While Housing Development Board (HDB) flat sellers are laughing all the way to the bank this year, first-time homeowners and singles trying to get a piece of the HDB resale market are furious.
These buyers are finding resale HDB flats too expensive and many are now deciding to postpone their purchase or even their marriage.
HDB data shows that the resale price index (RPI) has continued to climb higher and higher, posting a record 145.2 points for the third quarter of this year, a growth of 3.6 percent over the quarter. previous.
Analysts say this is due to increased demand, both from Singaporeans and permanent residents, and a lack of supply in the market, prompting HDB to increase the supply of its Build to Order (BTO) flats. from 8,000 to 9,000 units.
“This is obviously the result of the increased demand for second-hand apartments in recent months,” says Mohamed Ismail, CEO of PropNex, also referring to the 11,649 second-hand transactions registered in the third quarter.
This is 14.9 percent more than in the second quarter.
Other young couples, like Luqman Hakim Abdul Khir and his wife, have decided to rent, continue renting? due to high box valuations (VOCs).
In fact, analysts note that VOCs on flat rates continued to increase in the third quarter by an astonishing 300 percent.
“Not only has there been a significant increase in the number of transactions, but the overvaluation of cash has also skyrocketed across all types of plans,” says Mohamed Ismail.
According to PropNex, the overall median VOC for Q3 is $12,000, an increase of $9,000 compared to Q2’s $3,000 figure.
PropNex also notes that 79 percent of homes sold in the third quarter traded above valuation, up from 57 percent in the second quarter.
Blessings for HDB vendors, bane for young couples/singles
The exuberance in the HDB market has been a boon for HDB apartment owners, with many taking the opportunity to upgrade to a condo in the second quarter, when prices between privately owned and HDB resale apartments were at their peak. lower.
On average, these HDB improvements made at least $200,000 in profit when selling their apartments, resulting in a spike in demand for mass-market condos like the Caspian and Alexis earlier this year.
As recently as November, an Indonesian permanent resident made headlines when he allegedly paid S$653,000 for a four-bedroom HDB flat in Queenstown.
The price he paid was about two and a half times the $262,000 the seller and his wife paid a few years ago.
This equates to $674 per square foot, beating the previous record of $609 per square foot achieved in January of last year, by about 10 percent.
However, for young couples and singles, rising resale apartment prices are causing many to reassess their cash flow position.
Abdul Khir and his wife, for example, had completely given up on house hunting, having seen more than 30 three-bedroom resale apartments in Woodlands, Sembawang, Yishun, Ang Mo Kio, Toa Payoh, Hougang , Serangoon, Ubi and Bukit Batok.
“We couldn’t resell a condo because the agents were asking $2,000 in agent fees with a minimum COV of $5,000,” says the 27-year-old technical specialist.
Normally, when a VOC is high, buyers have the option of applying for apartments under the Built to Order (BTO) program or the Design Build & Sell Scheme (DBSS), where they do not have to put up as much cash for their purchase.
However, buyers will have to wait three to four years before they can move.
Abdul Khir did not apply for the BTO or DBSS floors because he could not wait that long.
However, he tried through the voting system twice under the Sales of Balance Flat (SBF) scheme, but the price was not met.
The apartment she successfully voted for was a three-bedroom in Queenstown priced at $250,000, well beyond her HDB loan eligibility.
“I am now applying for a rental apartment in the Bedok and Tampines area,” he says resignedly.
A call to rationality
Netizens who feel they have been locked out of the HDB market have taken up arms, blaming permanent residents for “spoiling the market.”
However, analysts say Singaporeans should think rationally, as the price of the four-bedroom resale flat in Queenstown will not set a precedent for similar transactions in the area.
Based on data pulled from the HDB website, the median price for four-bedroom resale apartments is averaging $479,000 and will remain within this range.
“I take this as a one-time sale. We haven’t seen prices in that area go up that much. The only reason it sold at that price is that it was very nicely renovated with high floors. Buyers are willing for that kind of deal.” price”. If their house is not so well renovated, they won’t be able to get that kind of price,” says Mohamed Ismail.
“This was a one-off transaction that doesn’t reflect the broader market. Most of HDB’s resale deals hover around appraisal prices. Appraisers generally don’t price one-off transactions of this type. They would look at transaction prices for Middle range”. says Donald Han, managing director of Cushman & Wakefield Singapore.
Also, analysts disagree that public housing has become less affordable as HDB offers options for all income groups.
“I don’t agree that they can’t pay as HDB offers other alternatives like BTO and DBSS. People who can’t pay should plan ahead to buy BTO and DBSS,” says Mohamed Ismail.
without intervention
According to PropNex, the HDB resale market is likely to see more transactions this year as there is an ongoing supply of resale flats that could generate 40,000 transactions this year alone.
He adds that if the economy recovers well, this could lead to higher demand in the HDB resale market because more Singaporeans may have well-paying or stable jobs, or if there are more permanent residents in the country. market.
This means that resale apartment prices will rise even further, something Singaporeans will surely complain about.
However, analysts say, the HDB market is unlikely to introduce cooling measures, similar to those implemented by the government in the private property market in September.
“It’s not a good thing for HDB to interfere with market forces. The fact is that, in a resale market, it is the buyers and sellers who determine the price,” says Mohamed Ismail.
“HDB has the difficult task of matching supply with demand, as it typically takes a two-year lead time to build. Forecasting effective demand is not easy: there is no foolproof method for predicting future demand,” he says. They have.
For prospective homeowners unable to afford HDB flats, analysts advise taking Abdul Khir’s cue: rent.
“If affordability becomes an issue, then rent. What goes up will go down, just like in any market cycle. Sometimes the best decision is to delay buying rather than overcommit and get caught up in payments for a large mortgage installment. Han says.
What about singles who can only buy on the resale market?
“Those who are doing well should buy ‘Mickey Mouse’ condos. Others should consider getting married,” says Mohamed Ismail matter-of-factly.
Advance planning: the work of the government or the Singaporeans?
MP Dr Muhammad Faisal, an assistant professor of real estate at the National University of Singapore, recently squarely blamed young couples who were unable to get an apartment for failing to plan ahead.
But can you really plan for matters of the heart?
Furthermore, it is the government’s liberal immigration policy that has contributed to some extent to the increased demand for HDB second-hand flats from permanent residents.
Potential owners are divided on this issue and some say they agree, but the onus remains with HDB.
“I agree that young couples should plan ahead, but back then, how will we know that foreigners will be flocking to Singapore three years ago? I think HDB should work closely with the Home Office on the number of immigrants who have been granted permanent residence to ensure that there is adequate supply in both the primary and resale markets,” says Abdul Khir.
One thing, however, remains true.
The issues of public housing affordability and the government’s liberal immigration policy is a hotly debated topic this year.