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.

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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.

Raised income ceiling for HDB grants – Help or Hurt

The income ceiling for the application of HDB grants was raised last year, and till date, the policy change has helped more than 1,500 household secure new or resale HDB flats. Previously, the income cap was $12,000 for executive condominiums, $10,000 per household  or $5,000 for singles. Following the adjustment in August last year, the income cap is now $14,000, $12,000 and $6,000 respectively.

Westwood ResidencesThe Housing Board has cited rising income and an increased demand for public housing as push factors for the change. Some property experts however feel that the move has hurt the private property market as these are potential private property buyers whom the market may have lost out on and whom may have cost taxpayer’s more burden. However, these buyers could also have been sandwiched between the public and private housing markets, unable to afford the latter nor the former without a CPF housing grant.

From the 11,833 new HDB flats and 6,464 resale flats sold within the last year, about 5 per cent and 15 per cent of the purchases would not have been made prior to the income ceiling revisions. The last time the income ceiling was raised by $2,000 was 5 years ago in 2011. The question remains if it is a matter of eligibility or affordability of existing public housing units which detracts a possible remaining group or groups of buyers who may still be unable to purchase resale units despite securing all possible grants.

 

Resale HDB flat market remains stagnant in November

Resale HDB flat prices have remained stagnant for the past couple of years, indicating that the market has stabilised. Though prices have increased by 0.2 per cent last month, sales volume has gone the opposite direction with a 5.3 per cent drop. The minimal rise is likely to be caused by buyers ready to complete transactions before the quiet festive year-end holiday season.

hdb-flat-rentalBetween permanent residents having a longer wait before they can purchase HDB flats and a closing gap between private non-landed homes and resale flats, the market is not looking a rebound anytime soon. As more new flats are being completed and more HDB flat owners receive keys to their new units and demand remains quiet, the scale between sellers and buyers may tip towards the latter.

Sellers of HDB flats in mature estates may fare better as prices here have increased 0.8 per cent in November. Location and proximity to schools, transport nodes and amenities remain the crucial factors in sealing deals. 1,585 resale flats were sold in November, down from 1,673 in October. In a year-on-year comparison however, 18,005 units have been sold, up from 2014’s 17,318 and likely to be comparable to 2015’s 19,306 units. The market stagnation is expected to continue well into 2017, especially as the authorities have not shown any signs of lifting the property cooling measures.

Resale HDB flat prices likely to remain at current level

After many consecutive quarters of market stagnation, buyers are coming to accept current resale HDB flat prices as the new norm.

solacresMany have remained in inertia as they waited for HDB flat prices to fall. But even with the introduction of massive new BTO flat supply, prices have not budged beyond the 11.3 per cent drop since the April 2013 peak. And property analysts are not expecting any further fall in prices, saying that the current resale flat prices are probably as low as they can get, especially as the government is closely monitoring the market in order to create some sort of balance between  individual profit and public housing provision.

Though the number of resale HDB units sold increased by 0.4 per cent in October, prices fell slightly by 0.1 per cent. Prices of the larger 5-room flats fell the most, at 0.9 per cent, though the rarer 3-room flats segment saw a 0.6 per cent rise and similarly a 0.8 per cent rise was reflected in the executive flat market as these units are in higher demand.

houganghdbThe past quarter has seen the resale HDB flat price index fluctuating within the 1 per cent range, with a fall in August likely due to the Hungry Ghost month, followed by some correction in September. In the months ahead, prices of HDB flats are not expected to swing either ways though the number of transactions may increase as buyers begin to realise that the numbers are unlikely to drop any further.

Government to strike a balance in HDB market

With the resale HDB flat market holding firm and prices of resale flats still high, the government has promised to look into shortening the wait for new HDB flats while monitoring the effect of exorbitantly-priced resale flats especially in the downtown areas.

Pinnacle DuxtonThe current wait for applicants of a new BTO (build-to-order) flat is now 3 to 4 years, with some having to wait as long as 6 years. But the wait may soon be shortened to 2 – 3 years, according to National Development Minister Lawrence Wong. For now, applicants who need a flat sooner are opting to ballot for units under the Sale of Balance Flats (SBF) scheme, usually from a pool of units in developments which are nearing completion but have yet to be sold.

Foreigners may be surprised by the high prices for public housing in Singapore (in most countries, public housing areas are rundown and hardly in demand). And while Singaporeans can be proud of a solid and stable public housing sector, the fact that prices were skyrocketing over the past decade, and could potentially happen again if not kept in check, has the government on their toes.

tampinesgreenhdbThe recent discussion about the high resale value and potential value-appreciation of HDB flats in downtown areas such as at Pinnacle@Duxton has resulted in proposals to have different resale market rules for these units – such as a longer MOP (minimum occupation period), higher resale levies and shorter lease periods. As of now, 18 resale units of the 174 transactions at Pinnacle@Duxton have been sold at $1 million or more.  Keeping the public housing system fair will take some skilful tweaking as the population and economic landscape of the future is vastly different from that of 40 years ago.