HDB resale flat prices up an estimated 4.4% in Q2

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HDB resale flat prices up an estimated 4.4% in Q2

By Channel NewsAsia | Posted: 01 July 2008 1505 hrs

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Straits Vista @ Marsiling

SINGAPORE: Prices of HDB resale flats rose 4.4 per cent in the three months to June over the previous quarter, according to the Housing and Development Board's flash estimate.

This was slightly higher than the 3.7 per cent increase in the first quarter.

In the first half of the year, HDB has launched a total of 4,524 new flats.

Subject to demand, HDB plans to offer about 3,900 new flats under the Build-To-Order (BTO) system over the next 6 months in various towns.

The total planned BTO supply of 8,400 new flats this year will surpass the BTO supply in 2007.

This will be in addition to flats offered under the Balloting Exercise for surplus replacement flats under the Selective En bloc Redevelopment Scheme, and the other exercises for sale of balance flats from previous offers.

- CNA/yb

http://www.straitstimes.com/Singapor...ry_253680.html

July 2, 2008

Prices of HDB resale flats still climbing

4.4% jump in second quarter, given strong demand, tight supply and higher valuations

By Jessica Cheam


THERE is a buzz in the property market and it is in the heartland.

HDB homes are continuing their bull run - even as private home prices stagnate - with prices rising 4.4 per cent in the second quarter.

This is according to flash estimates released by the Housing Board yesterday.

The latest jump is higher than the 3.7 per cent first-quarter rise in HDB flat prices.

Housing experts point to an underlying healthy level of demand for resale flats, tight supply and higher valuations as key reasons for the rise.

The onward march of HDB flat prices comes after prices rose 17.4 per cent last year.

In contrast, private home prices inched up only 0.4 per cent this quarter, compared to 3.7 per cent in the previous quarter, flash figures from the Urban Redevelopment Authority showed.

Last year, private home prices soared 31 per cent.

One reason public flats are outperforming private homes now is that HDB price rises are still lagging behind those of private homes which shot up in the housing boom, say market watchers.

Knight Frank director of research and consultancy Nicholas Mak said HDB prices still have room to rise as they were slow to take off at the start of the recent property boom.

Higher valuations of resale flats are also likely to have contributed to the price rises, said PropNex chief executive Mohamed Ismail.

He expects public-housing prices to continue their rise, by another 5 per cent, for the rest of this year. That would mean a full-year jump of about 13 per cent.

Both men agreed that the tight supply of HDB flats is another factor keeping the market buoyant, with demand from upgraders, downgraders and permanent residents.

'With Singapore's economic fundamentals still intact, the buzz in the HDB resale market is expected to continue in 2008,' said ERA Realty's assistant vice-president Eugene Lim.

'A buoyant HDB resale market is good news for developers of mass-market condominium projects as HDB upgraders are their primary target market,' he added.

However, with the stream of new flats coming into the market, some demand will move away from the resale market to new flats, he said.

During the first half of this year, HDB launched 4,524 new flats.

Subject to demand, HDB said in a statement that it plans to offer about 3,900 new flats under the Build-to-Order system over the next six months, in towns such as Punggol, Sengkang and Bukit Panjang.

The full data for the second quarter will be released at the end of the month.

[email protected]

http://www.todayonline.com/articles/262743.asp

Wednesday, July 2, 2008

PRs help drive flat resale prices

HDB upgraders’ demand for condos outside central region could also rise

TAN HUI LENG

[email protected]


AS SOARING rental rates add to their cost burden, more Permanent Residents (PRs) are snapping up Housing and Development Board (HDB) resale flats.

“Two years ago, you would pay less than $1,000 a month in rent for a four-room flat but now, you would be paying almost $2,000,” said PropNex chief executive Mohamed Ismail.

“If you are going to be here in the long run, it doesn’t make sense to rent when you can use the same money to buy a flat. One of my colleagues sells just three-room flats, and seven out of 10 units she sells are to PRs.”

The strong immigrant market is just one factor behind the strong 4.4 per cent growth in HDB resale prices between April and last month, even as the private property market is cooling. PRs cannot buy flats direct from the HDB unless they are married to a Singapore citizen.

ERA Singapore, which corners 40 per cent of the HDB resale market, has seen a four-fold increase in their PR clientele — from just 5 per cent in 2004, to some 20 per cent now.

Also fuelling the “pent-up demand” :— as Chesterton International’s consultancy and research head Colin Tan put it :— are HDB upgraders who cannot afford private housing and downgraders from the private housing segment.

With private homes still priced out of reach of the mass market for now, analysts believe the HDB resale market will remain bustling for some time.

This upbeat outlook echoed what National Development Minister Mah Bow Tan had said last month of this sector: “It’s a real demand, a real market for people to buy a flat to live in, unlike the privatemarket where some people buy to live, some to invest, some for speculation.”

“So long as there are new families being formed and new immigrants coming in, the HDB market will remain a very active one.”

Private homes within reach of HDB upgraders?

While this is good news for the flat values of home-owners, young couples and new families have been concerned about a limited supply of new HDB flats to choose from, and about affording the Cash-Over-Valuation of resale flats.

With the housing board announcing a steady stream of upcoming projects this year, these first-timers’ needs areaddressed.

But those who cannot wait to have a roof over their heads :— given that new flats will go up on a built-to-order basis, and the reduction of balloting exercises for excess flats to just two a year :— and those who cannot buy direct from the HDB continue to fuel resale demand.

Looking ahead, with HDB resale prices continuing strong as private home prices taper off, would more HDB upgraders be able to move to private property?

Recent launches of condominiums outside the central region such as Dakota Residences have gone for less than $1,000 per sq ft on average. Clover By The Park at Bishan is going at an average price of $750 psf.

Compared to the average $550 psf for executive condominiums now, the price may just be right for some to go private.

“We could see anything from $600 to $1,000 psf in upcoming launches for condominiums outside the central region,” said Cushman and Wakefield Singapore managing director Donald Han. “Developers will be targeting the HDB upgraders.”

Sonia Kolesnikov-Jessop

After two years of exuberance, activity in the private housing market in Singapore has slowed to a near standstill. The number of new property sales, measured on a monthly basis, contracted 64.9 percent in April, as buyers became more cautious and took a wait-and-see attitude. As a result, several well-publicized launches have been put on the backburner for an indefinite period and some developers have started to drop asking prices, for example at The Lakeshore in Jurong West and Blu Coral in Telok Kurau.

An air of doom and gloom has settled over Singapore’s residential property market and vultures are circling, proclaiming the Singapore residential property market is about to collapse by 30-40 percent, but are they interpreting the facts correctly? Not all experts agree, with some calling the current market downturn more of a short-term blip rather than the beginning of a market collapse.

“The slowing of the property market is a natural development after prices skyrocketed on the back of very strong demand,” says Sherman Chan, an economist at Moody’s Economy.com, “but a 30-40 percent collapse is highly unlikely. The construction sector is an important growth driver for Singapore and I don’t think the government would let it collapse as there would be wider ramifications. Let’s not forget that the government imposed some measures last year to cool down the market and these measures could very well be lifted if need be.”

In recent weeks, several bearish reports have forecast a dramatic plunge in home values over the next two years. Barclays Capital believes private home prices could slide 28-30 percent by 2010, while Credit Suisse predicted a price decline of 30 percent in 2008-2009.

The bears are pointing to several factors suggesting the writing is on the wall. The stock of unsold condominiums (as measured by projects that have been issued a sales license) rose to 10,861 units in the first quarter of this year, 34 percent higher than the quarterly average in 2007 and back up to levels not seen since June 2005. Net CPF withdrawals for private property have turned negative for the first time, reflecting the decline in transaction as well as profit taking by local buyers who own more than one property. “This has never happened before, not even during the 1998 Asian Financial Crisis,” notes Barclay Capital economist Waiho Leong. And vacancy rates in non-landed property developments have also risen in recent months toward 6.3 percent, compared with 5.6 percent in the last quarter of 2007. Credit Suisse, in its recent report, argues that this will rise further to 9.8-19 percent, on a base and worst case scenario. This could in turn trigger a sharp fall in rentals further weakening the market. “The last time vacancies shot up from 5.8 percent to 9.7 percent, rentals fell by 41percent,” Credit Suisse Tricia Song wrote referring to the year 1996.

Casting long shadows on the markets are the estimated 66,000 home units expected to be completed between 2009-2012, as well as the possible unwinding of speculative purchases. Unless many of the developments that are currently in the pipeline are postponed, a cumulative surplus could provide a glut that will be felt most acutely in 2010, Leong warned.

The bears also argue that given the current thin sales environment, the small price growth recorded by the URA indices do not reflect sentiment and can easily be biased by a few high-end sales. A better gauge of sentiment is land prices and developers’ waning appetite for recent URA auctions, they say. In May, a 99-year residential leasehold site in Choa Chu Kang Drive attracted a top bid of only $203 per square foot per plot ratio, well below the $230-$270 psf ppr range the market had expected.

But not everybody agrees. “I think bad interpretation of data is causing the string of bad news,” says Ku Swee Yong, Director, Savills Residential Private Limited.

Ku points out that the supply figures touted by some analysts bundle together planned, under construction and complete unit numbers. “The reality is that any apartments expected to complete in 2010 but still not under construction today, is unlikely to be completed on time given that the average construction period for a 20 storey apartment block takes 24 months from foundation works till handover” Ku remarks.

“The construction sector is tight on resources today and unless there are policy changes given to encourage faster pace of construction, the ‘oversupply scenario’ is not a realistic one,” he adds.

Tay Huey Ying, Director for Research and Consultancy at Colliers, agrees, pointing out that although the supply pipeline appears a “bit on the high side,” once delays and abandonment of project developments are taken into account, “the new supply will be much lower than expected.”

Leonard Tay, director, CBRE Research also points out that many of the units will be taken out by either en-bloc sellers who need to relocate, or new expatriates moving here. “There is a lack of activity in the market, but property prices have been holding. I believe there are still a lot of buyers in the market with ready cash; they’re just waiting for what’s next,” Tay says, forecasting that the luxury end of the market may “dip just a bit” this year, but prices should hold for now.

As for the units bought under the deferred payment scheme that some say will be “dumped” in the market as the construction is completed, Ku says their number is probably limited to around 2,900, 10 percent of the 29,000 units that URA has given approval for sale under Deferment Payment Scheme. “Not that much to worry about,” he says.

Many property consultants are pointing to the long-term prospects for the Singapore property market supported by the positive vibe stemming from the Integrated Resorts and events such as the F1 race and the 2010 Youth Olympics.

“I think the Singapore property market is still pretty strong. We could see a mild correction, but I don’t see that as a concern because the government is still trying to attract expatriates to work here and they will contribute to demand for properties,” Chan says.

Tay also points out that given the anticipated continuing influx of foreigners, the 15-year historical average number of 7,000 new units needed a year is likely to increase to 8,000 to even 10,000 units.

“So I don’t foresee an oversupply situation as yet. I don’t think the sky is about to fall in,” she says.