reporter2
18-10-22, 15:49
Mass market condo sales expected to remain firm despite softening demand from HDB upgraders
Oct 13, 2022
WHILE the latest round of property cooling measures will impact HDB flat owners’ ability to upgrade to private housing, the effect on mass market homes may not be as great as some might think.
This is because while HDB upgraders make up a significant 39.9 per cent of buyers of all non-landed Outside Central Region (OCR) private homes – the mass market segment often cited as being most dependent on upgraders – those with a private address contribute to 45.2 per cent of transactions.
If landed OCR residential property transactions are included as well, then the gap between the two groups of buyers widens – with the proportion of buyers with HDB addresses and those with private addresses at 36.7 and 49.7 per cent respectively.
The figures are based on transactions in the first nine months of this year, collated for The Business Times (BT) by ERA Research & Consultancy.
There are another 14.9 per cent of non-landed OCR home buyers without an address, and BT understands that these are likely to be purchasers of new units whose transactions have been reported by developers, but whose caveats have not yet been lodged.
Assuming this group has no foreign addresses and is split equally between those with HDB and private addresses, the former would make up 47.35 per cent and the latter, 52.65 per cent of OCR non-landed home buyers.
https://i.imgur.com/f4KlyVu.png
“It is commonly assumed that the majority of buyers of private suburban housing in the OCR are HDB upgraders,” said Marcus Chu, chief executive officer of real estate services provider Apac Realty : CLN +0.88% and ERA Asia Pacific. “Hence, the health of the private suburban housing market is closely tied to HDB resale market conditions.”
If prices and sales in the HDB resale market are badly affected by the latest market curbs, then the natural conclusion is that the OCR private home market will also be adversely affected.
However, this assumption is overblown, said Nicholas Mak, head of research & consultancy at ERA Singapore, noting that the impact of the latest cooling measures would be more significant if more than half of the non-landed housing units in the OCR were bought by HDB upgraders, which is not the case.
“Although non-landed home sales in the OCR would not be entirely shielded from the effects of the latest round of cooling measures, this market segment would not be as badly affected as initially feared,” he reasoned.
These measures, effective from Sep 30 2022, reduce home buyers’ purchasing power by imposing a more stringent total debt servicing ratio and mortgage servicing ratio.
Private property downgraders also face a wait-out period of 15 months before they can buy an HDB resale flat. Aimed at moderating demand and slowing the momentum of price increases in the HDB resale market by deferring demand from private property owners, this curb will likely also shrink the pool of HDB upgraders profiting from higher HDB prices.
Meanwhile, non-landed housing sales in the Core Central Region (CCR) and Rest of Central Region (RCR) depend even less on demand from HDB upgraders.
Public housing upgraders bought 14.2 and 29.5 per cent of non-landed units in the CCR and RCR respectively. The rest of the non-landed units were mostly bought by buyers with private housing addresses, foreigners and companies.
“Demand from HDB upgraders may soften, but it won’t cause the OCR market to collapse because in these past nine months, it’s the people living in private property who have formed the slightly larger proportion of buyers,” said Mak. “This is even with the higher additional buyer’s stamp duty rates imposed since the December 2021 cooling measures.”
Transaction volumes in the private residential property market are expected to decrease in the final quarter of 2022, due partly to the year-end lull period, and also to homebuyers re-examining their housing budget under the new home loan requirements.
“However, as long as the house-buying demand from residents with private home addresses is not adversely affected, sales in the private housing market will start to recover and stabilise in the first half of next year after homebuyers overcome the initial shock of the government intervention and resume their home-buying plans,” said Mak.
Given the latest measures, buyers with private housing addresses could make up an even bigger proportion of OCR home purchases going forward, he noted.
https://www.businesstimes.com.sg/real-estate/mobile-spotlight/mass-market-condo-sales-expected-to-remain-firm-despite-softening
Oct 13, 2022
WHILE the latest round of property cooling measures will impact HDB flat owners’ ability to upgrade to private housing, the effect on mass market homes may not be as great as some might think.
This is because while HDB upgraders make up a significant 39.9 per cent of buyers of all non-landed Outside Central Region (OCR) private homes – the mass market segment often cited as being most dependent on upgraders – those with a private address contribute to 45.2 per cent of transactions.
If landed OCR residential property transactions are included as well, then the gap between the two groups of buyers widens – with the proportion of buyers with HDB addresses and those with private addresses at 36.7 and 49.7 per cent respectively.
The figures are based on transactions in the first nine months of this year, collated for The Business Times (BT) by ERA Research & Consultancy.
There are another 14.9 per cent of non-landed OCR home buyers without an address, and BT understands that these are likely to be purchasers of new units whose transactions have been reported by developers, but whose caveats have not yet been lodged.
Assuming this group has no foreign addresses and is split equally between those with HDB and private addresses, the former would make up 47.35 per cent and the latter, 52.65 per cent of OCR non-landed home buyers.
https://i.imgur.com/f4KlyVu.png
“It is commonly assumed that the majority of buyers of private suburban housing in the OCR are HDB upgraders,” said Marcus Chu, chief executive officer of real estate services provider Apac Realty : CLN +0.88% and ERA Asia Pacific. “Hence, the health of the private suburban housing market is closely tied to HDB resale market conditions.”
If prices and sales in the HDB resale market are badly affected by the latest market curbs, then the natural conclusion is that the OCR private home market will also be adversely affected.
However, this assumption is overblown, said Nicholas Mak, head of research & consultancy at ERA Singapore, noting that the impact of the latest cooling measures would be more significant if more than half of the non-landed housing units in the OCR were bought by HDB upgraders, which is not the case.
“Although non-landed home sales in the OCR would not be entirely shielded from the effects of the latest round of cooling measures, this market segment would not be as badly affected as initially feared,” he reasoned.
These measures, effective from Sep 30 2022, reduce home buyers’ purchasing power by imposing a more stringent total debt servicing ratio and mortgage servicing ratio.
Private property downgraders also face a wait-out period of 15 months before they can buy an HDB resale flat. Aimed at moderating demand and slowing the momentum of price increases in the HDB resale market by deferring demand from private property owners, this curb will likely also shrink the pool of HDB upgraders profiting from higher HDB prices.
Meanwhile, non-landed housing sales in the Core Central Region (CCR) and Rest of Central Region (RCR) depend even less on demand from HDB upgraders.
Public housing upgraders bought 14.2 and 29.5 per cent of non-landed units in the CCR and RCR respectively. The rest of the non-landed units were mostly bought by buyers with private housing addresses, foreigners and companies.
“Demand from HDB upgraders may soften, but it won’t cause the OCR market to collapse because in these past nine months, it’s the people living in private property who have formed the slightly larger proportion of buyers,” said Mak. “This is even with the higher additional buyer’s stamp duty rates imposed since the December 2021 cooling measures.”
Transaction volumes in the private residential property market are expected to decrease in the final quarter of 2022, due partly to the year-end lull period, and also to homebuyers re-examining their housing budget under the new home loan requirements.
“However, as long as the house-buying demand from residents with private home addresses is not adversely affected, sales in the private housing market will start to recover and stabilise in the first half of next year after homebuyers overcome the initial shock of the government intervention and resume their home-buying plans,” said Mak.
Given the latest measures, buyers with private housing addresses could make up an even bigger proportion of OCR home purchases going forward, he noted.
https://www.businesstimes.com.sg/real-estate/mobile-spotlight/mass-market-condo-sales-expected-to-remain-firm-despite-softening