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.

Flats in Geylang and Bidadari available in HDB’s latest BTO Launch

HDB’s latest sales launch of Build-to-order (BTO) and Sale of Balance (SBF) flats will include 1,273 units in Geylang and 1,355 Bidadari (Toa Payoh HDB estate).

BidadariHDBflatMAy17May’s launch may not be huge considering it will span 14 mature estates and 11 non-mature estates, but the inclusion of many flats in popular estates such as Ang Mo Kio, Bedok, Clementi and Kallang/Whampoa will draw the crowds for sure. 5 applicants per unit is expected for Geylang as the area has not had a launch for the past 3 years.

The government is however attempting to shift applicants’ focus to non-mature estates up North, namely in Woodlands and Yishun. Up to 2,000 new BTO flats will be launched in these 2 HDB towns with prices considerably lower than those in mature estates. For example, a 2-room flexi HDB flat in Geylang will cost $179,000 while the same in Woodlands will cost more than $100,000 lesser at $73,000. In Bidadari, a 2-room flexi unit will cost $169,000. A 3-Gen flat in Bidadari will be priced at $622,000 while the same in Woodlands costs slightly over half of that at $320,000.

DakotaHDBflatMAy17Bigger 4- and 5-room flats will also be made available in the current launch. But be prepared to pay $489,000 for a 4-bedroom unit in Geylang while a 5-bedroom flat in Yishun will set you back only $331,000. Plans to establish Woodlands as an area for regional businesses is on the way, though it will take some time before it becomes a full-fledged hub. Infrastructure that is being developed includes new MRT stations, a terminus connecting Woodlands to Johor Bahru and the North-South corridor. More HDB launches can be expected in the Woodlands estate in future.

In the meantime, the mature estates are expected to dominate the latest launch. Applications close on Wednesday, May 24. HDB’s next launch will be in August and it will include 3,850 new BTO flats in Bukit Batok and Sengkang.

*Photo credit: HDB

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.

Limits placed on tenancy of private homes

From today on, private homes can no longer be tenanted by more than 6 unrelated persons. This is 2 lesser than previous cap of 8 persons.

Enforced by the Urban Redevelopment Authority (URA), the new ruling kicks in today but existing tenancy agreements of 7 or 8 persons will be allowed to carry on until May 15, 2019 regardless of the tenancy contract’s expiration date.

TownervilleThis change was made to keep the integrity and character of the local community and to ensure that residential premises integrate with the neighbourhood. The move will also better engage the services of student hostels and company dormitories. There are differing views to this change. Property agents, some landlords and even tenants may welcome this shift towards quieter and less disruptive living environments. Others who are relying on rental income to prop up their finances may have opposing views. The loss of 2 tenants could very well surmount to $1800 to $2600 in potential monthly rents.

This shift to tenancy regulations will also affect home-sharing market such as Airbnb. The URA has been considering the creation of new leasing category for short-term rentals such as those publicised on home-sharing sites. And for those wondering if a huge bungalow and a small private studio may have different restrictions? The answer is no. URA has stated that there is no “stratified occupancy cap control based on unit sizes”.

Aura83For HDB flats which are sublet, the number of sub-tenants allowed remain unchanged at 6 and 9 for 3-room and 4-room or bigger units respectively. Property analysts are however expecting this new tenancy rules to soon apply for the HDB market.

 

Overall price decline in Q1 but buying sentiment remains upbeat

Price-declines across the board for private residential, commercial and resale public housing sectors could mean the bottom of property cycle is close. For the 14th consecutive quarter now, private home prices have fallen, the longest period in the past 13 years.

That said, the general market sentiment has recently picked up as slight tweaks in the property cooling measures and a series of new and exciting property launches have gotten buyers’ blood flowing once more. Private home prices have fallen 0.4 per cent in Q1, slightly lesser than the 0.5 per cent in Q4 of last year.

Paya Lebar Quarter_Lendlease PLQPhoto credit: Lendlease 

Values of private residential properties have fallen 11.6 per cent since its peak in 2013, and this difference has probably revived purchasing interest as most buyers still see the potential of well-located properties in Singapore.

Total private home transactions hit 5,202 units in Q1, the highest in 15 quarters thus far. Property analysts are expecting the market to remain bullish and continue its growth barring any unexpected economic circumstances. City fringe properties are faring particularly, propped up by the strong demand for newly launched projects such as The Clement Canopy, Grandeur Park Residences, Park Place Residences and the Paya Lebar Quarter. Non-landed home prices have in fact risen 0.3 per cent in the city fringes and 0.1 per cent in the suburbs. Core central region property prices fell 0.4 per cent however.

ParkPlaceResidencesLanded home prices fell 1.8 per cent last quarter, likely due to the restrictions placed on these rarer commodities. Foreigners are not allowed to own landed properties. On the resale HDB flat front, prices fell 0.5 per cent, though the decline is expected to reverse itself soon, in response to the positive sentiments from the private property market.

Resale HDB sales volume down last quarter

After a period of relative stability in the resale HDB flat market, numbers have dipped once more last month with 1,834 transactions recorded in April compared to 1,910 in March.

TheTerraceECPunggolSales volume for resale HDB flats fell 4 per cent in April, and was also 0.9 per cent lower than April 2016. Prices also fell 0.3 per cent from March with only that of 5-room flats increasing by 0.2 per cent. Resale prices for 3-, 4-room and executive flats fell 0.2, 0.7 and 0.9 per cent respectively.

While resale units in mature estates continue to be in demand, prices of those in mature estates have fallen 0.9 per cent, as compared to the 0.2 per cent of units in non-mature estates. Though this may not necessarily signify a bottoming-out of the property cycle, property analysts are hopeful that sales will pick up in the 3rd and 4th quarter to hit the 20,000 target by year-end.

Since the property peak of 2013, resale flat prices have fallen 11.4 per cent. Q1’s fall of 0.5 per cent was a little steeper than the relatively minute fluctuations of 0 to 0.1 per cent for the last year, but art of the fall in sales volume in Q1 could be due to the Chinese New Year festivities and the market continues to be plug on in a state of stability.

 

Winds of change in local property market

A decade or so ago, owning a second or third property might be the fastest way to secure your retirement funds or to even accumulate a tidy little kitty. Investment properties were considered a surefire way of earning additional income, but in the climate of today, property owners and investors have much more factors to consider and competition to battle against.

SunshinePlazaResidencesWith the rental market weakening, property agents are finding that it takes twice as long and also many more viewings before a property is successfully tenanted. And even then, for much less than before. Some property owners have had to reduce rents by almost half. Leaving the units empty are simply not an option for some investors as the rents go towards the mortgage or mortgages of their properties. It is after all better to have less help than none at all.

SerangoonHDBflatFor new investors looking to enter the market, the environment is a lot tougher than before. Considerations such as whether there is a large pool of HDB flats available for rental nearby, the long-term potential of the property, competition from other new launches or even within the same property, whether the local and global economy will affect businesses and commercial hubs nearby thus reducing the pool of foreign tenants, and so forth.

Before the market makes a complete recovery, a possibly lengthy period of stabilisation will ensue, despite the governments having made some allowances in the are of the property cooling curbs.

February’s dip in resale flat prices points to market stabilisation

February was a little slow for the resale HDB flat market as prices fell by 0.3% and transactions by 8.5%. This was following a promising start to the year. But industry experts are not too quick to dismiss the possibilities for the sector as the year moves ahead.

ClementiHDBflatThe slight dip last month was most likely due to the post Chinese New year lull which is a common occurence. Rather than being indicative of a falling resale flat market, the decline simply points at a stabilizing  market enironment. Though resale flat buyers paid about $2,000 less than market value across  the board, some HDB estates continued to clock more than 10 transactions and at prices above market value

In Bedok, some buyers paid $10,000 and more for their resale flats while in Clementi, some transactions closed at $4,000 above market value. That comes as no surprise as these are mature HDB estates where demand is high. There were also some recent private property launches in the vicinity, for example the Clement Canopy, which may have had some residual effect on the resale HDB  flat market.

Aerial view of HDB flats in Ang Mo Kio

Aerial view of HDB flats in Ang Mo Kio

There were however a couple of HDB towns which did not post as promising figures despite being popular locations for flat seekers. In Queenstown, the lowest below-market prices were clocked at $12,500,  followed by $10,000 in Ang Mo Kio. Prices of 3-room flats rose by 0.2% while executive flat prices fell by 1.7%. Overall, prices of resale flats in mature estates rose by 1.1%.