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.

The A-Bi-Cs of mature HDB estates

Bishan and Bidadari. Both mature estates and both in popular demand. The only difference might be that Bishan is more established while Bidadari is a new foundling in the already-mature estate of Toa Payoh.

The recent buzz around the centralised Bidadari estate has prompted many to call it the “next Bishan”. How exactly do these 2 estates compare?

BidadariPhoto credit: HDB

As far as history goes, Bishan was one of the first model HDB towns 30 years back. And now Bidadari, which means “angel” or “fairy” in Malay, seems to be taking its place as the next big thing. Both B-word towns have good city-fringe locations and are built on land which were once cemeteries. Bidadari will have the luck of having Bishan run its course with the stigma of living on cemetery land. Buyers of today are no longer as affected by this fact.

Even though property agents and analysts say they are unsure how resale prices and infrastructure in this new estate will pan out, the initial response is very positive. Both its November 2015 and February 2016 launches were about 23 times oversubscribed despite the more expensive sales tags. Its proximity to the city centre plus the 3 MRT stations (Potong Pasir, Bartley and Woodleigh) serving it, Bishan makes up for the difference only by its direct access to its own shopping mall, park and amenities such as sports facilities, library, community centre, offices and business facilities. The Bishan MRT station is also an interchange station between the North-South and Circle MRT lines.

Bishan HDB estatePhoto credit: HDB

Resale HDB flats in Bishan can go up to $730,000 for a 5-room flat. While the new BTO flats in Bidadari were launched at prices between $544,000 and $625,000, they look set to reach possibly higher resale prices once they are available in the resale market.

 

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?

Property DIY – Buy and sell Resale HDB flat on your own

Ready and planning to buy or sell your HDB flat? Finding a good agent is the next big step, and an important one. But if you have the energy and time to do it yourself, the option and resources are available.

Queenstown-HDB
HDB regularly runs resale seminars in English, Mandarin, Malay and Tamil to educate buyers and sellers about the resale process. On their website, they have a clearly mapped out 9-step process complete with links to resources. Sellers could also do the marketing and selling of the flat themselves but engage an agent only to assist with the paperwork.

The entire resale transaction, minus the open houses and home viewings, commonly takes between 6 to 8 weeks. Before all that, sellers and buyers are advised to check their eligibility to sell or buy a flat, plan their finances and either approach banks or apply for a HLE (HDB loan eligibility) letter before looking for a flat. HDB also has an online tool that helps you compute a rough estimate of your loan type and amount.

HDB websiteUpon finding a flat you wish to purchase or when someone is ready to purchase your flat, the seller will then need to grant the buyer an OTP (option to purchase) which costs up to $1,000 and the ball is then in the buyer’s court whether or not to exercise the option within 21 days. If the buyer wishes to purchase the flat, both parties are required to submit resale applications via HDB’s e-Resale service. There are additional legal, administrative, insurance and valuation fees to consider in the entire process. Agent or DIY, having a firm idea of what is required will only be helpful in making the entire resale flat search and purchase process a smoother one.

 

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.

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.

 

Mortgage cap continues to limit resale HDB flat market

One of the more impactful property cooling measures implemented in recent years have been the Total Debt Servicing Ratio (TDSR) framework and the mortgage servicing cap for HDB flats, which limits the percentage of one’s gross income which can be used to service a loan for a HDB flat to 30 per cent.

SengkangHDB

Resale flat prices have been deflating for 2 years now and looks like it will be flatlining this year. Since its peak in April 2013, resale HDB flat prices have fallen 11 per cent and many transactions are now closed sans Cash-over-valuation (COV). The second half of last year did however see a slight increase in prices. With the selling prices of recent transactions quite transparently and clearly reflected by HDB, buyers are now more aware of the current market climate.

The number of transactions in January fell 121 units from December, and prices fell 0.5 per cent. But this may be due to the busyness which January brings for buyers and sellers and property analysts are not overly worried about the HDB market as prices and sales volume are only expected to remain level this year. The stability may be a good thing this may be the much-needed rest period before a market rebound.

 

Resale HDB flat prices stabilising

HDB resale flat prices fell a mere 1.5% last year, buoyed by a 0.2% rise in the last quarter of 2015.

Skyline Bukit Batok HDB BTO FlatPhoto credit: HDB

With the lowered prices of resale HDB flats, there may be an increase in sales volume this year as buyers have found many of these sans-COV (cash over valuation) resale units more affordable. Price-wise, property experts are looking at a 1 – 2 per cent movement, with prices staying quite stagnant this year. More young couples and upgraders may also be moving into the private property market as the total quantum prices of units have come down to a much more palatable level.

According to Minister for National Development Lawrence Wong, resale flats are mostly selling at market value, with prices comparable to that of 2011. Some of the property cooling measures which have been implemented since that which have taken effect, and which may continue to do so include the mortgage servicing cap of 30 per cent, the 25-year maximum loan tenure limit, and a 3-year waiting period for permanent residents before they are allowed to purchase resale HDB flats. Demand may also have waned as singles are now able to purchase new 2-room BTO flats directly from HDB and 18,000 new flats are to be rolled out this year with the first launch in February.

Though this may point to the market bottoming out by end of 2015, two consecutive quarters of price increase is required before a clear sign of a market rebound can be confirmed.