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Thread: Prices of resale flats, private homes continue to rise

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    Default Prices of resale flats, private homes continue to rise

    Prices of resale flats, private homes continue to rise
    By Julie Quek / Wayne Chan | Posted: 01 July 2011 1433 hrs



    SINGAPORE: Prices of HDB resale flats have increased 2.9 per cent in the second quarter of this year compared to the previous quarter.

    Flash data released on Friday by the Housing and Development Board (HDB) shows that its resale price index in the second quarter this year came in at 179.9.

    The rate of price growth in the second quarter is higher than the previous quarter's 1.6 per cent hike.

    HDB said it is on track to offer 22,000 Build-to-Order (BTO) flats by September, and another 3,000 BTO flats in the last quarter of this year.

    Prospective buyers can check the HDB website for details of the projects scheduled for sale from July to September.

    Key Executive Officer of ERA Realty Network, Eugene Lim, said the higher increase in prices of HDB resale flats last year was due to a supply shortage.

    He added that the pool of potential HDB upgraders may have shrunk with higher and rising private property prices. The recent cooling measures could be another put-off.

    In particular, he pointed to stricter rules to qualify for loan financing as a reason for more HDB owners preferring to stay put.

    Mr Lim said: "If you have an existing mortgage, you want to buy another flat before you sell, you are only eligible for a 60 per cent bank loan, so this puts off a lot of home sellers."

    Mr Lim said this trend has led to HDB owners postponing their plans to upgrade, with some subletting their flats for a good return instead after fulfilling the minimum occupation period of five years.

    Also, Mr Lim said those that are able to afford to buy a private property after fulfilling the minimum occupation period of five years without selling their HDB flats; as they can sublet the whole unit and get a good return.

    He said demand however, continues to be strong due to upgraders, downgraders, Permanent Residents and private property owners who have cashed out.

    This has driven Cash-Over-Valuation (COV) upwards.

    Based on ERA's transactions for the last three months, Mr Lim said the median COV has risen from S$30,000 in April to S$37,000 in June.

    To further enhance the supply for third quarter this year, HDB said it plans to launch 2,000 flats under a Sale of Balance Flats Exercise scheduled in August. HDB said this exercise will offer some flats in the mature estates.

    While this is welcome news, analysts said the release of new flats will not have much impact on the resale market as the move caters primarily to first timers.

    Meanwhile, private home prices have also continued to rise in the second quarter of this year, but at a slower pace compared to HDB flats.

    Latest flash estimates from the Urban Redevelopment Authority (URA) showed the price index for private homes rose 1.9 per cent in the second quarter - slightly lower than first quarter's 2.2 per cent increase.

    And analysts see further price moderation down the road as buyers continue to remain cautious.

    Colin Tan, Head of Research and Consultancy at Chesterton Suntec International, said: "At the moment, I think market sentiment has taken a hit because of the Euro debt crisis. The last time, the market suffered that kind of lack of interest was also in April last just when the Greek crisis started.

    "But once the debt problem is resolved, then maybe we can see markets returning back again because other than that, the fundamentals haven't really changed much."

    URA said the rate of price increase has moderated for seven consecutive quarters, since the fourth quarter of 2009.

    - CNA/fa/ac
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    Any comment if KBW will be looking at restrict whole HDB lease out upon MOP since more owner is keeping their HDB for rental which worsen the supply for resale. Afterall HDB flat in the view of most people is public housing not investment tool.

    Just wonder, when pinnacle@duxton upon MOP, what is the percentage of units are rented vs own stay? Selling is like killing the cash cow.

    Any view?

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    Quote Originally Posted by flxcat
    Any comment if KBW will be looking at restrict whole HDB lease out upon MOP since more owner is keeping their HDB for rental which worsen the supply for resale. Afterall HDB flat in the view of most people is public housing not investment tool.

    Just wonder, when pinnacle@duxton upon MOP, what is the percentage of units are rented vs own stay? Selling is like killing the cash cow.

    Any view?
    Disallowing HDB upgraders to rent the flats would be to stab the rental market severely.

    1. Its like taking away HDB from the resale market where many who look to buy cheap would turn to HDB. Similarly, those who look to rent cheap would turn to HDB rental market. What they can afford in rental for a 4 room HDB flat would only qualify them for a 2 bedder private condo at the best. KBW will not commit suicide like that lah!

    2. It will open up mindless opportunity for condo owners looking to rent to jack up their rental prices because they know the demand will be there when so so so many HDB renters will be forced to exodus the HDB market and seek for OCR rental opportunities!

    3. The demand will burst the rental market. Too many people looking to rent and too little supply available. A huge problem to rectify in double quick time.

    4. Too many vacant HDB flats simply because HDB upgraders will then be desperate to sell to minimize losses. Supply exceeds demand. Its the buyers' market and resale prices will plummet. This is create a strange phenomenon where OCR rental market will soar while HDB resale market will drop to who knows where.

    So don't think our dear Mr K will do something like that...

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    Quote Originally Posted by flxcat
    Any comment if KBW will be looking at restrict whole HDB lease out upon MOP since more owner is keeping their HDB for rental which worsen the supply for resale. Afterall HDB flat in the view of most people is public housing not investment tool.

    Just wonder, when pinnacle@duxton upon MOP, what is the percentage of units are rented vs own stay? Selling is like killing the cash cow.

    Any view?
    First know why HDB allow sublet then you will get your answer to your question.


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    Quote Originally Posted by Arcachon
    First know why HDB allow sublet then you will get your answer to your question.

    Thank you for your historical find. This keeps us in perspective of the reason behind the hugely debated HDB rental market. Well the demand for HDB rental will always be there because it forms the lowest tier in the housing rental market in Singapore so never never sell HDB after MOP. Rent it coz the yield is almost guaranteed.

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    Quote Originally Posted by ysyap
    Thank you for your historical find. This keeps us in perspective of the reason behind the hugely debated HDB rental market. Well the demand for HDB rental will always be there because it forms the lowest tier in the housing rental market in Singapore so never never sell HDB after MOP. Rent it coz the yield is almost guaranteed.
    Thanks both of for the insight.

    Just thinking aloud. In order to satisfy demand both public and pte housing supply is gearing up at full speed recently and a slowdown in the FT tap is the govt helping to create the possibility of the mentioned of perfect storms in 2013/14 especially keeping the HDB leasing intact. Indirectly is creating a buying opportunity for those who have missed the boat to buy pte with a caveat informing buyers about the risk of the perfect storms. Interesting hee....

    Assume no change in policy totally agree to hold on to my HDB as the secondary mkt HDB is unlikely to be over supply with more and more owner keeping for rental

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    Quote Originally Posted by flxcat
    Thanks both of for the insight.

    Just thinking aloud. In order to satisfy demand both public and pte housing supply is gearing up at full speed recently and a slowdown in the FT tap is the govt helping to create the possibility of the mentioned of perfect storms in 2013/14 especially keeping the HDB leasing intact. Indirectly is creating a buying opportunity for those who have missed the boat to buy pte with a caveat informing buyers about the risk of the perfect storms. Interesting hee....

    Assume no change in policy totally agree to hold on to my HDB as the secondary mkt HDB is unlikely to be over supply with more and more owner keeping for rental
    Its best cash cow...keep it till u die.....

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    Wan, insightful info! Many owners living in private while owning & renting out HDBs & hogging supply which can be released immediately for occupation. Time for Mr Khaw to set new law to forbid people from owning HDB if they own private?


    Quote Originally Posted by Arcachon
    First know why HDB allow sublet then you will get your answer to your question.

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    The configuration of HDB flats esp the older ones is suited to sub-letting. For example, 4-room flat can have 6 people in the bedrooms comfortably, 2 in each room. Some private condos have small 3rd bedroom, cannot fit in 2 beds. Old 4-room flats also have well-proportioned kitchens.

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    This move will pull down your pte property prices indirectly.

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    Quote Originally Posted by hyenergix
    This move will pull down your pte property prices indirectly.
    Pure speculation.
    Once pte supply has increased say 2013/14, pte rental may drop and rental gap between HDB and Pte may narrow if FT intake still controlled. Policy may change to stop HDB rental and tenant still able to switch to pte tho size will be smaller. This may kill 2 birds with 1 stone. Improve HDB resale supply instead of supply coming in ~8yrs from now, and pte owner can still use the rental to help with instalment. And gradually increase supply to cater for 6.5mil.
    Last hear (without statistical backing) one HDB master room rental is ard $1k n a 3rm HDB flat is ard $1.5k. So over next 3yrs price gap may narrow if pte rental drop due to more supply.
    Well having say that only our dear minister will have all the necessary data on hand to decide what policy is good for the market, all other opinion are pure speculation.

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    Quote Originally Posted by flxcat
    Pure speculation.
    Once pte supply has increased say 2013/14, pte rental may drop and rental gap between HDB and Pte may narrow if FT intake still controlled. Policy may change to stop HDB rental and tenant still able to switch to pte tho size will be smaller. This may kill 2 birds with 1 stone. Improve HDB resale supply instead of supply coming in ~8yrs from now, and pte owner can still use the rental to help with instalment. And gradually increase supply to cater for 6.5mil.
    Last hear (without statistical backing) one HDB master room rental is ard $1k n a 3rm HDB flat is ard $1.5k. So over next 3yrs price gap may narrow if pte rental drop due to more supply.
    Well having say that only our dear minister will have all the necessary data on hand to decide what policy is good for the market, all other opinion are pure speculation.
    HDB rental will never stop..
    Lot of people depend on HDB rental be it subletting or full unit.. Govt can't risk such a policy move..

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    Quote Originally Posted by flxcat
    Pure speculation.
    Once pte supply has increased say 2013/14, pte rental may drop and rental gap between HDB and Pte may narrow if FT intake still controlled. Policy may change to stop HDB rental and tenant still able to switch to pte tho size will be smaller. This may kill 2 birds with 1 stone. Improve HDB resale supply instead of supply coming in ~8yrs from now, and pte owner can still use the rental to help with instalment. And gradually increase supply to cater for 6.5mil.
    Last hear (without statistical backing) one HDB master room rental is ard $1k n a 3rm HDB flat is ard $1.5k. So over next 3yrs price gap may narrow if pte rental drop due to more supply.
    Well having say that only our dear minister will have all the necessary data on hand to decide what policy is good for the market, all other opinion are pure speculation.
    Even if no amendment to HDB rental policy, pte supply increment in 2013/14 will be met with similar if not more increment in the the public supply too.

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    Quote Originally Posted by flxcat
    Pure speculation.
    Once pte supply has increased say 2013/14, pte rental may drop and rental gap between HDB and Pte may narrow if FT intake still controlled. Policy may change to stop HDB rental and tenant still able to switch to pte tho size will be smaller. This may kill 2 birds with 1 stone. Improve HDB resale supply instead of supply coming in ~8yrs from now, and pte owner can still use the rental to help with instalment. And gradually increase supply to cater for 6.5mil.
    Last hear (without statistical backing) one HDB master room rental is ard $1k n a 3rm HDB flat is ard $1.5k. So over next 3yrs price gap may narrow if pte rental drop due to more supply.
    Well having say that only our dear minister will have all the necessary data on hand to decide what policy is good for the market, all other opinion are pure speculation.
    Many pte property owners are holding on to HDB, and many are also planning to move into pte property and rent out HDB. Banning HDB ownership will unleash a lot of HDB units into the market suddenly, depress the pte property buying power of HDB upgraders, and cause panic in the market.

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    Quote Originally Posted by hyenergix
    Many pte property owners are holding on to HDB, and many are also planning to move into pte property and rent out HDB. Banning HDB ownership will unleash a lot of HDB units into the market suddenly, depress the pte property buying power of HDB upgraders, and cause panic in the market.
    This could just be the scared cow to kill in order to alleviate COV . But it will come at a huge political price. If done properly, it will not cause mkt panic.

    1st HDB should discontinue the policy of banning concurrent pte pty ownership except for PR. 2nd they should instead enact a policy requiring pte pty owner to stay in HDB to retain ownership of their public housing unit. Owner can rent out their pte pty but must stay in their HDB. 3rd HDB should shorten MOP to 2-3 years. These measures could help push more resale units into the mkt thus reducing COV while letting more savy HDB owner invests in pte pty.......
    Last edited by avo7007; 04-07-11 at 09:01.

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    isn't HDB supply what MND trying to tackle? Just disallow HDB ownership for private prop owners & we will get instant ready to live in supply!
    MND should just focus on solving HDB problem & stop mandling in private market! get ride of SSD as it is a sickening rule with private prop price increase now even much lower than HDB prices!


    Quote Originally Posted by avo7007
    This could just be the scared cow to kill in order to alleviate COV . But it will come at a huge political price. If done properly, it will not cause mkt panic.

    1st HDB should discontinue the policy of banning concurrent pte pty ownership except for PR. 2nd they should instead enact a policy requiring pte pty owner to stay in HDB to retain ownership of their public housing unit. Owner can rent out their pte pty but must stay in their HDB. 3rd HDB should shorten MOP to 2-3 years. These measures could help push more resale units into the mkt thus reducing COV while letting more savy HDB owner invests in pte pty.......

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    Quote Originally Posted by teddybear
    isn't HDB supply what MND trying to tackle? Just disallow HDB ownership for private prop owners & we will get instant ready to live in supply!
    MND should just focus on solving HDB problem & stop mandling in private market! get ride of SSD as it is a sickening rule with private prop price increase now even much lower than HDB prices!
    They will try as much not to meddle with private housing matters but this part of the market is still within the care of MND, unfortunately...

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    Quote Originally Posted by ysyap
    Even if no amendment to HDB rental policy, pte supply increment in 2013/14 will be met with similar if not more increment in the the public supply too.
    Would like to offer my alternate view on public supply.
    Come 2013/14, public supply will not increase drastically if the flat is based on recent launch due to 5yrs Mop. Price pressure on resales will still be there with more pte owner keeping their HDB flat for rental gain. Hee I am equally quietly too

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    Quote Originally Posted by teddybear
    MND should just focus on solving HDB problem & stop mandling in private market! get ride of SSD as it is a sickening rule with private prop price increase now even much lower than HDB prices!
    ya la....HDB rise faster den OCR condos....how can tat be!?!?!

    govt supposedly got more control over HDB prices den condos....lol

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    Quote Originally Posted by ysyap
    They will try as much not to meddle with private housing matters but this part of the market is still within the care of MND, unfortunately...
    i tink the very first step is to scrap all future DBSS land for sale

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    Quote Originally Posted by flxcat
    Would like to offer my alternate view on public supply.
    Come 2013/14, public supply will not increase drastically if the flat is based on recent launch due to 5yrs Mop. Price pressure on resales will still be there with more pte owner keeping their HDB flat for rental gain. Hee I am equally quietly too
    3rm old old hdb flat fetch 1.8-even 2.5k, triple cfm double digit rental yield for them (5yrs ago, HDB 3rm flat 150-180k only)

    even based on 300k, 1.8k rental gives them 7% yield

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    Quote Originally Posted by hyenergix
    Many pte property owners are holding on to HDB, and many are also planning to move into pte property and rent out HDB. Banning HDB ownership will unleash a lot of HDB units into the market suddenly, depress the pte property buying power of HDB upgraders, and cause panic in the market.
    You indeed pin point the issue here. Why are pte owner jogging to their HDB flat which created the pressure on HDB supply hence pushes price upwards?
    All the while I got the impression from govt upgrade is to sell urcurrent flat and move to bigger and/or better flat for better life . Maybe I got the wrong idea.
    As for pte price dipping,with rental supply from public competing the pie, not able to rent out will in crease fire sales by 13/14, pte price may still dip.

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    Quote Originally Posted by flxcat
    As for pte price dipping,with rental supply from public competing the pie, not able to rent out will in crease fire sales by 13/14, pte price may still dip.
    not so simple....HDb oredi relax the subletting of whole unit few yrs ago oredi....

    last time must stay in HDB flat if they own pte ppty concurrently, but bcoz govt wana open foreign workers floodgate, so they relax the rules.....they aso noe got many lock 1rm illegal subletting cases, but they aso close one eye as long nobody complains...but last 2yrs they goto clamp down illegal subletting due to many many complaints lor....tat results in a drop in HDb rental supply ....perhaps 5-10% at least? hehe

    i m ok for locals to benefit la....the worse is to allow PR to do the same!

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    Quote Originally Posted by hyenergix
    This move will pull down your pte property prices indirectly.
    Fundamentally the approach is flawed so if govt continue to address the need on demand and keep building more public houses with an artificial supply crunch due to owner keeping their HDB cash cow for rental gain. One day the rental mkt will be flooded with lots of supply from both public n pte housing. Price of public or pte will be affected. Of course unless it is part of the plan of the bigger goal to provide affordable rental for the guture 6.5mil. Then I rest my view

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    Quote Originally Posted by devilplate
    3rm old old hdb flat fetch 1.8-even 2.5k, triple cfm double digit rental yield for them (5yrs ago, HDB 3rm flat 150-180k only)

    even based on 300k, 1.8k rental gives them 7% yield
    With such yield and low maintenance fee. The choice is obvious and more people will continue this game and move to pte. A clear sign was the article written by a journalist asking to do away with MOP so she can rent out her whole flat to pay for a more centrally located unit. What is going on...
    Well key is to keep the HDB cashcow as per your advice, if opportunity comes can also join in the fun if you can't beat it ha ha

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    Quote Originally Posted by flxcat
    Fundamentally the approach is flawed so if govt continue to address the need on demand and keep building more public houses with an artificial supply crunch due to owner keeping their HDB cash cow for rental gain. One day the rental mkt will be flooded with lots of supply from both public n pte housing. Price of public or pte will be affected. Of course unless it is part of the plan of the bigger goal to provide affordable rental for the guture 6.5mil. Then I rest my view
    how about those holding many many multiple units? oversupply story always there

    but imagine HDB restricts/tighten HDB subletting, rental will shoot up immediately as we oredi noe old old 3rm flat fetches 2k on average now which is oredi super high!

    population cfm rise one la....govt build so many MRT for? so so many lines......last time 3mil can survive wif just EW and NS line.....now got NEL, DTL1,2,3, circe line, TSL, ERL....

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    Quote Originally Posted by flxcat
    With such yield and low maintenance fee. The choice is obvious and more people will continue this game and move to pte. A clear sign was the article written by a journalist asking to do away with MOP so she can rent out her whole flat to pay for a more centrally located unit. What is going on...
    Well key is to keep the HDB cashcow as per your advice, if opportunity comes can also join in the fun if you can't beat it ha ha
    dunwan la....buy liao goto stay HDB for 5yrs regardless got grant anot....damn bohua one lor....last time 3yrs MOP only without grant....somemore goto sell all pte ppty....i leave the priviledge for others

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    Quote Originally Posted by devilplate
    not so simple....HDb oredi relax the subletting of whole unit few yrs ago oredi....

    last time must stay in HDB flat if they own pte ppty concurrently, but bcoz govt wana open foreign workers floodgate, so they relax the rules.....they aso noe got many lock 1rm illegal subletting cases, but they aso close one eye as long nobody complains...but last 2yrs they goto clamp down illegal subletting due to many many complaints lor....tat results in a drop in HDb rental supply ....perhaps 5-10% at least? hehe

    i m ok for locals to benefit la....the worse is to allow PR to do the same!
    Let's not blame them. There is an opportunity why not exploit it and afterallnthey are given the rights to do so after they fulfill the MOP.

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    Quote Originally Posted by devilplate
    how about those holding many many multiple units? oversupply story always there

    but imagine HDB restricts/tighten HDB subletting, rental will shoot up immediately as we oredi noe old old 3rm flat fetches 2k on average now which is oredi super high!

    population cfm rise one la....govt build so many MRT for? so so many lines......last time 3mil can survive wif just EW and NS line.....now got NEL, DTL1,2,3, circe line, TSL, ERL....
    True.
    Anyway there is no way the change of policy can implement immediately as there are on going lease contract. At least adv notice of 2 to3yrs for those who just entered a lease contract. So with the onset of pte supply 13/14 will be able to absorb and level impact of shortage. Mentioned inearlier post,only govt have all the data to shape what is best for the nation. Here is wild guessing to kill time only.

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    On 1 hand they are in control of HDB flats via MND (they can control supply via building HDB flats and they can control demand via rules and regulations they have absolute control in changing) and they promise to solve the complaint about run-away HDB flats prices. On the other hand the HDB flats prices are running away much faster than private properties which is slowing down by so much vs the increasing by so much for the HDB flats' prices? Either they are incompentent or they are not doing what they said they want to do! They can slap 4yrs 16% SSD on private properties and they can't do the same for HDB flats via simiar draconian measures? Simple lah, let me give them some suggestions:
    1) Nobody is allowed to simultaneous own HDB flat and private properties. (They can either keep private or keep HDB).
    2) 10 years MOP.
    3) HDB flats for own stay only, cannot rent out!

    Quote Originally Posted by devilplate
    ya la....HDB rise faster den OCR condos....how can tat be!?!?!

    govt supposedly got more control over HDB prices den condos....lol

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