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6 May

No quick-fix to managing HDB flat prices

So says National Development Minister Khaw Boon Wan.

Ever since the Government announced that new HDB flats will come at a lower price, HDB flat owners have been expressing fears of losing their nest egg should prices of flats drop. But as new flats are limited to only certain groups and limited in terms of type and location, will there necessarily be a drastic drop in resale flat prices and are we worrying too early? Though the number of resale flat transactions have decreased, prices continue to remain high. And there will always be those who wish to choose a flat of their liking in a location they prefer, as opposed to trying perhaps numerous times in the HDB ballot queue.

HDB Flats THinkStockMr Khaw reassured Singaporeans that while prices of HDB flat will only drop “a few per cent over the next few years”, but in the same breath said that the prices of HDB flats cannot keep rising forever. “If housing prices keep rising,it won’t be good. When I came into the MND (Ministry of National Development) two years ago, that was my target”. And much has been done since then, with the ramp up of BTO flat supply, changes in income ceiling, limits on HDB flat sizes, increase in number of allocated flats for both first and second-timers, and even allowing singles to buy new HDB flats.

During the recent Our Singapore Conversation (OSC) dialogue, the idea of selling back new flats only to the Housing Board was faced with much opposition. Homeowners naturally worry that their homes will lose  their value and cut them off from the profit they can earn by selling it in the open market. Mr Khaw admits that resale flat prices are difficult to manage as they are largely subjected to the market demand. SLP International executive director Nicholas Mak speculates that one way of gently letting resale HDB flat prices drop is to decrease the prices of new HDB flats in the same estate.

Forestville Executive Condominium.

Forestville Executive Condominium.

Recent debate also surround the Executive Condominium (EC) scheme\. While some have said that those who can afford an EC should not receive subsidies from the Government, the scheme was specifically initiated to help those who may not qualify for other HDB subsidy schemes. Thus should ECs still be considered a value-added profit-making asset for their owners?

19 Mar

February’s amazing new home sales

Amazingly low, that is. With figures not seen for more than a year, it looks like the Chinese New Year general pausa and January’s cooling measures have hit the private property market hard. For now. http://blog.iproperty.com.sg/wp-admin/post-new.php

February saw a 65 per cent fall in the number of home sales. 2, 016 home were sold in January while only 708 were sold in February. Some of the condominiums which fared well were D’Leedon at a median price of $1, 540 psf and Q Bay Residences in Tampines at $1, 041 psf.

How will Singapore's private property market react to the recent housing policy changes?

But the developers are back with more offers, and dangling attractive discounts and partial absorption of stamp duty to bait buyers back into the market. With the way response was over last weekend’s new property launches, March’s numbers could very well bounce back double.

Buyers seem to be ditching their wait-and-see attitude and as long as there are no further property curbs, they will be back before you can say “uncle”. Head of research at SLP International Mr Nicholas Mak, is expecting private home sales to run between 3, 000 to 5, 000 units a quarter. That is 12, 000 to 20, 000 private homes in 2013.

Though new launches in March and HDB’s regulation overhauls might effect a U-turn and drag numbers up once more, it may be months before results show.

13 Mar

Possible HDB housing policy shakeups

2013 might be the year that changes everything. In the HDB flat market, that is.

Following a series of announcements from National Development Minister Khaw Boon Wan last and this week, it seems the housing board flat market might be getting a long-awaited shakeup. Even before the General Election of 2011, the public have been hankering for change in Singapore’s housing situation. Almost 2 years later, the Government seems to be willing to start work on cementing some major tweaks.

Although nothing is yet set in stone, news about singles being able to buy new 2-room HDB flats have already been put into motion. Next step the authorities are hoping to take is to rethink the role and nature of public housing, as put by Mr Khaw Boon Wan earlier this week.

HDB Flats THinkStockSome suggestions he has put forth include:
1. Extending Minimum Occupation Period (MOP) to reduce likelihood of property speculation and weeding out those who are looking to earn a quick buck flipping properties.
2. Shortening leases
3. HDB Owners will only be able to sell HDB flats back to HDB and not on the open market.

Will these restrictions truly bring the HDB market back to the ground? Will it be a hard fall and how can the landing be softened? Speaking in Parliament, Mr Khaw has expressed the need to balance between the needs of home buyers and home owners, and the upcoming changes will have to be a “trade off which are sustainable”.

People who might feel the immediate sting are those who depend on rental yields for income since their tenants are usually those who cannot afford a flat. This, coupled with the Government’s intentions to put a cap on foreign tenancy within a HDB block, might also put a damper on home owners who are renting out entire flats or a room in their home.

11 Mar

Singles will be allowed to buy new HDB Flats by July

This rang clear in the National Development Khaw Boon Wan’s message last Friday. And many are already cheering.

Currently singles above the age of 35 are allowed to buy HDB flats, but only from the resale market.

Currently singles above the age of 35 are allowed to buy HDB flats, but only from the resale market.

There are caveats however.

  • The age limit for singles buying flats has not changed, resale or new, you have to be 35 years of age before you can buy a public housing unit.
  • Singles can only buy 2-room flats . These flats are either 375 or 485 sq ft in size. This is just slightly smaller than some studio apartments or shoebox apartments in private condominiums.
  • There is an income cap at $5000.
2-room Bukit Batok HDB flat for sale.

2-room Bukit Batok HDB flat for sale.

A new 2-room HDB flat in Punggol went for around $100,000 last year, and that was before available grants kicked in. Currently singles can apply for a $15, 000 HDB grant if they earn $5000 or less. Mr Khaw has said that they recognise that those earning under $5000 a month will face difficulties owning a home in Singapore.

Part of the reason behind pushing out this new ruling by July this year is that the increased supply of new HDB flats have cleared “a backlog of applications from married couples seeking a Housing Board home for the first time”.

Is this new move a response to Prime MInister Lee Hsien Loong’s National Day Rally speech last year, where he acknowledged that singles have housing needs too?  Are these restrictions fair and what are the possible loopholes? Will this cause a drop of resale HDB flat prices and how will that change the landscape of this market?

5 Feb

HDB flat prices – New versus Resale

Do prices of BTO HDB flats rise in parallel to resale units? No, says the Singapore Government.

In line with their aim to keep new flat prices affordable for first-time buyers, National Development Minister, Khaw Boon Wan, has emphasized that BTO flat prices are in no way linked to the market prices of resale HDB flats.

Tampines Court BTO HDB flats, part of HDB's latest January 2013 launch. Photo by HDB.

Tampines Court BTO HDB flats, part of HDB’s latest January 2013 launch. Photo by HDB.

Addressing concerns that BTO prices may be dancing hand-in-hand with resale HDB flats, which have been on the rise for the past few quarters, Mr. Khaw promises to provide abundant and affordable housing to match the projected 6.9 million population of 2030. He says that as long as ‘property remains hot’, the new pricing policy of de-linking BTO flats to resale HDB flats will continue. It looks like this policy may have to stay for quite some time yet, as market feedback shows that prices are still going strong and have barely shown signs of letting up.
Industry players are not expecting the new HDB flats to take too much away from the resale flat market. SLP International’s head of research Nicholas Mak says that low prices of new flats may ‘effectively slow down the resale market but will not stop or reverse rising trends yet’.  However, Mr. Khaw did mention that although BTO prices will be priced differently from resale flats, there will be differences within its own category. He says HDB will not be pricing its new flats ‘haphazardly’ but instead, buyers can expect prices of BTO flats in mature estates to be up to 40 per cent more than those in outlying suburbs.

This keeping of prices low does come at a price. Taxpayers are essentially paying for the gap between new flats and resale flats. Because HDB purchases land from SLA (the Singapore Land Authority), land prices are based on the prices of resale flats in the vicinity, thus if resale flat prices are rising, land is more expensive, but if new flat prices are still kept low, the amount difference is made up by government subsidies, which indirectly comes from the taxpayers’ coffers.

30 Jan

Steep rise in Resale HDB Flat COV

The storm that brewed in the public housing market last quarter came in the form of COV prices. Rising from $45, 000 to as much as $67,800 in popular mature estates such as Toa Payoh and Tampines, January’s cooling measures may just have been the breakwater to calm the waves. The cooling measures have only just been implemented, and the first three weeks of 2013 saw steady median COVs and demand for resale HDB flats.

Mirage new HDB BTO Flats in Choa Chu Kang.

Mirage new HDB BTO Flats in Choa Chu Kang.

Whether these price waves will crash and subside or overtake the cooling measures, may be dependent on the supply of flats as well as whether there are changes in the eligibility of singles in applying for new HDB flats. Although National Development Minister Khaw Boon Wan has mentioned that this year may be the year rules change, it still awaits implementation.

The lack of supply of resale HDB flats is also partly due to the fact that most HDB owners see their flats as a good source of rental income, and as long as that option is open, and the rental demand is high, they may be unwilling to forego their HDB flats, thus decreasing the number of available resale flats in the market.

Some reasons which may have driven buyers to look for resale HDB flats:
1. They are willing to pay for a favourable location
2. They want to move into a new home quickly
3. They are looking to upgrade within the public housing category to a bigger space

On the other side of the coin, industry analysts have brought up the point that demand for resale HDB flats are driven largely by those who are ineligible to purchase new HDB flats, mainly permanent residents (PRs) and singles. Does this mean then that these groups of buyers are actually able to afford resale HDB flats and thus there may not be a need to change things around and allow them to purchase new HDB flats? Or will a change of rulings mean lesser HDB flat owners may now benefit from the rise in value of the properties over the years? Will this largely decrease the potential pool of buyers of resale HDB flats or will the demand continue to be present, perhaps minus COV (cash-over-valuation)?

18 Jan

2013′s Property Heave-Ho

It looks like there is going to be some push and pull in the property industry this year. And big hoorays for that.

Heron Bay Executive Condominium in Upper Serangoon View.

Heron Bay Executive Condominium in Upper Serangoon View has a number of Dual-key units.

Push: Singles may finally have the opportunity to buy new HDB flats. National Development MInister Khaw Boon Wan said his ministry is looking into implementing this new policy within this year. Without doubt, there may be restrictions, but at the very least, there is an option where there was no room to budge before. The minimum age is unlikely to be lowered to below 35, and singles buying new flats may be able to do so only for strict ‘owner-occupier’ purpose. The fact that 3,800 of the 18,000 singles who bought resale HDB flats actually did get married eventually may have helped.

Pull:  And perhaps a number of immediate issues popped up within the last couple of months which made the authorities think twice about making rules and sticking by them. The executive condominium (EC) market for one. It has dawned on them that some buyers have been ‘taking advantage of ECs to profit’. In the spirit of returning the EC scheme back to its original motivation of helping out ‘sandwiched class’ families who may need the space but are unable to pay for private property, Mr. Khaw has told Parliament that the Government changed the EC rules as soon as they realised what some buyers had caught on to. He referred to the fact that now EC units will be capped at 160 sq metres and only multi-generational families can apply. Apparently some families were immediately renting out their dual-key units.

Stay tuned for a lot of change.

2 Jan

Property makeover for 8 private estates

Under the Estate Upgrading Programme (EUP), 8 private estates will be getting a whole new look by the end of 2014. Although it may not extensively change the property prices, it may nevertheless provide an added incentive to potential buyers and thus benefit the sellers.

Mount Rosei GardenWhich estates are these?

What they will be getting are landscaped environments, fitness equipment, park furniture and wider footpaths, according to the Ministry of National Development. Selection was based on the age, physical condition and scope of improvement. As the areas have begun to look dated and some plagued with drainage and parking issues, the revamp will cost about $29 million.

Marine Parade GRC MP Fatimah Lateef and Potong Pasir MP Sitoh Yih Pin are looking forward to improvements for their wards. In all, there has been a high demand for these government-funded upgrading schemes and Senior Parliamentary Seretary for National development, Dr. Maliki, has reflected strong spport for such programmes as it is aimed at improving community bonding.

All in time for the next election perhaps? Either ways, about 7,000 households will benefit from these estate upgrades, but how much more these new amenities and facilities will bring to the properties in these districts still awaits further analysis.

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