Published September 10, 2008

HDB upgraders come out to play in quiet market

Their share of private home purchases rises, that of foreigners falls


(SINGAPORE) When the property market is hot, foreign buyers are in action. When it quietens, HDB upgraders take the spotlight.

HDB upgraders' share of private home purchases rose to 34 per cent in Q2 2008 from just 28 per cent share in Q1 2008. This is the highest quarterly figure in at least three years, according to DTZ's analysis of caveats captured by Urban Redevelopment Authority's Realis system.

The number of private homes bought by those with HDB addresses also increased 35 per cent quarter-on-quarter to 1,199, outpacing a 3 per cent increase over the same period in the number of private homes picked up by those with private addresses.

In absolute terms in Q2, HDB upgraders picked up the most number of units in The Verve in the Balestier area - 36 - followed by 32 at Stadia at Yio Chu Kang Road in the primary market (from developers). Proportionately, The Quartz was the most popular with 86 per cent of its buyers being upgraders.

Developers are targeting this segment. 'Developers have been pricing launches at more realistic prices and some developers have arranged for banks to offer attractive mortgage schemes for buyers,' said DTZ executive director Ong Choon Fah.

Meanwhile, the buyers of 97 of the 169 primary market transactions of private apartments/condos below 1,000 sq ft and costing at most $1,000 psf in Q2 had HDB addresses. 'This could be partly due to singles who are staying with parents in HDB flats purchasing for either investment or owner-occupation,' DTZ said.

HDB upgraders have also been more active in Q2 in the secondary market, where prices have dropped by as much as 10-12 per cent in Q2 2008 over Q1 2008 in some instances, Mrs Ong said.

The number of private apartments/condos changing hands in the subsale market bought by those with HDB addresses increased 52 per cent Q-on-Q to 152 deals in Q2 2008.

'HDB upgraders can more easily upgrade to private properties as HDB resale flat prices are still rising, while prices for some private properties have fallen,' DTZ said.

The median price for private apartments/condos picked up by HDB upgraders in the subsale market declined 8 per cent Q-on-Q to $871 psf in Q2 this year.

Subsales - often seen as a reflection of speculative activity - refer to secondary market deals in projects that have yet to receive their Certificates of Statutory Completion.

The total number of subsales for non-landed private homes rose 25 per cent quarter-on-quarter to 493 in Q2 2008. They made up about 17 per cent share of transactions of non-landed private homes in Q2.

'This is high considering that there's very little speculation now compared with last year. Rather, the subsale activity in Q2 seems to have been fuelled by those who'd bought units in the past few years unloading their investments as their units reach or near completion,' DTZ said.

The median subsale price (of non-landed private homes) continued to fall by 5 per cent quarter-on-quarter to $1,052 psf in Q2 after sliding 8 per cent in Q1 and 4 per cent in Q4 2007. 'This was due to fewer high-end units being transacted in the subsale market as well as slight price corrections. Owners are now more realistic in asking prices,' DTZ said.

Median subsale prices of Citylights and The Sail @ Marina Bay were $1,100 psf and $1,810 psf respectively in Q2 2008, down about 2 and 14 per cent respectively from Q1.

Meanwhile, the number of private homes acquired by foreigners (including permanent residents) rose 3 per cent Q-on-Q to 913 in Q2. Foreigners bought 26 per cent of total private homes in the quarter, down slightly from a 28 per cent share in Q1.

DTZ senior director Chua Chor Hoon observed that 'when private property prices are high, there are more foreigners as they are attracted by the growth story. When private property prices are low, there are more purchasers with HDB addresses as it's a good opportunity to upgrade at more affordable levels.

'The price gap between HDB resale flats and private properties is also narrower, so the outlay is smaller for HDB upgraders who can use the sale proceeds from their HDB flats to pay off part of the private property purchase price.'