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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?

21 Feb

Will $1 million dollar HDB Flats become the norm?

While Singaporeans try to live with rising inflation, and the Government attempts to cool the property market multiple times, the peculiar case of rising public housing costs continues to rise its head in the sea of rising private property prices.

Perhaps this does not happen in many other countries, where most of  the time public housing is often put aside for the lower income groups or those on welfare, but in Singapore, public housing is a commodity and an investment tool. And it could be this concept which gave rise to continuously rising HDB flat prices.

Woodlands-Executive-Maisonette.jpg

According to data from the Singapore Real Estate Exchange (SRX):
In 2011, there was only 1 case of a HDB flat selling for more than $900,000.
In 2012, there were 18.
In 2013, in January and February alone, there were 18.

The trend is obvious and there seems to be no sign of doing a U-turn. Property analysts say these are usually units which provide value for money in comparision to private properties in the same area. Usually the larger units, its not longer the older resale flats in mature estates which are commanding such prices, even newer flats pricing themselves in the same range.

Bishan Shunfu HDB

In January this year, a 1, 750 sq ft executive maisonette in Bishan was sold for $1.01 million, beating the record of a $1 million Queenstown executive apartment. A 5-year Jalan Membina 1,180 sq ft 5-room flat is seen to be priced at $925,000.

With even more units from choice locations coming into the market in 2 years’ time, such as those at Pinnacle@Duxton, industry experts are expecting the number of $1 million resale HDB flats to go up. Will $1 million be the new property baseline? Will the National Development Minister‘s promise to unpeg new HDB flat prices from resale flat prices truly benefit? And who will benefit? Does this really take care of those who can neither afford resale HDB flats nor private properties and yet do not qualify to purchase new flats?

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.

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)?

19 Dec

Prices of HUDC Flats – Not a medium median

Well, unless you think $1 million should be the normal selling price for HUDC flats. The prices of these rare public housing units are only going upwards as more buyers focus on their potential value after privatisation. For the first time in HUDC history, the median resale price of HUDC apartments have risen to above the $1 million mark according to the Singapore Real Estate Exchange (SRX) data. And though the Q4 numbers are not out yet, they are almost certain it is still inching upwards.

Bishan Shunfu HDB

Last month, a HUDC unit in Shunfu Road was sold at $1.33 million. The median resale price for HUDC units is now $1.04 million. Perhaps the buyers were simply able to afford the selling price, and location plus apartment size were ideal for their current situation, but property analysts have warned buyers against over-extending themselves in hope of future profits.

However if you are indeed looking for a HUDC apartment in its pre-privatised state, HDB estates to look out for are:
Bishan (Shunfu)
Serangoon North
Hougang North N3
Hougang North N7
Potong Pasir

HUDC were introduced in the 1970s to provide options for families who needed bigger flats but were unable to afford private properties. But once private property prices fell in 1987, the authorities stopped releasing these units. There are a total of 18 HUDC projects in Singapore, which yielded 7, 731 units.

With the knowledge of the motivation behind HUDC Units, should it really be about whether it is a public housing unit or a 99-year leasehold private property when perhaps the only difference is whether it is in an enclosed compound with perhaps some facilities (though they do come with maintenance fees). Should floor area and location be the ultimate determinant between property prices? How does one begin to differentiate between public and private housing if prices of the latter is moving constantly up the charts. Is this a product purely of inflation or are there other reasons and factors which need to be first tackled?

13 Dec

HDB Resale flats – COV prices hit new record high

It seems this might be the headlines for quite some time yet. While $250, 000 could get you a new BTO HDB flat, it was merely the COV on the recent sale of a resale HDB flat in Bishan. Resale HDB flats supply is diminishing and thus have squeezed prices so tight they are popping at the seams and bursting off the charts. Out of control or just the new norm?

Over October and November, resale HDB COV prices have climbed to a median of $34, 000, bringing the new median selling price of resale flats to $455, 000. Have COV prices been the main component affecting the affordability of flats and could managing this then put HDB flat prices in a more realistic range?

Industry experts are expecting COV prices to continue rising as more buyers return to the HDB market due to rising prices in the private property market. And with private property prices rising 5.4 per cent over the past two months, it doesn’t look like that would happen anytime soon. C&H Properties key executive officer Albert Lu has made a valuable suggestion that changes in the rulings which allow an individual to own a private home and a HDB flat at the same time may release more units back into the resale HDB flat market and help manage home prices all round.

6 Dec

Executive Condominium prices = Private Condominium prices?

And it might be that way for a while more as new executive condominiums present luxe features, giving private mass market homes a run for their money. The current price gap is 17.2 per cent this year, down from 32.2 per cent in 2007′s property high. Executive condominiums are hot ticket property buys in the local real estate market.

Some of the pros of buying an executive condominium include:

1. The income ceiling for ECs has increased to $12, 000 per household, thus if you earn less than that, you are still eligible for a housing grant from HDB.

2. After the minimum occupation period (MOP) of 5 years, the EC unit can be sold to Singaporeans and Permanent Residents in the open private property market.

3. After 10 year, the EC unit can then be sold to foreigners.

Property buyers see a great deal of rising value in this particular property type. And it is usually the areas where EC units are limited that see the most active sales. Districts with the greatest number of resale ECs are usually those with the narrowest price gaps.  Areas such as Bishan and Ang Mo Kio, and Pasir Ris, Simei and Tampines, saw the narrowest price gap of 10 per cent whereas in Sengkang, Punggol and Hougang, the price gap was 22.4 per cent. Average psf of units at Bishan Loft and Nuovo in Ang Mo Kio is only $100,000 below the average price psf of private condominiums in the same district.

The recent EC launches, CityLife in Tampines for example, has pushed this market up a notch into the private property arena with its  luxury penthouse, infinity pool and sky terraces.

Is this narrowing of the price gap between public and private housing a true reflection of the housing situation in Singapore?  If the rise in prices continue, would the Executive Condominium market eventually suffer the same fate as the Design Build and Sell Scheme (DBSS)? In the end, the only question we are truly left with is, should it be that way?

5 Dec

Once, twice, always a HDB Flat

First time round, they opted for a new HDB Flat. Second time round, it’s still their first choice. On the second-time HDB buyers’ checklist are bigger flats in Bedok and Toa Payoh.

Five-room flats in Bedok’s Fengshan GreenVille new BTO flats were oversubscibed by six times.

They may be flocking back to buy new HDB flats directly from the authorities rather than try their luck in the resale HDB flat market simply because luck, or prices, may not be on their side. Rising resale HDB flat prices, driven up by rising private property prices which saw more downgraders competing for the  same limited pool of resale flats,  have made those who are looking to upgrade within the public housing market think twice. It certainly does not help that Permanent Residents (PRs) and singles are also looking at the same resale HDB flats.

Mature HDB estates are the most popular with the second-time buyers and they are also preferring larger units. Units in Fengshan GreenVille in Bedok were oversubscribed six times for five-room HDB flats. Sengkang also saw some heat for Compassvale Mast, though no surprises there as this new block will be just next to the Sengkang MRT station. Are buyers hoping to reap some profits when it comes time to sell?

Is the demand and supply ratio weighing too heavily on the buyers’ end? Will the increase supply of new BTO flats really release many more flats in the resale market and if so when will that be?

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