Changes in the public housing landscape?

The ratio of home owners living in private homes versus HDB flats have been rising. The proportion of HDB flats in Singapore’s total housing stock is also smaller now compared to 10 years ago despite more public housing being made available with the government’s moves in the last few years to ramp up supply of new flats.

HDB flats STB photoPhoto credit: Singapore Tourism Board

Last year, with just slightly more than 1 million HDB units, the percentage of public housing stock stood at 73 per cent. In 2006, with 880,000 units, the proportion was 78 per cent. Respectively, the number of private condominium units and landed homes was 372,0000 and 243,000 with the percentage growing from 22 to 27 per cent within a decade.

Does this signify Singapore’s rising living standards and that more are now able to afford private housing? How has the functionality and affordability of public housing changed over the years? Recent government reports indicates that the percentage of BTO flat buyers who defer on their purchase after they have been invited to collect their keys is now less than 2 per cent. This could mean that more are now taking better stock of their finances and are able to make sustained payments for their new flats despite rising prices. The resale market could also be stabilising as more are finding it easier to sell off their existing flats within a reasonable grace period.

Bidadari HDB flats 2Photo credit: Housing Board (HDB)

National Development Minister Lawrence Wong has however reminded buyers to take into account market fluctuations when computing the financing of their new home with proceeds from sales of their existing flat. In provisional cases where buyers are unable to find buyers for or let go of their existing HDB Flat, the government does offer time extensions and exercise some flexibility for example waiving the required forfeiture payment.

More Sale-of-Balance flats units in mature estates

Aside from the large number of new BTO flats in HDB’s latest launch, many units under the Sale of Balance flats scheme will also be made available, including units in mature HDB estates such as Kallang/Whampoa and Queenstown.

SkyParcDawson3Photo credit: www.dla.com.sg


3,946 flats which remained unsold from previous launches, spread over 14 mature estates and 11 non-mature estates, were rolled out in last week’s Sale of Balance Flats launch. From the 14 mature estates which also included Pasir Ris, Tampines, Serangoon and Ang Mo Kio, the 523 and 263 units in Queenstown and Kallang/Whampoa were the most eye-catching. The proximity of these 2 HDB estates to the Central Business District (CBD) and the number of balance flats available were factors making this one of the highlights of this current launch.

SkyParcDawson2Photo credit: www.dla.com.sg

Most mature estates will only see single- or at most double-digit number of units available under the sale of balance flat scheme. The high volume of leftover units from previous launches in Queenstown could be due to leftover replacement units previously put aside for the Selective En bloc Redevelopment Scheme (SERS). Most of these units are in the SkyParc @ Dawson development which will be ready by end of 2020. These new flats and their modern designs will no doubt make them the hottest units in this launch. Priced between $454,600 and $527,200, they are more affordable than some of the newer BTO units in estates such as Geylang and Bidadari.

1 in 5 first-time HDB Flat buyers opt for resale

CLementiHDBIt has become easier for first-time HDB flat buyers to secure a new flat directly from the Housing Board (HDB) but some are still opting for one in the resale market. 95 per cent of new Build-to-order (BTO) units are now reserved for first-time buyers. But yet figures have shown that 1 in 5 first-time HDB flat buyers are still choosing to buy a unit from the resale flat market instead of applying for a new one.

The decline in resale flat prices, the growing pool of available resale flats on sale in mature estates and the fact that more young buyers are willing to pay dearly for older flats to get the space and location they desire could all be reasons for the high numbers of first-time buyers choosing to buy resale.  Younger families prefer homes in better locations, perhaps also to be closer to their extended families, and they now have more available stock to choose from. For buyers buying a flat near their parents, they can also receive a $20,000 housing grant.

ClementiHDBflat3,441 Singaporean families purchased a resale flat with the aid of housing grants last year – that is almost 20 per cent of the flat purchases made by first-time buyers. The remaining 80 per cent applied for 14,273 subsidised units directly from HDB. Young couples who are eager to start a family may also choose to purchase from the resale market in order to skip the waiting period of 3 to 4 years which comes with the acquisition of a new BTO flat. The now-enhanced CPF Housing Grants also mean first-time buyers can get up to to $50,000 in subsidies.

Will this then mean that resale flat sellers can price up as demand does not seem to have waned? Not necessarily so, as the option of new flats are very much available to first-time buyers. There have however been recent transactions in popular areas where records were set for resale units – such as $1.04 million for a 118 sq m resale flat on the 39th floor of Clementi Towers.

Paying more for older resale flats – Aye or nay?

National Housing Minister Lawrence Wong has recently raised concerns about transactions of resale flats with less than 60-years on their lease for above-market values.

The increasing number of such transactions in the resale HDB flat market seem to indicate that buyers are putting aside factors such as age of the flat (HDB flats have a 99-year lease) and favouring others such as location, size of the flat and even the possibility of the blocks qualifying for the Selective En Bloc Redevelopment Scheme (Sers). Under Sers, certain blocks of flats built on or around sites where land has yet to be fully utilised or developed are acquired by the government and demolished. The residents are granted a fixed sum of $15,000 for singles and $30,000 for families in the form of a Sers grant and also guaranteed a replacement flat in new blocks with a full 99-year lease.

KallangWhampoaHDBflat

But the authorities are warning against paying too much for flats which are older than 30 years, or with less than 60 years left on the lease, especially for younger couples.  Many buyers may be under the impression that the value of the bigger resale flats, some in locations which are becoming more developed and hip, will increase as time goes by. Some have purchased rare terraced units such as those in Whampoa or Queenstown and are confident of flipping them within the next half a decade for more. There will be those who will are counting on location to be the prime draw when they finally sell. Older resale flats are usually in mature estates with well-established amenities, schools and transport available immediately. Some buyers could also be in urgent need of a flat and are unable to wait for the ballot and construction wait involved with new Build-to-order (BTO) flats.

Fresh Start Housing Scheme helps families start afresh

A new Housing board programme has been rolled out last December to help families own a HDB flat.

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Photo credit: Ministry of National Development

Aptly named the Fresh Start Housing Scheme, it is aimed at helping families who have once lived in subsidised housing and are now living in rental flats. They can now apply for 2-room flexi flats with shorter leases of 45 to 65 years, which means they pay less than the usual 99-year leasehold HDB flats secured directly from the housing board.

These will be a boost for lower-income families or those wanting to move on and up from the rental schemes. But as these rare 2-room flexi units are also made available to singles and senior citizens, they are one of the most popular unit types in the board’s latest BTO (build-to-order) sales launch. 713 such 2-room units were put up for ballot and the subscription rate was almost four times that with 2,894 applicants. First-time home buyers are also allowed to apply for grants of up to $35,000.

PunggolBTOFlat

Photo credit: HDB

There are however clauses in the Fresh Start Housing Scheme that limit qualifying applicants. Households applying under this scheme must have at least 1 citizen parent, 1 citizen child under the age of 16 and at least 1 family member must have had a stable employment for the last 12 months. The Ministry of Social and Family Development will also need to assess applicants and they must not have accumulated more than 3 months in arrears on their rental units.

2017’s first BTO Launch expected to be over subscribed

Could it be a sign that the Housing Board’s first Build-to-order (BTO) launch this year was on Valentine’s Day and that this launch is also the first time families can apply under the Fresh Start Housing Scheme? Perhaps the parallels are pushing it, but the 4,065 new flats in Clementi, Tampines and Punggol will no doubt provide a good start for couples hoping to start a family.

CLementiHDBPhoto credit: HDB

Out of the 4000 plus units, 1,603 will be in Clementi, 638 in Tampines and 1,815 in Punggol. This latest launch will also feature a number of 2-room flexi units which are popular with singles who are now allowed to purchase selected flats directly from HDB, and senior citizens. In fact, these were the most heavily subscribed units in the current launch.

Units in Clementi are expected to garner the most interest, with its proximity to the upcoming Jurong Lake District and schools such as NUS High School of Math and Science, UniSIM, Ngee Ann Polytechnic and the National University of Singapore. Four-room flats in Clementi are expected to start at $432,000. In comparison, prices of 4-room HDB flats in Tampines are considered affordable considering its mature estate status with four-room flats starting at $299,000 (before grants are applied).

TampinesHDBPhoto credit: HDB

Application closes today and analysts are expecting a four to five times take-up rate for units in Clementi and Tampines while Punggol might be twice oversubscribed. There are 731 two-room flexi units offered in Punggol and the projected subscription for these units is 5 times that number. Despite it’s isolated locale, Punggol is growing to be a busy business and lifestyle cluster, and thus more appealing to singles and senior citizens choosing to live close to their married children.

Fewer new HDB Flats to be launched in 2017

sembawanghdb-flatMore applicants have been successful in securing a suitable and preferred unit from the Housing Board (HDB) directly since the authorities ramped up supply a few years back. Come 2017, the supply flow of new Build-to-order (BTO) flats will be reduced by 1,000 units from 18,000 this year to 17,000. Some of the latter launches this year, in particular those in non-mature estates such as Sembawang and Yishun, have already seen lower application rates and the 10,000-unit stock of balance flats from previous launches is also rather high.

81d36c494a88405a9dbd5dad5c28924aPart of the reason for the trim could also be the slowing economy and the reduced pace of family formation. But unlike the long 3- to 4-year wait typical of most BTO flats, these newer launches could be launched by 2018 and be ready for occupation by 2020. With the declining local populus, tighter immigration policies and a rapidly ageing population, the Singaporean government is feeling the increased urgency in encouraging millennials to form new family units.

Most of the younger generation of Singaporeans prioritise acquiring a home and having children in that order. Being able to provide them with a home quickly will no doubt be crucial in the push for Singapore’s birth rate. The National Development Minister, Lawrence Wong, has however promised that the supply of new BTO flats will continue, albeit being adjusted according to demand, across both non-mature and mature HDB estates to provide applicants with a range of choices.