HDB’s May launch includes units in mature estates

bedoknorthwoodsUp to 8,940 new BTO (Build-to-order) and SBF (Sale of balance) flats will be made available in HDB’s latest launch. Most action may be seen in Ang Mo Kio and Bedok, both mature estates with well-laid-out amenities. Analysts are expecting subscription rates of up to 5 times the number of units available. The other estates with new BTO units available are  Sembawang and Bukit Panjang while SBF units are available in most other estates, numbers varying.

Sembawang East Creek1Without doubt, flats in mature estates tend to have a more established resale value. But Minister for National Development, Mr. Lawrence Wong, is encouraging young families to consider flats in non-mature estates, stating that “a ‘non-mature’ estate today can become a ‘mature’ estate tomorrow” as the government is working hard to instate regional commercial hubs, transport and other public amenities into these newer towns in order to connect the residents to the workforce better.

He cites the difference of up to $100,000 between a 3-room flat in Sembawang and a similar unit in Bedok. In fact, 2-room flexi units could be priced as low at $4,000 with grants taken into account. 2-room flats are now available for senior citizens and also singles, though the latter are only allowed to apply for those in non-mature estates.

AngMoKioCourt

Photos credit: HDB

Applications for May’s launch will close next Monday on May 30.

Resale HDB flat prices down 0.1%

March saw a very slight 0.1 per cent fall in prices for the resale HDB flat market, mainly for 3-room and 4-room flats. This is following a 0.2 per cent rise in February and a year of stagnant prices.

Analysts are not expecting resale flat prices to go anywhere anytime soon as the slowing economy and continued property cooling curbs continue. Buyers seem to be favouring slightly smaller 4-room flats over 5-room units and any spike in the price index could be occasional and non-indicative of the overall market outlook.

21c0a7bf81e440299d0bd4b956642daaResale flats in mature estates have always been  popular with buyers, but even this market segment has been hampered by global and local uncertainties. There is good news however. Sales volume of resale HDB flats have risen in March despite the fall in prices. There were 451 more units sold in March than the 1,200 in February. The launch of new BTO (build-to-order) flats in February may have also taken some attention away from the resale market, though the latter will always find a place in the consumers’ radar as some buyers may not be willing or able to wait for new flats to be built or they may prefer living in locations other than those in which new flats are being launched or built.

How deep is the property market well?

Property prices in Singapore have been falling since 2014, 10 consecutive quarters to be exact. In the first quarter of this year, HDB flat prices have stabilised at 0.1 per cent while private property prices have dipped 0.7 per cent. In 2015, HDB flat and private property prices fell an average of 0.4 and 0.9 per cent respectively.

Kingsford WaterbayPhoto: Kingsford Waterbay condominium 

HDB flat prices have begun to stabilise of late, though some property analysts are still expecting a further drop in the second half of the year as 25,000 new BTO flats reach completion this year. A good 30 per cent of these new-flat buyers are upgraders and home owners, not investors, which means they will be looking to sell their existing HDB flat in order to finance their new flat. This will bring a new slew of units into the resale HDB flat market. Though the demand for resale flats has not waned much, the rise in supply may put the ball in the buyers’ court.

 Photo: Clementi Gateway BTO flats

Similarly in the private property and EC (executive condominium) market, buyers will need to time their upgrading manoeuvre in order to manage cash flow, thus some may be in a rush to let go of their existing unit which could put further pressure on the market which will be seeing 21,906 new private condominium and 4,561 EC units enter its midst this year. How will the property sector perform in this crucial second quarter of 2016?

Fewer resale flats entering HDB market

A good number of new HDB flats have reached or will soon reach the end of the minimum occupation period (MOP), and despite the expected slew of relatively new resale HDB flats entering the market, the situation is contrary.

CIty View Boon KengPhoto: City view @ Boon Keng (credit: Hoi Hup Realty Pte Ltd)

Some units in prime locations and prime developments such as the Pinnacle @ Duxton and City View @ Boon Keng may have fetched record prices, but most owners are not in a rush to put their units up for sale as the resale market is currently slow.

In 2010, 1,338 units were sold within a year of reaching their MOP, about 13.7% of the number of newly eligible flats. By last year, there were only 388 such transactions, at about 6%. Though private property prices have fallen, the gap between public and private housing remains considerable; and with a slowing market, resale flats may not be able to command the prices of before.

Pinnacle @ Duxton was awarded the 2011 Urban Land Institute (ULI) Global Awards for Excellence. Image by HDB.

Pinnacle @ Duxton. Image by HDB.

The upperhand-tussle between buyers and sellers have been ongoing for the past 4 to 5 years, and the undercurrent uncertainty of late have not aided the situation. It may be a matter of “who blinks first” as buyers and sellers both wait out this iffy period. More flat owners are instead beginning to sublet their flats after meeting the MOP. The next big move which might shake things up would be possible changes to the property cooling measures.

Resale HDB flat prices up again

HDB resale flat prices have risen for 2 consecutive months this year, with a 0.2% rise in February. More than a distinctive market rebound, property analysts are embracing the slight adjustments as a sign of market stabilisation.

JurongEast HDB FlatIn fact, the market has been stable for the past year and a half, with less than 1 per cent fluctuation. It is still however, the buyers’ market. The number of resale HDB flat transactions have fallen, which could mean that demand is slowly waning, and the price point may be what the buyers are focused on. With the transparency of transaction data and statistics, more options made available such as singles now being able to apply for 2-room flats directly from HDB, and the injection of 9,000 new BTO flats into mature estates this year, buyers are more savvy and will only take the bait if the deal is truly good.

1,200 resale flats exchanged hands last month, down from 1,286 in January but still up from 1,148 last year though the lull could have been due to the year-end festivities. Industry experts are expecting resale HDB flat prices to remain flat this year, with an increase of transactions up to July when a fall in activity is expected during the Hungry Ghost Festival month.

Bidadari – Future Boomtown

In the most recent Housing Board’s sales exercise, which included 236 new BTO flats in Bidadari, the 5-room and multi-generation flats in this mature estate were more than 12 times oversubscribed, with most applicants being second-timers. That could signify how much potential the public saw in the new HDB estate, so much so that they were willing to try again.

Bidadari HDB estatePhoto credit: HDB

The new flats in Bidadari will also include new 2-room flexi units for senior citizens. Although singles are now allowed to purchase new 2-room flats directly from HDB instead, they are limited to flats in non-mature estates, and thus do not qualify to purchase 2-room flats in Bidadari under the Single Citizen Scheme if they were to purchase on their own.

AnchorvaleAs February’s launch was the first for 2016, the number of applicants indicated that housing demand remains high, while property curbs could have limited options. In the same exercise, flats in West Plains @ Bukit Batok were more than twice oversubscribed and those in Anchorvale Plains in Sengkang saw almost 7 applicants vying for one unit.

Anchorvale boasts views of the Punggol Reservoir and is close to a LRT station, which could explain its popularity. Buyers with limited resources might choose to go for units in non-mature estates and Sengkang is as good an estate as any, with promises of waterside living and the new Punggol township just next door.

 

HDB Flats – Mature vs Non-mature estates

Bukit Batok HDB - WestplainsThis year, in response to the high demand for new HDB flats in popular and mature estates, the Housing Board will be including more mature-estate-based BTO flats in their sales launch.

In February’s sales launch, they have already included some in Bidadari and Bukit Batok. Bidadari is considered a mature estate, part of Toa Payoh and the units in the previous launched have flown off the shelves because of its prime location. It is part of a mature estate yet holds the exclusivity and unique nature-friendly environment and freshness of a new estate. 1,594 new Bidadari BTO flats were offered up in this month’s launch and 1,655 more in Bukit Batok. 921 units were also available in Sengkang.

Alkaff Oasis Bidadari HDBAs per the response to last year’s Bidadari sales launch, the five-room and 3-Gen flats, with a starting price of $550,000, in this new estate received the most eyeballs.

Although mature estates often have a space constraint and are unable to absorb more new blocks, HDB is looking at allocating half of their 18,000 units to be launched this year to mature estates. In May’s launch, the public can look forward to new units in Ang Mo Kio, Bedok and Bukit Merah. Most will be 3- and 4-room flats, there in Ang Mo Kio, 2-room flexi and 3-generation units will also be available. This may be good news for smaller families or singles and senior citizens hoping to live near their parents or children.

Who’s the most expensive of them all?

Hong Kong. When it comes to housing affordability. According to Demographia, a United States-based urban planning research unit, Hong Kong has emerged as one of the most expensive cities out of 367 metropolitan areas in 9 countries. Second on the list was Sydney, followed by Vancouver, Melbourne and Auckland. Singapore was 5th on the list.

Hong Kong property

Photo: Apartment in Viking Garden, Hong Kong 

In Hong Kong, median home prices are almost 19 times the median annual gross household income. It is the largest year-to-year increase in pricing over the 12 years in which the research was conducted. A small shoebox apartment below 500 sq ft would cost almost US$75,000 (or S$1.1million) in Hong Kong. That is almost double the price of such an apartment unit in Singapore. In the United States, only 9 metropolitan registered highly affordable housing prices, with San Jose, San Francisco, Los Angeles and San Diego being some of them. 14 other cities in the United States remained under the affordable level, with Buffalo, Cincinnati, Cleveland and Rochester tied in first place.

SF FlatPhoto: San Francisco apartment

With the US interest rates rising this year however, property analysts are expecting some change in the global property markets. Hong Kong’s property bubble may burst should the authorities do good on their promise to meet housing supply demand.

In Singapore, housing prices are 5 times that of the median annual gross household income. Although still considered ‘severely unaffordable’ under Demographia’s rating scale, HDB has been making efforts in the last couple of years to increase supply and reduce demand for public housing. For now, the price of a new HDB flat is still $150,000 to $180,000 lesser than a resale unit in the same area.