Resale HDB flat market’s continued stabilisation

For 2 consecutive years now, the sales volume of resale HDB flats have been on the rise. Since 2014, the number of transactions recorded for resale HDB flats have been increasing, from 17,318 in 2014 to 19,306 in 2015 and then 20,813 last year.

ToaPayohHDBflatResale flat prices are showing signs of stabilisation, with only a 0.1 per cent fall in 2016 from the year before. Though last quarter’s transaction figures fell 9.1 per cent, it could be due to the usual year-end lull as most were away for the school holidays. Akin to buyers’ sentiments and reactions in the private property market, HDB flat buyers have also been increasingly keen on closing deals as prices have been falling steadily since 2013. Most consider the market currently nearing or at the bottom of the property cycle and are thus more confident or willing to make the purchase at what they consider lowest-possible prices.

Despite the government ramping up supply of new BTO (build-to-order) flats for young couples and families, even including singles in their bigger scheme of things by providing them the option to purchase 2-room units directly from HDB instead of previously restricting them to only units in the resale market, there are still those who will require a unit sooner rather than later or do not quite qualify for new flats. These buyers will be the ones who prop up the market, though with the current cooling measures still in place, prices are unlikely to rebound anytime soon.

ClementiHDBflatProperty analysts are however hopeful that the number of resale flats transacted this year will be closer to the 21,000 to 23,000 mark. Resale prices have fallen to a level at which young couple and families find attractive or affordable enough to commit. A large number of HDB flats and suburban condominiums will also reach completion this year, which could mean more HDB upgraders will be looking to sell their existing flat in the resale market. And as rents are expected to fall as well, for the same reasons, the most optimistic outlook could be a 1 to 2 per cent price increase by end 2017.

January 2017 – New HDB subletting rules kicks in

A new regulation in the subletting of HDB flats has kicked in, allowing non-Malaysian work permit holders from the manufacturing industry to only rent rooms and not entire HDB units. In force since the first of January this year, the rule may impact not only the workers, but also employers, companies and HDB flat owners who are leasing their units. The impact may be beneficial to some, and not so much to others as the government hopes that this move will push employers to provide better workers’ living quarters and also move them to purpose-built dormitories where their needs can be catered to more efficiently.

BukitBatokHDBAn estimated 3.5 per cent of HDB households will be affected by the rule-change though those currently renting a unit are allowed to continue with their current living arrangements until their leases expire. This is not the first time a change was implemented in terms of the leasing of HDB flats. In 2006, the same rule was first implemented with regards to non-Malaysian work permit holders from the construction industry, and again in 2015 to the marine and process sectors. Malaysian work permit holders are still able to lease entire flats or rooms.

Service sector non-Malayisian work permit holders are however still allowed to sublet entire HDB flats and the government will continue to monitor the balance between landlords and sub-tenants closely in order to make further adjustments when and if required.

Plans for 6,000 new HDB units along East Coast Park

The new private condominium, Seaside Residences, and her sea views may have competition yet from the public housing sector in the form of new Build-to-order (BTO) flats along East Coast Park.

MarineParadeHDBflatThe authorities are looking at building 6,000 new BTO flats in the Bayshore district. The last public housing flats to be built here were in the 1970s – the current ones in Marine Parade which are wildly popular in the resale market likely for its proximity to many schools and the city centre, the sea views and the many transport options and amenities offered by this mature estate. With the upcoming Thomson-East Coast Line, properties in the area may become even more in demand with property buyers and investors. Resale HDB flats in Marine Parade have been known to fetch up to $900,000 in recent months.

In a 60 hectare plot bounded by Bayshore Road, East Coast Parkway, Bedok camp and Upper East Coast road, the Urban Redevelopment Authority (URA) has called for master plan pitches for the Bayshore district which will also include land area put aside for 6,500 private homes. The authorities are looking at developing the area into a residential, car-lite district. There has been concerns raised about the influx of population which might put a strain on transport networks, amenities and the Changi General Hospital in Simei. The future 12,500 new homes may possibly change the idyllic atmosphere this area is specifically known for.

Fall of private home rents put dampener on market

Hana CondoFor the 6th month in a row, private home rental rates have fallen with an even sharper 1.3 per cent drop last month. In the HDB market, rental prices have however edged up by 0.2 per cent. The overall decline in rents is smaller in this market, at 3.7 per cent for the entire year of 2016. In the private property market however, for the whole of last year, rents have fallen 6.2 per cent and in a year-on-year comparison with January 2013, almost 20 per cent.

Not in particular good news for those who have been counting on rental yields to help with their multiple property mortgages. Plus a probable interest rates hike this year, the market could be looking at more sellers putting their property in auction sales or banks being more active in their mortgage auction sales. This could however work in the favour of buyers who have been looking for a home to live in. The closing price gap between private housing and higher-end resale public housing may also cause some contention and competition, with location and floor area possibly being the deciding factor for many.

KatongRegencyNot only has rental rates fallen, so has leasing volume. The number of condominium apartment leases fell to 3,691 last month, down 2.2 per cent from November’s 3,775 units. Last December’s leasing volume however is 17.1 per cent higher than in the same period in 2015. Overall, the rental market is weakening and investors can no only rely on rental yields to help tide them over.

Resale HDB market looking at a year of stabilisation

Transaction volume and prices of resale HDB flats dipped once more last month, following a rise in November. Prices of resale HDB units fell 0.3 per cent in December and 13.9 per cent fewer transactions were recorded in midst of the usual year-end quiet. A total of 1,364 resale flats were sold last month.

bishanloftecLarger units such as the executive flats and 5-room flats saw a bigger price decline of 0.9 and 1 per cent respectively. Prices of rarer 3-room and 4-room units dipped only 0.1 and 0.2 per cent. The steeper decline for the bigger flats could be due to declining private property prices, which may steer some buyers towards that direction. Smaller HDB flats are priced much lower than the same in the private property sector, thus the pool of buyers for these units are considerably more stable though now that singles can apply for 2-room flats directly from HDB, the pool could have diminished slightly.

5-roomhdbPrices of resale HDB units in non-mature estates fell the hardest at 1.2 per cent year on year, possibly due to competition from the rising number of private residences in the suburbs. In mature estates on the other hand, prices have risen 1 per cent. Overall, with prices fluctuation within the 1 to 2 per cent range, analysts consider the market stabilised after years of gradual decline since 2013. The market could be reaching a zero per cent change soon and with the current market levels remaining unchanged, buyers are beginning to take the opportunity to snap up units in the resale market when a suitable deal comes up. Resale transactions may rise up to 15 per cent this year.

Will property market bottom out soon?

Hopes of a market rebound may be reignited as the bottom of the cycle seems to be in close reach. While private home prices have fallen by 0.4% for the 13th consecutive quarter, the rate of decline of private home prices have been reduced from the 1.5% in 2016’s Q3.

cairnhillresidencesIn 2016, private home prices fell only 3%, the slowest since 2013. Since the third quarter of 2013, home prices have fallen 11.2%, with a 4% fall in 2014 followed by a 3.75% fall in 2013. The projected fall in home value this year is 2% to 3%. While home seekers and investors may be drawn back into the market with the lowered property prices, analysts are not expecting them to splurge.

highlandresidencesIn Q4 of 2016, non-landed private home prices fell 0.7 per cent, led by city fringe properties with a 2 per cent drop. Prices of units in the core central region remained unchanged while suburban home prices fell 0.3 per cent. Units in the core central region have suffered a 1.9 per cent fall in Q3, thus the fact that sales volume have increased while prices remained unchanged could be a good sign for the year ahead.

Landed property prices posted a surprising rise of 0.9 per cent after a 2.7 per cent fall in Q3 while in the resale HDB flat market, prices fell 0.1 per cent.

Continued decline of private resale condo prices expected

2017 has arrived and the question on every property owner, seeker and investor’s mind may be how the year will fare for them. Will interest rates rise and how will that affect their financial sustainability? Will vacancy rate fall and will there be an increase in resale units hence affecting price competitiveness?

casabellaThe last couple of months of 2016 has shown a continued decrease in resale condo prices. In November, overall resale condominium prices have fallen 0.7 per cent, following a 0.2 per cent in October from September. While central region private non-landed residential properties have regained some favour with foreign buyers, prices have dipped despite a rise in sales volume. Property analysts are expecting a market stagnation at best for 2017 as a quick rebound seems unlikely due to the continued slow economic growth and global political uncertainty.

The increase in sales volume is however a sign of hope for the property sector, as the rate of price decline may cease after a period of increased activity. Most sellers who are listing their units under the current market conditions are more likely than not serious sellers as most investors will try to hold on to their units and tide over the market lull. Thus buyers are increasingly aware of this change in tide and are negotiating for lower prices.

seletar-springsThe segment most affected could be the small suburban condominium apartments as the number of resale units are on the rise and also facing competition from HDB flats. While official figures are yet to be computed, analysts are expecting private property prices to have fallen by approximately 3.5 per cent last year.

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.