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13 May

HDB Resale flat sales lowest in 16 years

The numbers are low but the prices may not be so. Is this a case of rare treasures raking in high prices?

HDB’s reports have shown that there were only 4,335 resale flat transactions in Q1 of this year, as compared to the average of 8,000 for the first quarters in previous years. However resale flat prices have continued to increase with a 1.3 per cent rise this year. Albeit slower than the 2.5 per cent increase from Q4 of 2012, it is still a 0.6 per cent rise when compared year on year.

Photo by HDB.

Photo by HDB.

The latest property curbs could have had a part to play here. HDB flat buyers can now only loan up to 35 per cent (previously the cap was at 40 per cent) from HDB and bank loans are now capped at 30 per cent of the household income. Thus with these restrictions, some may now not be unable to upgrade to larger flats and thus taking away a considerable pool of buyers from the resale HDB flat market. PRs who previously form a significant number of buyers, may also be out of the picture as they are now subjected to an additional 5 per cent tax on their first home.

Skypeak @ Bukit Batok. Photo by HDB.

Skypeak @ Bukit Batok. Photo by HDB.

But with the drop in flat buyers, there is in turn an increase in flat renters. HDB reported a 15 per cent rise in subletting transactions, to 7,410 this quarter. The money is coming through rental now as more HDB owners hold on to their flats, hoping to reap in enough profit to help them make the leap to private property.

This, plus the number of new HDB flats being launched and built last and this year, have drawn buyers away from the resale market. Which type of resale flats are seeing the most activity? Is there now less competition for the larger 4 and 5-room flats? Are 3-room flats the current “hot property”? Come July, singles will also be able to purchase new flats directly from HDB. Will this impact the demand for the smaller 2 and 3-room flats?

30 Apr

Changes to Exec Condo housing scheme?

2013 might be the year of housing policies shockwaves. Earlier in the year, news of singles being about to purchase new HDB flats directly from housing board stirred the market a little, then there were the limits placed on dual-key apartments which are now only available to multi-generational families. A cap was also put on the size of executive condominium (EC) units, at 160 sq m. ECs have been put under the microscope of late, with some questioning the amount of subsidies buyers are receiving from the government.

Forestville Executive Condominium.

Forestville Executive Condominium.

Certain members of public have questioned whether EC buyers should receive any government subsidies at all, since they are able to or willing to afford million-dollar units in both new and resale developments. The executive condominium scheme was initially set up by the government in 1996 to help families transit between public and private properties. But as the price gap between ECs and private properties now draw close, there has been a niggling thought about whether changes should be made to this scheme.

National Development Minister Khaw Boon Wan recently highlighted that there might soon be changes in the EC scheme and buyers and developers are poised to react. Forestville, the next EC to launch in June this year, might benefit from increased response since buyers might be leaping at what may very well be their last chance to secure a unit under the current conditions. EL Development‘s Lim Yew Soon has this to say: “Whenever policies change or are alikely to, the immediate launches will have the biggest benefits. There’s a good change that buyers may snap up existing ECs to ensure they still receive the grant.” Will resale ECs also benefit from this rush?

Should there be a drastic adjustment in government subsides, the most affected might be first-time buyers. Buyers and owners of existing ECs are imploring the authorities and public to see things from their point of view. Engineer Eddy Lau, 40, said, “It’s not right to just look at the profit we make. We also pay more in interest over the years for the EC. For us who are sandwiched, ECs are the only option to upgrade.”

Ultimately, the question that probably begets the Government is, what defines “sandwiched class” and what are the housing schemes actually meant to do. And perhaps only honest answers will help everyone fully understand and accept Singapore’s future housing situation.

2 Apr

What does Q1′s slow private property growth rate indicate?

A cooling real estate market? Perhaps. But not by much. Of course, we do have to give the cooling measures time to work. But if we go by the response from the previous rounds, it may not do much. Although the pace has weakened somewhat, a 0.5 per cent growth as compared to the 1.8 per cent jump in the last quarter, private home prices still reached a record high.

QBay Residences

QBay Residences

Private non-landed suburban homes alone showed a 1.7 per cent rise, still a rise, but well lesser than the previous quarter’s 3.8 per cent. Property analysts are expecting further effect from the cooling measures to kick in this year, maintaining home prices at the current levels.

In the HDB flat market, resale flats may expect a fall in demand as singles will be allowed to purchase new Build-to-Order (BTO) flats directly from the Housing Board come July. The bumper crop of new flats being rolled out within the first 3 months of 2013 alone has also taken away the need to purchase from within the resale market. The quota plus the lowering of home loans to 30 per cent of a borrower’s gross monthly pay, 40 per cent if receiving a HDB home loan, has also taken some wind out of the sails. PropNex cheif executive Mohamed Ismail is however still expecting a rise in resale HDB flat prices, of between 4 to 5 per cent.

The Singapore Real Estate Exchange has reported a fall of HDB resale transactions from 4, 635 in Q4 of 2012 to 3, 028 in Q1 of 2013. The median COV prices have dropped by very slightly, from $34, 000 to $33, 000. This may not be quite the comfort buyers are hoping for, especially since resale prices have risen to an average of $457,000.

This could be the time to suss out potential long-term investments in the private property market as many developers are dangling carrots in the form of discounts, rebates and other incentives in order to secure more sales. Recent launches at D’Nest and Urban Vista have also boosted sales. The authorities seem more determined this year than ever to help tame the roaring property lion, but they will need to give property curbs some time to take effect before deciding their next move.

1 Apr

3-room flats favored by second-time HDB flat applicants

Soon a larger number of new HDB flats allocated to second-time applicants, but for now, they are all choosing to make a beeline for 3-room flats, leaving the larger flats in popular areas such as Punggol to first-timers. In HDB’s latest sales launch, the Punggol HDB flats were snapped up mostly by first-time applicants. The area has come up as the frontrunner for lifestyle suburban living. New amenities, increasing transport options and new schools are bringing a new wave of residents into the area, mostly young couplses and new families. They could also be banking on the value of property there rising in years to come.

Skypeak @ Bukit Batok. Photo by HDB.

Skypeak @ Bukit Batok. Photo by HDB.

But with second-timers, it seems the 306 units in Bukit Batok saw three applicants vying for each unit. But since 85 per cent of the new units were reserved for first-timers, it meant that it was actually oversubscribed 20 times. Most of the second-timers are downgraders whose children may have moved out and now choose to live in a smaller, more manageable area. Another reason could be one of the many new rules implemented earlier in the year, which capped the home loan value, limiting some applicants from applying for bigger flats. Now, bank mortgages are limited to 30 per cent of the household income or 35 per cent if a loan is  taken from the Housing Board. Previously, a HDB loan was capped at 40 per cent and bank loans had no limit, meaning buyers could spend up to half their wages repaying their housing loans.

The next round of new flats will be launched in May, with about 8, 000 units up for sale, including 3,000 of leftover flats from previous launches. And this will also be when the allocation of flats for second-timers is increased to 30 per cent (from the current 15 per cent).

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?

20 Feb

Even fewer resale HDB Flats on the market?

Could this be the case, since recent reports indicate that more HDB owners are holding on to their flats, even after the minimum occupation period (MOP) is up? Four years ago, the opposite was apparent, with resale HDB flats selling like hotcakes. Data from the Housing Board released over the weekend showed that the percentage of home owners who sold their property within the year after the 5-year minimum occupation period had risen from 4.3 per cent in 2008 to 18.3 per cent in 2011 but has dropped to 11.8 per cent last year.

HDB flats

Although more than double of the figure in 2008′s, it shows that the trend of investing in HDB flats may be waning. But one of the reasons this could be happening, is that HDB owners are expecting resale HDB flat prices to appreciate even further, possibly even outpacing that of private properties. In 2012, resale HDB flat prices have risen 6.6 per cent, while private property prices rose 2.8 per cent.

With the Housing Board promising to build more new BTO flats within the next few years, are these HDB owners wishing for more than they can bite? Some HDB owners feel that if they sell high, then they would have to buy high, especially since private properties of the same size in the same locations may be priced out of their range, at least for now.

Oleander Breeze BTO Flat in Yishun.

Oleander Breeze BTO Flat in Yishun. Photo by HDB.

Restrictions put in place by the authorities on selling a flat, could also have deterred some from acting on their plans to sell. Most are concerned that once they sell their HDB flat,  it may not be as easy to get back into the public housing market, especially since once you own a private property, you have to sell it before you can buy a HDB flat. Whereas if you own a HDB flat, once you have fulfilled the minimum occupation period, you can then purchase an additional private property and own both at the same time. These are the rules for now, but as the population grows, they may change and it is very much dependent on the global as well as national changes. For the moment, more are likely to keep their existing HDB flats and rent out instead.

14 Feb

Families benefit from new priority scheme

Before, it’s not often unheard of young couples having to wait years before getting the keys to their new flat. Some even have to wait to get a HDB flat, and then wait some more to live in their selected flat. But now, with a new priority scheme aimed at helping young families with children, the waiting time may be considerably shortened.

HDB's January BTO sales launch. Photo of Keat Hong Colours BTO Flats by HDB.

HDB’s January BTO sales launch. Photo of Keat Hong Colours BTO Flats by HDB.

And more are taking advantage of this, it seems. Up to the full 30 per cent of HDB flats allocated for them in January’s Biuld-to-Order (BTO) sales launch were taken up by applicants who qualify. This means, out of all the young families with children who applied for a flat, almost all will receive one. Named the Parenthood Priority Scheme, it was introduced early this year as part of the government’s push for marriage and parenthood. The scheme stipulates that up to 30 per cent of each HDB BTO launch will be set aside for married couples with children under the age of 16. It is aimed at helping couples set up families more quickly.

Success, however, is limited to the non-mature HDB estates such as Choa Chu Kang, Hougang and Yishun. Mature estates of Ang Mo Kio, Kallang/Whampoa and Tampines saw married applicants with kids applying for almost 80 per cent of the number of flats available. Understandably, mature estates are more popular with HDB flat applicants, regardless of category. These areas often already have established schools, amenities and means of transport, plus applicants may be applying for such areas in order to live nearer to their parents.

Flat allocation under HDB's Parenthood Priority Scheme. Photo by HDB.

Flat allocation under HDB’s Parenthood Priority Scheme. Photo by HDB.

Many applicants are hoping that this new scheme will increase their chances of successfully balloting for a flat, since quite a number have been waiting endlessly for one. For the rest of the applicants, it may be good news that HDB is planning to launch a ‘balance flats’ sale sometime later in the year and it may the lucky year of the snake for some.

31 Jan

3,300 new HDB Flats in January’s sales launch

Young married couples with children will get priority in the latest round of sales launch of new BTO HDB flats. These new flats are available in both mature and non-mature estates, namely Ang Mo Kio, Yishun, Tampines, Choa Chu Kang, Hougang and Kallang-Whampoa.

New BTO flats in both mature and non-mature estates in HDB's January 2013 launch.

New BTO flats in both mature and non-mature estates in HDB’s January 2013 launch.

New flats in mature HDB towns will cost more than those in non-mature estates. Yes, even fresh ones from HDB. But at $575,000 for a five-room flat in Ang Mo Kio, it is still considerably lesser than a similar one in the resale market which goes for as much as $628, 000. Units from the sales launch which are not taken up, will then be release to first-timers. First-timers can get up to $60,000 in grants. Prices start from $140, 000 for a 700 sq ft, three-room unit in Cho Chu Kang.

Photo from HDB.

Kebun Baru Court HDB flats in Ang Mo Kio. Photo from HDB.

Analysts are expecting an increase of bids from young families, but Dennis Wee Group spokesman Lee Sze Teck thinks otherwise. He thinks that most married couples who were looking for new living arrangements may have already done so by now, especially if they have children below 16 years. And if they haven’t, it could be that they are comfortable with their current situation thus may not be that eager to go for a new HDB flat. But still, response may be as heated as before, simply because the resale market is rising to unreachable heights.

The next launch of 3,980 BTO flats will be in March with units in Bukit Batok, Punggol and Sengkang.

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