP) by 2016.

The 653-unit Forestville executive condominium is situated in Woodlands, an upcoming regional business hub, and near the future Woodlands South MRT station. Schools in this area include the Singapore American School, Innova Junior College, Singapore Sports School and Republic Polytechnic. Across the island in Pasir Ris, just two bus stops away from Pasir Ris Central, the 495-unit Sea Horizon prides itself in being the only EC with a sea view.

It will be an exciting market to watch as there are quite a few new ECs being launched in this half of the year, including Westwood Residences, The Brownstone, Sol Acres and The Vales.

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.

BTO Flats in less mature estates sold for more

Punggol Northshore, one of the latest BTO (Build-to-order) HDB flat offerings in Punggol, proved popular with young families and couples. The response may have been surprising 10 years ago, when the area was still underdeveloped and considered far-flung. But now, as the amenities have built up over the years, those who have bought units in Punggol and Sengkang in the earlier years are reaping the ripe profits.

Punggol HDB EstateMost of the resale HDB flats which sold in these 2 HDB estates have tripled their original purchase prices. Four-room flats in Sengkang once cost $205,000 but now they can sell for as much as $566,880 in average on the resale HDB flat market. The lowest recorded sale was $410,000, double its original price tag. Property analysts have placed the HDB price index at a 90-per-cent increase since the launch of the system in 2002.

Once costing buyers $178,000 at its highest in 2003, prices of these BTO flats have since appreciated over the past 10 years. Most BTO flats take 4 years to be completed, and buyers have to fulfil a 5-year MOP (minimum occupation period) before being allowed to list their flat in the resale market.

It was once thought that older flats in mature estates were able to fetch higher prices, but these newer BTO flats are beating them at their odds; mostly due to the young age of the flats which means they will also be in relatively better condition, have more years left in their lease, and possess a higher potential for growth in terms of property prices once the less mature township is developed.

Reduced BTO flats = Increased resale flat demand?

The number was 16,900 and now it is 15,000. The Housing Board has revised the number of new BTO (build-to-order) flats to be offered this year as the resale HDB flat market has shown signs of stabilising.

In the previous year or two, the increased supply of BTO flats has meant that more who qualify to apply for a flat directly from HDB have been able to secure one fairly successfully, which has reduced the demand for resale flats. Recent launches have even been undersubscribed for some segments – three-room flats in Sembawang and four-room flats in Bukit Batok. Second-timers have also been more successful in securing units in this year’s BTO launches and the pool of available units in the Sale of Balance Flats (SBF) has been growing.

BIdadari HDB

Photo credit: HDB

Prices of resale HDB flats have fallen 7.4 to 12.4 per cent since its peak in 2013. But the last quarter has indicated once more, a rising demand  for resale HDB flats, partly due to the lowered prices and the sense of the market bottoming out.

The next HDB BTO sales launch will be later this year in September, with 4,860 flats up for offer in Bidadari and Punggol Northshore, both of which are increasingly popular spots for young couples and families.

 

Singapore home prices down last quarter

Across the board, property prices have dipped again last quarter, but resale HDB flat prices may be stabilising. Following the first quarter decline of 1 per cent, resale HDB flat prices dipped only 0.4 per cent last quarter, possibly signifying a bottoming out of this market.

Optima condominium at Tanah Merah.

Optima condominium at Tanah Merah.

Nudged by the lowered mortgage servicing ratio cap from 35 to 30 per cent and reduction in the number of new BTO (build-to-order) and SBF (sale of balance flats) units, HDB resale flat prices have fallen for a few quarters now. Property analysts are expecting a stabilising of the market, or at least a rise in demand for resale units as HDB plans to increase the income ceiling for BTO flats, which may replenish the pool of potential resale HDB flat buyers.

Private home prices are however expected to fall further this year, especially as resale HDB flat prices have fallen so quickly the gap between private suburban homes and the former have widened. Some HDB upgraders may think twice about selling their HDB flat to purchase a private condominium unit and others may turn to resale flats instead of private homes. The expectation of a rush of new private apartment units to hit the market in the later half of this year may have also put a damper on market prices.

In the first quarter, private home prices fell 1 per cent, and the fall remained steady in the second quarter at 0.9 per cent. Moving ahead, prices of private non-landed homes are expected to fall 4 to 6 per cent by the end of the year.

 

Rising competition in the Rental market

If you were looking to buy a condominium unit to call home, competition from the rising number of new homes might be good news for you. But if you were looking to invest in a unit to reap rental profits, it might be wise to consider your options carefully.

Jupiter18 CondoThe rental market for suburban condominiums has been falling, especially as more new properties enter the market. Private condominium rentals have fallen 0.6 per cent last month and is 6 per cent lower than last May on a year-on-year comparison. More new condominiums will receive their TOP (temporary occupation permits) in the next few months, which may suppress the rental market even more. Property analysts are expecting a fall of up to 7 per cent for the private property rental market this year.

The effects may also trickle down to the HDB rental market as competition heats up across the board. The price gap may be narrowing between HDB and private apartment rents, thus giving tenants a much wider pool of options. A five-bedroom HDB flat now usually rents for up to $2,400 per month while a 2-bedder private condo unit rents at just under $3,000.

Location is still king and units in mature estates or near MRT stations will still command slightly higher rents.

HDB resale prices – Upwards soon?

With property prices on the decline since almost a year ago, have HDB resale flat prices finally bottomed out?

Buyers seems to have caught on with the price drop and have been back on the hunt for units as the number of transactions in May this year indicated a 20 per cent rise compared to the same month last year. Prices have also shown a 0.2 per cent increase in March and have held steady in April.

Resale 5-room HDB flat on King George's Avenue with asking price of more than $700,000.

The property cooling measures rolled out by the government seem to have finally taken full effect since their implementation over the past couple of years. Since its peak in 2013, HDB flat prices have fallen 11 per cent.  Property analysts are expecting resale HDB flat prices to reach it’s bottom by the end of the year. Minister for National Development, Mr. Khaw Boon Wan, has previously mentioned a possible single digit fall in HDB flat prices this year.

How long the lower prices will be maintained is largely dependant on policy changes and buyers’ sentiments, but also on the private property market and the options made available to the buying public. It could be that the prices may remain stable for awhile with the number of sales transactions increasing as buyers take advantage of this window of opportunity.