Swiroset.com

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 HDB resale flats too expensive and many now decide to put off 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 high of 145.2 points for the third quarter of this year, a growth of 3.6 percent from 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 supply of its Build to Order (BTO) flats. from 8,000 to 9,000 units.

“This is clearly the result of the increased demand for second-hand flats in recent months,” says Mohamed Ismail, CEO of PropNex, also referring to the 11,649 second-hand transactions recorded 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 cash valuations (COV).

In fact, analysts note that VOCs on flat rates continued to rise 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 planes,” says Mohamed Ismail.

According to PropNex, the overall median VOC for the third quarter is $12,000, an increase of $9,000 compared to the $3,000 figure for the second quarter.

PropNex also notes that 79 per cent of flats sold in the third quarter were traded above valuation, much higher than the 57 per cent in the second quarter.

Blessing for HDB vendors, bane for young couples/singles

The exuberance in the HDB market has been a boon to HDB condo owners, with many taking the opportunity to upgrade to a condo in the second quarter, when prices among privately owned and resale HDB condos were at their peak. lower.

On average, these HDB improvements made at least $200,000 in profit by selling their apartments, resulting in a surge in demand for mass-market condos like the Caspian and Alexis earlier this year.

As recently as November, a permanent resident of Indonesia 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.

For young couples and singles, however, rising resale apartment prices are causing many to reassess their cash flow position.

Abdul Khir and his wife, for example, had given up looking for houses altogether, having seen more than 30 three-bedroom resale flats 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 for $2,000 in agent fees with a minimum VOC of $5,000,” says the 27-year-old tech specialist.

Typically, when a VOC is high, buyers have the option of applying for floors under the Built to Order (BTO) or Design Build & Sell Scheme (DBSS), where they don’t have to put up as much cash for their purchase.

However, buyers will have to wait three to four years before they can move in.

Abdul Khir did not apply for the BTO or DBSS flats 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 he successfully voted for was a three-bedroom apartment in Queenstown priced at $250,000, well beyond his 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 shut out of the HDB market have been up in 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.

According to data pulled from the HDB website, the median price for four-bedroom resale condos averages $479,000 and will stay within this range.

“I’m taking 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 open to that kind of deal.” price”. If their house is not that 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 HDB resale deals hover around appraisal prices. Appraisers generally don’t price on one-off transactions like this. They would look at the transaction prices of Middle range”. says Donald Han, managing director of Cushman & Wakefield Singapore.

Additionally, 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 floors that could see 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 good-paying or stable jobs, or if there are more permanent residents in the country. market.

This means resale flat prices will rise even higher, something Singaporeans are sure to complain about.

However, analysts say, the HDB market is unlikely to introduce cooling measures, similar to those implemented by the government in the private real estate market in September.

“It’s not a good thing for HDB to interfere with market forces. The fact is, in a resale market, it’s 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 gestation period to build. Forecasting effective demand is not easy: there is no foolproof method of forecasting future demand,” he says. They have.

For would-be landlords who can’t afford HDB flats, analysts advise them to take Abdul Khir’s example: rent.

“If affordability becomes an issue, then rent. What goes up will come down, as in any market cycle. Sometimes the best decision is to delay the purchase rather than overcommit and get stuck in the payments on a large mortgage payment. 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,” Mohamed Ismail says matter-of-factly.

Planning Ahead: The Government’s Job or Singaporeans?

MP Dr. Muhammad Faisal, an assistant professor of real estate at the National University of Singapore, recently placed the blame squarely on young couples who couldn’t get an apartment for not planning ahead.

But can you really plan matters of the heart?

Furthermore, it is the government’s liberal immigration policy that has contributed to some extent to the increased demand for second-hand HDB flats from permanent residents.

Prospective owners are divided on this issue with some saying they agree, but the onus still rests with HDB.

“I agree that young couples need to 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 amount of immigrants who were granted permanent residency to ensure 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.