More new HDB flats as resale prices climb

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http://www.businesstimes.com.sg/sub/...13540,00.html?

Published October 2, 2009

More new HDB flats as resale prices climb

HDB resale prices are now at their highest level ever

By UMA SHANKARI


(SINGAPORE) The Housing and Development Board (HDB) is stepping up its supply of new flats to meet increased demand for public housing. The news came as flash estimates showed that prices of resale HDB flats rose 3.2 per cent in Q3.

The price increase comes after a 1.4 per cent rebound in Q2 following a marginal drop of 0.8 per cent in Q1. This means HDB resale prices are now at their highest level ever. The previous two peaks were in Q4 2008 and Q4 1996.

Analysts attributed the growth to the greater demand for resale flats in recent months.

Observed Eugene Lim, associate director for ERA Asia Pacific: 'The surge in demand for HDB resale flats and the consequent rise in prices have been fuelled by a mix of upgraders, downgraders and the increasing population of permanent residents.'

There is also a 'trickle-down' effect from the growth in private property prices, which climbed 15.9 per cent in Q3.

But plans to boost the supply of new flats could mean that the price increase in the resale price index could see some moderation in future, said Minister for National Development Mah Bow Tan, who announced HDB's plans yesterday.

With the good response to recent build-to-order (BTO) launches, HDB will increase its supply of BTO flats from the 8,000 units previously planned for this year to 9,000 units instead. HDB launched 3,945 BTO flats from Jan to Aug 2009.

Now, potential home-buyers can look forward to another 5,000 new BTO flats over the next three months in various locations. This translates to an average of 1,500 new flats monthly, with at least two BTO project launches each month.

In addition, HDB also launched an exercise yesterday to sell leftover units from previous sales exercises. Under this scheme, 2,132 'balance flats' will be offered for sale. HDB expects these flats to be especially popular as most of them are either completed or close to completion, and a large chunk of them are in mature estates.

The new supply could take some pressure off the resale market, market watchers said.

'The grouses of many first-timers will be soothed as the introduction of these flats should, at least temporarily, ease the demand of resale flats,' said PropNex chief executive Mohamed Ismail.

Mr Ismail expects cash-over-valuation (COV) levels to dip slightly due to the immediate addition of the 2,132 balance flats to the market, and feels that this will actually encourage sustainable long-term growth of the HDB resale price index.

However, the increase in the supply of new HDB flats under the BTO scheme may not have the immediate effect of slowing down the price increase of resale flats because these flats would not be available immediately, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

Transaction volumes and resale prices are expected to continue climbing in Q4.

ERA, which said it has a 45 per cent market share of the HDB resale market, observed that its transaction volume continued to increase by some 10 per cent in Q3, after surging by 52 per cent in Q2 over Q1.

'With the current market momentum likely to follow through till year-end, we are likely to see a similar price increase of 2-3 per cent for the last quarter.

For the whole year, HDB resale prices would probably have increased by 7-8 per cent,' said ERA's Mr Lim.

Mr Mak likewise said that for the whole of 2009, average HDB resale flat prices could increase by 5-9 per cent year-on-year as demand is still expected to remain healthy.

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October 2, 2009 Friday

HDB ramping up supply of flats

7,000 units will be released over the next three months

By Jessica Cheam


THE Housing Board will unleash about 7,000 flats onto the market over the next three months in an aggressive step to tackle rising concerns over supply and affordability.

The 7,000 homes exceed the 6,450 units released for first nine months of this year.

They also include 2,132 units in 24 estates across the island that have just been finished, or are near completion. They were launched yesterday in what was the Housing Board's single largest sales exercise in recent times.

National Development Minister Mah Bow Tan announced the move yesterday, on a day when new figures showed that HDB resale flat prices rose 3.2 per cent in the third quarter over the second quarter to reach another record high.

The price surge follows an increase of 1.4 per cent in the second quarter over the first three months of the year.

Mr Mah told the media yesterday: 'I want to assure everybody that there are sufficient flats available across the board for every budget.'

The high demand for housing, reflected in the price rises in yesterday's flash estimates, is likely behind HDB's move to lift housing stock.

Industry analysts say the steps to boost supply should have an impact on resale flat prices.

'COV levels will likely dip due to the immediate addition of these flats,' said PropNex chief Mohamed Ismail.

COV refers to 'cash over valuation' - the cash a buyer pays over and above a flat's valuation.

But Ngee Ann Polytechnic real estate lecturer Nicholas Mak says a dip in COV levels is unlikely to be sustained if the buying momentum continues.

'It will slow down the pace of price increase only temporarily. In the past three years, an average of about 3,200 resale flats were transacted each quarter, which is about 50per cent more than the 2,132 flats offered for sale,' he said.

HDB's move to increase supply comes amid growing discontent among buyers priced out of the market by high demand and limited supply.

HDB resale prices have risen by a hefty 31.2 per cent in the past two years.

An online petition to Mr Mah started circulating last month to collect 1,000 signatures calling for lower flat valuations and more affordable homes.

As of last night, it had received 1,079 names.

The minister added yesterday: 'The Government has made a commitment to provide our people with quality, affordable housing.

'This is a commitment that we will keep... and if there is a necessity, we will step up the building programme even further.'

The new flats earmarked for the rest of the year are being released under two main schemes.

Flat supply under the build-to-order (BTO) scheme for the year will be ramped up to 9,000 from about 8,000 announced previously.

About 5,000 units under the BTO programme will be launched for sale in Punggol, Sengkang, Jurong West, Sembawang, Bukit Panjang and Dawson.

The highly-anticipated 1,700 flats by award-winning architects at Dawson estate in Queenstown, which were to have been launched last month, will now be released in December, said HDB.

The Housing Board also unveiled a new scheme called Sales of Balance Flats (SBF), which will replace the existing balloting, quarterly sales and half-yearly sales exercises.

It offers flats from earlier BTO exercises, the Selective En-bloc Redevelopment Scheme and repurchased flats and will be launched as and when sufficient flats accumulate, said HDB.

The aim is to simplify the flat application process and provide buyers with a wider choice of flats across a range of locations in one exercise.

The 2,132 flats launched yesterday fall under this new scheme. They range from studio apartments to executive flats, priced from $97,000 to $643,000.

Analysts are expecting a rush, especially as the prices of three-, four-, and five-roomers are about half of their respective resale prices, noted Mr Mak.

Home buyer Lynn Koh, 28, is one person preparing to apply.

'COV has risen in Whampoa, where my parents live, so I hope to be successful,' she said.

As of 5pm yesterday, HDB had received 2,038 applications for the 2,132 flats. Applications close on Oct 14.

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