TheHouseSale.Info

The one stop portal for all your Singapore property info

Win-win scenario in HDB resale market

Win-win scenario in HDB resale market

Housing and Development Board (HDB) flats house over 80 per cent of Singapore's population and, more often than not, are the first choice of housing for young families. A perennial question among this group of buyers has always been: Build-To-Order (BTO) flats versus resale flats, which is the better option?

While BTO flats are cheaper, they come with a longer waiting time of around three years before buyers can move in. Resale flats are pricier, but the sale process takes a shorter time. Buyers' choice would therefore depend heavily on their individual circumstances. However, with stabilising resale prices and increased Central Provident Fund (CPF) Housing Grants, resale flats have become an increasingly attractive option lately.

In 2016, resale HDB flat prices were almost unchanged, dipping by only 0.1 per cent. Over the same period, the number of HDB resale transactions increased 8 per cent to 20,813 units. Among these transactions, there were 20 units that changed hands above the S$1 million mark. Evidently, resale flats are popular choices among buyers.

Big price drops unlikely

There are several reasons why the number of buyers is on the rise. A key one is that prices have fallen from their peak in 2013 and have been stable since mid-2015. It is extremely unlikely that HDB resale prices will register huge drops in the near future, as buying activity is already picking up at current price levels. Given the limited downside risk, buyers can be more confident in their purchase.

Also, HDB resale transactional information is available publicly. Buyers no longer need to be afraid of getting a bad deal by "overpaying" a premium above the flat's valuation. They can easily check against HDB's database, which is updated on a daily basis, prior to any negotiations. Armed with such information, buyers now have a firm basis on which to centre discussions.

Recently, Finance Minister Heng Swee Keat announced during Budget 2017 that the amount of grants available to eligible first-timer buyers would be increased with immediate effect. Previously, the Family Grant was S$30,000, but has since been increased to S$50,000 for first timers buying a four-room or smaller resale HDB flat and S$40,000 for those buying a five-room or larger resale flat. Together with the Additional CPF Housing Grant and Proximity Housing Grant, the total amount a first timer is eligible for is now a maximum of S$110,000. Effectively, this makes resale flats more affordable for buyers. This is expected to swing more buyers to the resale market, especially those still deciding between a BTO flat and resale flat, as they capitalise on the higher grant amounts.

Hence, the current market is a favourable one for buyers. Now would be a good time for buyers to consider committing to a purchase, especially if they have been sitting on it for some time.

Should I sell my flat now?

On the other hand, some sellers might have been reluctant to put their unit on the market as prices are lower than the peak some three-and-a-half years ago. However, current market conditions are still favourable for sellers.

For one, HDB resale prices were on the rise from 2005 to 2013, increasing by a total of 104 per cent over 31 quarters. In comparison, the recent slide in prices was only 9.9 per cent over 14 quarters. Most sellers would still be making a healthy profit even if they were to sell today, especially if their purchase was a BTO flat.

For sellers who are looking to upgrade to a private residence, now is an opportune time to make the switch. Private residential prices have been on a decline; and there is abundant supply in the market. Upgraders would be spoilt for choice as developers continue to keep prices attractive in order to woo more buyers.

Of course, there are concerns among sellers that prices would increase after they have sold their unit. However, this is not very likely to happen. As National Development Minister Lawrence Wong said, the government expects HDB resale prices to remain stable due to the healthy supply of resale flats.

It is worth noting that the Mortgage Servicing Ratio (MSR) compels buyers to keep their monthly mortgage repayments to 30 per cent of their household income, thereby capping the maximum loan amount available to them. Any price increase will therefore be tied to income growth. Given that Singapore's economic growth is forecasted to be in the region of one to three per cent in 2017, any price increase would be a gradual process, instead of a sudden spike.

Also, with the increased grants, there will be more buyers looking to purchase resale flats. Selling may likely be an easier and faster process now. However, sellers should be cautioned against rashly increasing their asking prices for their flats in view of the higher grant amounts, especially if the change is not backed by transaction data. HDB flats are very similar products and buyers can easily switch to sellers who did not raise prices.

No perfect time

Moving forward, we are not expecting huge changes to the HDB resale market. Transactions will probably receive a boost from the higher grant amounts. We are expecting a 10 per cent increase in resale volume this year over 2016, in the region of 22,000 to 23,000 units. Price wise, we might be seeing a modest uptick this year, in the range of 0.1 per cent to 0.5 per cent for the full year.

Unlike in the private residential market, where emphasis is placed on timing for investment purposes, the HDB resale market is much less speculative. Thus, our advice to any prospective buyer or seller is to focus on need instead. There is simply no perfect or best timing to enter or exit the HDB resale market.

Adapted from: The Business Times, 30 March 2017

Views: 58

Add a Comment

You need to be a member of TheHouseSale.Info to add comments!

Join TheHouseSale.Info

Badge

Loading…

Notes

Hdb to Pte avoid ABSD issue

Created by Geoffery Ho Feb 14, 2019 at 10:18pm. Last updated by Geoffery Ho Feb 14.

The Troubling Implications of Owning a 40-Year old HDB Flat

Created by Geoffery Ho Feb 14, 2019 at 9:21pm. Last updated by Geoffery Ho Feb 14.

HDB Industrial New Policies - 1st June 2015

Created by Geoffery Ho Jul 22, 2015 at 12:53pm. Last updated by Geoffery Ho Jul 22, 2015.

What you should know about ECs

Created by Geoffery Ho Oct 1, 2014 at 11:34am. Last updated by Geoffery Ho Oct 1, 2014.

8 Things You Should Know When Using CPF for Property

Created by Geoffery Ho Aug 19, 2014 at 9:32pm. Last updated by Geoffery Ho Aug 19, 2014.

Eligibility to Buy PTE or HDB

Created by Geoffery Ho Jun 6, 2011 at 7:03pm. Last updated by Geoffery Ho Aug 18, 2014.

Can Private Property Owners (Local or Overseas) buy HDB Flat (New or Resale)?

Created by Geoffery Ho Jun 3, 2014 at 9:21pm. Last updated by Geoffery Ho Jun 3, 2014.

CPF property rules: 4 things you may not know

Created by Geoffery Ho Aug 2, 2009 at 11:15pm. Last updated by Geoffery Ho May 8, 2014.

Thinking Of A Career With Us?

Created by Geoffery Ho Jun 29, 2009 at 10:54pm. Last updated by Geoffery Ho May 7, 2014.

HDB & PTE : Online e-Services & Utilities Application

Created by Geoffery Ho Oct 21, 2009 at 11:53pm. Last updated by Geoffery Ho Apr 13, 2014.

Progessive vs Deferrment Payment Charts

Created by Geoffery Ho Feb 8, 2014 at 1:38am. Last updated by Geoffery Ho Feb 8, 2014.

Can You Trust Your Property Agent in Singapore? Take these 5 Steps to Confidence!

Created by Geoffery Ho Nov 11, 2013 at 11:31pm. Last updated by Geoffery Ho Nov 11, 2013.

Commission GuideLines

Created by Geoffery Ho Sep 21, 2013 at 10:58pm. Last updated by Geoffery Ho Sep 21, 2013.

Total Debt Servicing Ratio (TDSR) and How It Affects Your Loans

Created by Geoffery Ho Aug 26, 2013 at 11:27pm. Last updated by Geoffery Ho Sep 14, 2013.

Banks' Home Loan Comparison & Mortgage Calculators

Created by Geoffery Ho Oct 14, 2008 at 1:05pm. Last updated by Geoffery Ho Apr 16, 2013.

Financing A Commercial Property

Created by Geoffery Ho Apr 16, 2013 at 12:12am. Last updated by Geoffery Ho Apr 16, 2013.

URA Guidelines On Retail Unit Size & Corridor Width

Created by Geoffery Ho Apr 8, 2013 at 12:25am. Last updated by Geoffery Ho Apr 8, 2013.

THE HOUSING LOAN INFO & TIPS

Created by Geoffery Ho Sep 18, 2008 at 1:26am. Last updated by Geoffery Ho Mar 31, 2013.

Type Of Property & EC in Singapore

Created by Geoffery Ho Mar 11, 2013 at 10:00pm. Last updated by Geoffery Ho Mar 11, 2013.

Forum

Draft Master Plan - West Economy

Started by Geoffery Ho in Information May 7, 2014.

CPF FOR PURCHASE OF HDB FLATS LESS THAN 60 YEARS 2 Replies

Started by Geoffery Ho in Information. Last reply by Geoffery Ho Apr 13, 2014.

How Singapore’s Latest HDB Cooling Measures Affect You 1 Reply

Started by Geoffery Ho in Information. Last reply by Geoffery Ho Oct 8, 2013.

HDB flat sellers left in tight spot by new rules

Started by Geoffery Ho in Question Aug 29, 2013.

Watch the wording in 'offer to purchase' letter

Started by Geoffery Ho in Others Aug 14, 2013.

Why Singapore's property continues to rise...

Started by Geoffery Ho in Question Apr 16, 2013.

3 SMARTER WAYS TO SAVE INTEREST ON MORTGAGE

Started by Geoffery Ho in Information Apr 16, 2013.

Feng Shui Tips to Revitalize Your Home 2 Replies

Started by Geoffery Ho in Leisure. Last reply by Geoffery Ho Sep 29, 2012.

3 Lessons From the Sky Habitat Sale

Started by Varchel in Information Sep 17, 2012.

FAQs 3 Replies

Started by Geoffery Ho in Question. Last reply by Geoffery Ho Jul 12, 2012.

99-Year vs Freehold

Started by Geoffery Ho in Information. Last reply by Geoffery Ho Sep 21, 2010.

THIS WEEK'S TOPIC: Keeping speculators at bay 8 Replies

Started by Geoffery Ho in Question. Last reply by Geoffery Ho Sep 14, 2010.

Potential Growth Areas (Residential) - Where to buy?

Started by Geoffery Ho in Others Mar 23, 2010.

How to avoid conflict in real estate transaction 2 Replies

Started by Geoffery Ho in Others. Last reply by Geoffery Ho Nov 9, 2009.

© 2019   Created by Geoffery Ho.   Powered by

Badges  |  Report an Issue  |  Terms of Service