HDB Resale flats – More affordable now?

Have prices of resale HDB flats reached an acceptable level? Prices and sales volume have been falling, and with the time it has taken for the property cooling measures to sink in, are resale flats now more affordable?

As more executive condominiums (ECs) and Build-to-order (BTO) flats hit the market, owners of existing HDB flats who are upgrading or getting keys to their new flats, in particular second-timers, are pressured to sell their flats within a stipulated time period of 6 months. This, plus the fact that a substantial period of time of steady but gentle decline of resale flat prices may have instilled confidence in buyers who may either see the market as stabilising, with slight or no further chances of price drops.

Bellewaters ECHow much as price really dropped? In a year-on-year comparison, prices have dipped 6 per cent since April last year, and an 11 per cent drop when matched against the peak in 2013. Property analysts are expecting prices of resale flats in non-mature estates to fall a little further of 6 per cent whereas those in mature estates are expected to hold their own for the rest of the year. Three-room and four-room flats also saw a 0.3 per cent price rise while five-roomers and ECs fell 0.8 and 2 per cent respectively.

In the first quarter of the year, the rate of decline in HDB resale flat prices have been the lowest since the fall in 2013, at 1 per cent. This be a signifier of a stabilising market, though 2015 may be the year to watch in terms of future market trends. With the possible General Elections coming up next year, it could also be the calm just before the storm, whichever way the wind blows.

 

Resale and New HDB Flats – Price gap narrowing?

Have the price tag on new BTO HDB flats truly gone down, as the Minister of National Development, Mr Khaw Boon Wan has promised? Or are prices of new flats still considered high? What about resale flats?

WestRockHDB flatA recent survey has shown that most still think new HDB flats cost between $300,000 and $400,000 for a four-room unit. That is almost $100,000 more than the actual average of $295,000 for a new flat. Resale four-room HDB flats can easily range between $320,000 to more than $500,000 depending on location and floor area.

The average price of a new 3-room HDB flat currently stands at $186,000. But perhaps buyers have been using resale HDB flats as a gauge of value and have been expecting new BTO flats to cost between $200,000 to $300,000.

Since most of the individuals surveyed were willing to pay about 20% more than the actual prices of new HDB flats, what does this indicate about the resale HDB flat market? Are buyers getting used to the higher prices of public housing? Should the authorities work to keep new and resale flat prices as what they are? Is public housing truly affordable and has enough been done to keep the market just so?

Photo credit: HDB

 

 

Resale HDB flats in prime locations command high prices

Even though the resale HDB flat market seems to be following the general downhill trend of the property market over the last year or so, bigger and newer units in the town’s hottest locations are still bringing in big bucks.

Of the 20 five-room HDB flats which sold at over $900,000 this year, as compared to just one in the same period last year, 14 were from the lauded Pinnacle @ Duxton. The other sales came from units in Bukit Merah and Queenstown.

View from PInnacleAs units at the Pinncale@Duxton were only recently released into the market, after their statutory five-year MOP (minimum occupation period), part of the increase in sales could be accounted for by these units. At their time of launch in 2004, five-room units were only priced between $345, 100 to $439, 400. Prices have since more than doubled. With their astounding views (for a public housing facility) and close proximity to the CBD (Central Business District), chinatown and city centre, the reasons for their expensive price tags could hardly be disputed.

Most of the other flats which sold in Strathmore Avenue and Holland Drive, were also newer ones which came under the Selective En Bloc Redevelopment Scheme (SERS). These flats were newly built in order to house owners of older flats nearby which were scheduled to be demolished. Many of these owners were luckily enough to secure a new flat at almost no additional cost, and now are able to sell at a profit.

Other areas with a higher ratio of newer resale flats include the less mature estates such as Punggol and Sengkang. Here, the units may not command as high a price due to their far flung location and higher number of sellers. But that said, it could be early days yet and in years to come, another tune may be sung.

Offers galore in blossoming EC market

Executive condominium launches in the recent months haev proved attractive to the buying crowd, especially after years of quiet on the ground.

But with 7 more launches planned for the later part of the year, will the market be poised for a saturation point? Or will buyers welcome the competition and options? Most of the new launches will be near existing EC sites in the North and North-east regions, which could mean stiffer competition for the developers.

Westwood ResidencesOne project which may however prove promising is the Westwood Residences in Boon Lay. Together with Lake Life EC, they could the only 2 executive condominiums in Jurong since 2010. The rarity, coupled with the pent-up demand could means buyers may be willing to pay slightly higher than average prices for units here as compared to ECs elsewhere. Property experts are expecting the median prices for ECs launched later this year to hover between $750 to $770 psf.

Currently, the average selling prices for ECs are at around $800 psf. But buyers have not been particularly responsive to this pricing level and with the introduction of thousands of new units over this and next year could bring the competition higher and prices lower. The dip in resale HDB and private condominium prices since the high in 2013, would also mean that ECs have to priced realistically in order to entice HDB upgraders and buyers.

As the market segments react to one another, the EC being hybrid between private and public properties, may also find themselves having to price themselves appropriately between these two market segments.

 

Resale HDB flats – Sales go up as prices do down?

2014 saw a record low number of HDB resale flats exchanging hands. It could be due to the effects of the property cooling measures, in particular the TDSR (Total Debt Servicing Ratio) framework set by the Monetary Authority of Singapore,  just starting to kick in. Buyers were more wary and more careful in weighing their options while sellers were still unwilling to lower prices. The tussle was just beginning.

SeaHorizonECBut this year, it seems one side is starting to give, slightly; especially for those who need to sell their current flat within the stipulated time of collecting the keys to their new flat, or face forfeiting their deposit. Prices of resale HDB flats have dropped 0.8 per cent in March this year, and the number of transactions increase from 1,148 to 1,349., As the number of new BTO (Build-to-order) HDB flats which will be launched this year decrease, buyers may also begin turning to resale flats to fulfil their needs. Prices of four- and five-room flats fell the most at 1.1 per cent and prices have been dropping since a year ago.

Property experts continued to stick to their forecast of a 5 to 6 per cent drop in resale flat prices this year, and hope for a higher sales volume than last year. It all depends on how the market fares from now till June, just before the traditional lull period of the Hungry Ghost Month.

Prices of rare HDB flats such as ECs (executive condominiums) remained high however, in fact showing a rise of 1 per cent last month.

Yishun no backwater town

A somewhat laid back atmosphere that speaks of a slow and nature-filled life with occasional bursts of activity and energy describes the fringe township of Yishun. This HDB estate once was called “Ulu” (a Singaporean slang for being out-of-the-way and backward), but it has progressed nicely into the genteel gem it is today.

It seems to live life just the edge, growing and filling in a gap that straddles bustling and slow. Latest news of the redevelopment of the Yishun Central, with Frasers Centrepoint Homes taking the lead in building a mixed-use condominium and mall development, Northpoint City, in the vicinity, the Yishun area may be seeing a revival of sorts.

The EstuaryStretching out in a large area between Chong Pang, Sembawang and Yio Chu Kang, it has quite the space for development and expansion. Some of the current private properties already in its midst include Orchid Park, Lilydale and The Estuary. Newer residential developments include Nine Residences, Symphony Suites and the recently launched Northpark Residences.

There are a considerable number of HDB flats in the area as well, and property prices are considered reasonable and affordable. For now. New BTO (Build-to-Order) flats were also introduced into the mix starting from 2013, putting a good 9,500 units in the estate, including Yishun Greenwalk, DBSS ADora Green and Vista Spring.

From kampung to new town. The kampung spirit remains strong.

Will adjusting HDB income ceiling help “Sandwich class” own a home?

As earning power climbs, the combined household income for an increasing number of families now fall just above the income ceiling for public housing. This puts them just out of reach of a new HDB flat yet still quite a distance away from being able to afford a private property, especially as inflation and the financial stress of providing for a family kick in.

Forestville Executive Condominium.

Forestville Executive Condominium.

The combined household income ceiling for a new HDB flat currently stands at $10,000 while the same for an executive condominium (EC) is $12,000. The income ceiling was last raised in 2011, from $8,000 to $10,000 for HDB flats and $10,000 to $12,000 for ECs. Over the last five years, there has been a significant increase in the number of couples and families falling into the “sandwiched class” of middle-income households in Singapore. Especially as Singaporeans now tend to marry late in life, when the husband and wife’s earning capabilities are at a certain level which puts them just beyond qualifying for a new HDB flat might be facing the most headaches.

Is there a way around it as public housing was originally aimed at helping those in need. But since there might always be a section of the population who will find public housing out of reach and private housing too much of a financial burden or risk, will raising the income ceiling really help elevate their circumstances only to be a burden to yet another group of citizens? What other options are available for these middle class families? Will they be looking at resale HDB flats as the only viable and affordable option?

More foreign private home buyers

The number of Singaporean buyers of private properties have fallen last year. Possibly overshadowed by the increase in number of foreign buyers since rules have changed for Permanent Residents (PRs) buying HDB flats. New PRs must now wait 3 years before they are able to purchase from the public housing market. The rules have been in place since August 2013.

Marina ONe iprop watermarkThe percentage of PRs purchasing private properties in Singapore have risen from 15 to 18 per cent in 2014. But the number of Singaporean buyers have dipped almost by half. In 2013, 16, 789 homes were sold to Singaporeans while in 2014, Singaporeans only purchased 8,707 private homes.

Most of the foreign buyers were made up of Chinese nationals, Malaysians, Indonesians and Indians. 229 units were sold to Chinese nationals in the last quarter of 2014, up from 214 units in the third quarter. With the launch of the Marina One Residences, which is a joint venture between Malaysia and Singapore governments, Malaysian buyers were also active in the private property scene here. Over the course of last year, some 119 units were purchased by US citizens and 58 by Britons.

The number of PR and foreign buyers have remained steady for the past couple of years. Should this be a promising sign for the road ahead? And how can local private property buyers leverage on this?