BTO supply shrink

2013 was the year for new properties, private and public. Bumper crops of new BTO HDB flats were launched almost every two months and an average of 4,190 units were offered up at each launch. In the first launch this year, the number was a reduced 3,139 units.

Although smaller in number, HDB is happy to offer eco-friendly features in their latest launch such as motion-sensor lighting and recycling chutes. New BTO flats were offered across Bukit Batok, Jurong West, Punggol, Woodlands and Serangoon. Prices ranged between $73, 000 for 2-room flats to $433, 000 for 3-Gen units. 3-Generation flats are mainly four-room HDB flats reserved for married applicants submitting purchase requests with their parents.

Bukit Gombak Vista

Photo source: HDB

National Development Minister, Mr Khaw Boon Wan, has announced last year that BTO supply will be reduced this year as demand has been mostly satisfied. The authorities are however considering offering more 2-room flats as singles aged 35 and above are now eligible to apply for new HDB flats. Previously they were only allowed to purchase off the resale market.

As expected, Wednesday’s launch saw the most activity in the 2-room flats department. 5, 000 of these smaller units will be made available through out this year. 455 studio apartments in Jurong West were also included in the current launch. There will be a decrease in the number of three- to five-room flats however.  It seems the authorities are working hard to cover all ground and assuring citizens a fair chance at owning a home.

Drop in government land supply

And this will happen come 2014. As numbers in both public and private property markets signal a soon-to-be oversupply, developers are cutting back on the number of land plots they bid for, and the authorities are getting the hint and hence cutting back on the supply of land.

A wise move perhaps to prevent a property bubble, though the first major move could be the tightening of loan limits implemented middle of the year. Only enough land for 11,600 new homes will be released in Q2 of 2014. That is 17.3 per cent lower than Q2 of 2013. The warning signal came in November from the Real Estate Developers’ Association (Redas) and it seems the Ministry of National Development (MND) has kept their ears open and made an announcement on Wednesday regarding the reduction.

THe CrestEven so, the market can expect 65,000 new residential properties to enter the market within the next 3 years. And this is expected to fulfill the housing demands of the population without sacrificing sales figures. 8 plots of land will be put up for sale in the first half of next year, and most of them will be in suburban areas such as Yishin, Sembawang, Sengkang and one at Prince Charles Crescent in Redhill next to The Crest. These plots will also yield some 2, 2000 executive condominiums (ECs).

The market will see the building of more executive condominiums, which may slow the private property market down a little, but still keep the number of new homes in the black. However, these hybrid homes will become available in the open market in 5 years’ time and this slowing down of supply in this sector may be a well-timed move.

More smaller HDB flats to be built

Though the supply of HDB flats may be reduced starting next year, National Development Minister Khaw Boon Wan has said that these may apply only to the larger four- and five-room flats. Smaller two-room and studio flats will still be steadily supplied in the coming year or two.

5,000 new two-room flats are targeted for 2014, and since response from singles applying for new HDB flats have been overwhelming, with 58 applicants for 1 unit since the scheme began in July this year, this will be greeted with much cheer.

bto-families-ft-st-b2
Photo Source: Ministry of National Development.

Some larger HDB flats will also be made available to second-time applicants. But this shift in supply is to balance out demand for BTO (build-to-order) flats between singles and families. And since demand from families have mostly been met, the shift to releasing smaller units will allow for more success from other applicants such as singles, divorced families and young couples.

Is this halt to releasing larger HDB flats an effective way to adjusting the dynamics in the housing market? Will there be a kickback reaction in the private property market? What is the percentage of the population who are able to afford private housing and will that percentage increase five years down the road or will the building of HDB flats continue to dominate much of the nation’s housing supply?

Reduced BTO launches will not affect resales market

2013 was a year of new BTO HDB flats. With a sales launch almost every couple of months, it may have taken the shine off resale HDB flats. Coupled with the decreasing COV prices, will this mean a a weakening resale market?

National Development Minister, Mr Khaw Boon Wan recently announced that starting 2014, HDB’s “massive construction programme” will slow as the pent-up demand for public housing units have been largely elevated by the continuous supply of BTO flats over the past 3 years. Industry analysts are not expecting the resale market to be overly affected by this announcement, especially since the pool of buyers usually have different motivating factors. Most BTO flat applicants are young families and first-time buyers. Now that application rates have fallen from 5.3 to 2 in 2 years’ time, there seems reason enough for the authorities to put the brakes on the building programme.

East Lawn Canberra HDB FlatIn comparison, the resale market has suffered slightly, with stricter loan limits, competition from the private property market, and recent COV prices have come to show for it. With the median at an all-time low, many are wondering if the cease of supply of new HDB flats will once again bring resale flat prices up. But this may be unlikely, at least for the next half year or so. As long as the loan limits and private residential options remain and especially since demand has been largely fulfilled,

It will be an interesting year for Singapore’s real estate sector. Which way will the wind blow?

Waterfront Singapore

URA Master Plan 2013As an island country, waterfront living seems like it should be a buzz word. And it certainly will be, come as early as 2023. A new blueprint, the Draft Master Plan 2013, for nation planning has been put in place, with promises of more and better homes, and a more sustainable green and ecological living environment. National Development Minister, Mr Khaw Boon Wan, has said in his blog post that “the underlying philosophy of making Singapore an endearing home and a clean, green, livable city remains unchanged”.

About half a million new homes have been planned for new housing areas. These include Bidadari, Tampines North and Punggol Matilda. Other older HDB estates will also see the injection of some new blood, in Sembawang, Yishun, Hougang and Choa Chu Kang. A strong focal point of the Master Plan is the Greater Southern Waterfront, a 1,000 hectare development along the south coastline.


Punggol Matilda HDB1And as recent property news have signaled, the Kampong Bugis and Marina South areas will be a hotbed for private residential home activity, with the possible yield of 13, 000 new homes. Out of the 13,000, 9,000 private properties are designated for the Marina South area, which will only be developed once the Thomson Line is completed in 2017 or 2018. And cyclists may have something to cheer for, with URA setting the wheels in place to make Singapore more cyclist-friendly.

As the nation becomes more congested, it now becomes less practical to travel too far from home for work, and the constant development and setting up of regional commercial centres will make the most sense. The Woodlands Regional Centre and North Coast Innovation Corridor are just two of the many scattered around the country.  There were also talks about a new commercial centre in Punggol, and new industrial sites at the Seletar Aerospace Park, and also in Defu and an area called 2 West near the Nanyang Technological University. Since properties near commercial and financial hubs usually fetch the highest prices,  could this also cause property prices to rise overall?

Foreign property buyers not biting

National Development Minister, Mr Khaw Boon Wan has announced a significant drop in the number of foreign buyers of property in Singapore, from 17 per cent in 2011 to only 7 per cent in Q3 of this year. From 1, 400 transactions per quarter in 2011, it’s now down to 330 transactions last quarter.

Was the high in 2011 reason for the government implementing the 10% Additional Buyers’ Stamp Duty (ABSD) in December of the same year, and is the current drop the intended goal of that exercise? Sub-sales, which are an indication of the property speculation level in the market, has decreased by 3 per cent. It stood at 7.6 per cent in 2011.

The Creek in Bukit Timah.

The Creek in Bukit Timah.

This year, there were a few rounds of property cooling measures, including a new debt-servicing framework and also caps of loan limits. Increase in the ABSD percentage may have also put a bitter taste in the mouths of some investors. The luxury market has been quiet for awhile, but property developers seem to be hopeful about next year, with some holding back on launches, waiting out the year-end festive period which is usually a lull period for the property market.

Moving forward, Mr Khaw says regulatory policies will need to remain nimble in order to deal with a fluctuating and ever-changing industry. Although many other countries have had stricter property-buying rules for foreign buyers, such as in Australia, it does not necessarily mean the property market is entirely stable. They are in fact experiencing signs of a property bubble and thus being able to react to market response is a skill the authorities will have to hone. Perhaps also with some good luck on the side.

There are no restrictions on foreigners purchasing properties in Hong Kong. Will investors turn their attention there instead? A comprehensive listing of properties for sale and rent are available at GoHome.com.hk.

There are now increasing restrictions on foreigners purchasing properties in Hong Kong. Will investors turn their attention elsewhere instead? A comprehensive listing of properties for sale and rent are available at GoHome.com.hk.

In Hong Kong, the government is already imposing a 50% down payment on properties. With the minimum sum raised six times over less than three years, they seem determined to find ways to make homes more affordable. The Singapore government has not resorted to such drastic measures yet, but in future, will we go down the same road? Will more Singaporeans be able to afford their own homes then?

204, 500 properties to be completed by 2016

At 6,508 more units than the 197,566 units projected earlier this year, there will be 204,500 executive condominium and private apartment units built by 2016, according to data released by the Urban Redevelopment Authority (URA).

Completed condominium units are increasing in number as developers pour fresh new stock into the market mix. Despite having held back on some major launches as the year-end lull draws close, the number of properties available in the market continues to rise. Industry experts are however expecting developers to lower their launch prices in order to boost sales.

The CreekFrom the looks of the recent Inflora condominium launch, selling prices, of new properties at least, may indeed be on the slippery slope. But that perhaps might be good news for those looking to invest. Properties in the prime city centre spots are dropping by as much as 0.5 per cent whereas city fringe and suburban areas enjoy continued growth, however slight.

Over the next 3 years, 4, 884 more private homes will be built as National Development Minister, Mr. Khaw Boon Wan considers it “making good progress in our ramp-up of the home-building programme”. The number of HDB flats to be built will remain the same as projected. 1, 355 executive condominiums will be ready within the same time frame. What does this heightened supply mean for Singapore’s housing market and will the population growth be a reflection of a cause of this increased property growth?

New Property Loan Rules

Over the weekend, new loan rules were put in place. Tougher rules targeted at reining in property investment, according the Minister for  National Development, Khaw Boon Wan. These new rules look set to be a permanent fixture in the financial landscape as the government looks to stablising Singapore’s real estate market.

money-imageAs such, they are refraining from calling it a cooling measure. It is structured in a way to better stablise the property market here as the current low interest rates are not sustainable. Implemented by the Monetary Authority of Singapore (MAS), banks now have to follow the new guidelines when assessing the property buyer’s loan eligibility.

Should the monthly repayments of a buyer’s total debt obligations exceed 60 per cent of his gross monthly income, the bank will have to decline his loan application. Mr Khaw says that these new rules will not affect buyers truly looking for a home, since it will essentially apply for those looking to purchase their second or third properties. The inability to afford rising mortgage as interest rates fluctuate, which then results in a more rapid rate of asset liquidation may be what they are attempting to catch before the wave happens.

Besides property investors, these new rule will also help banks better understand and manage the potential changes as interest rates eventually bounce back up. Is this an effective and timely move by the Singapore Government to curb a potential housing bubble? How will this affect the upcoming property launches?