Sliding flat values in tale of two markets

SINKING property prices seem to be the order of the day, so another quarter of tumbling prices came as no surprise.

More notable is an emerging trend that private home prices appear more resilient now than those of HDB resale flats. Since the third quarter of 2013, prices of HDB resale flats have fallen more than those of private homes.

Cooling measures sent private home prices down by 3.8 per cent in the past year, flash estimates indicated yesterday. Housing Board flat values tumbled a steeper 6 per cent in the same period.

Over the year, experts predict that private homes prices will ease 5 to 6 per cent while HDB resale prices slide by 5 to 8 per cent.

This reverses the usual pattern.

Rises or falls in private home prices mostly outpace changes in the HDB market, especially during a global or economic crisis, said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

She cited the 1997 Asian financial crisis when private property prices dived 44.9 per cent as HDB resale prices shed 20.4 per cent. “HDB flats are a basic housing provision… the public segment tends to be insulated from external shocks during those times.”

A shortage of new flats had also forced buyers to look to resale flats, propping up prices, said Mr Ong Teck Hui, JLL national director of research and consultancy.

But the rug seems to have been pulled from under the feet of the HDB market, as demand shifted from resale flats to new flats.

The market is now flush with new HDB flats after the Government ramped up its building programme to meet first-time buyer demand. About 25,000 new flats were launched last year, with 22,000 more due this year.

A mortgage servicing ratio limiting monthly housing payments at 30 per cent of the buyer’s gross monthly income hit many. And newly minted permanent residents can buy an HDB flat only after three years.

Private home buyers have been hurt by tough mortgage lending guidelines and higher stamp duties but one key difference is that high land prices paid by developers act as a limit on discounting.

“They’re floating on thin margins,” as Mr Alan Cheong, research head at Savills Singapore, noted.

Also, private property owners would have gained from the 60 per cent surge in private home prices during the most recent market upswing. They are unlikely to lower their selling expectations.

Still, the private home market could be hit by an external shock, much like the Asian financial crisis, or internal issues, like rising vacancies owing to an oversupply of new homes.

The market will soon abound with completed condo units – many of which have been bought for investments – in the face of a shrinking pool of foreign tenants.

“If loan servicing is affected by reduced rental income, there could be selling pressure resulting in price declines,” said Mr Ong.

Plotting the ‘high life’ at low cost

ARCHITECT Tan Cheng Siong has come up with a grand scheme that he says could triple Singapore’s land space by creating a vast network of elevated decks.

182921__1412220901This vision, which he calls “Skyland”, involves elevated decks of about 20m wide or more, built to link MRT stations above the rails and available for use by cyclists and pedestrians.

Affordable homes could also be built on the decks, said Mr Tan, who designed Singapore’s first condominium (Pandan Valley) and its first super high-rise (Pearl Bank Apartments).

This vast project would free up enough space to ensure there is no need to increase plot ratios or even have people living underground to cope with the rising population, Mr Tan told The Straits Times on Tuesday.

“We have all this space in the sky, which can provide Singapore with low-cost land for the next 50, 100 years.”

He has been displaying his vision at the inaugural architecture exhibition ArchXpo at Marina Bay Sands over the past three days.

He said the authorities are aware of his plans but will, of course, require time to consider the massive proposal.

Under his plan, the Government would repossess HDB land in more mature estates where old flats would need replacing.

Above these areas, the Government would build elevated decks to link MRT stations, or community malls. The cost, he believes, would be at about $100 million for every 1km, or $60 per sq ft (psf).

This is money that a central authority – likely the Housing Board – may recoup by tendering the newly created space to developers, at about $100 psf.

Citizens may buy a 1,000 sq ft plot to build their home at about $150 psf, with a renovation budget of $50 psf. This would bring the total cost to $200 psf, or $200,000 per 1,000 sq ft unit.

The land below the decks may be re-zoned for enterprise use or communal, low-rise facilities for sports, schools or other amenities.

In this way, business space could be more affordable for small and medium-sized enterprises as well, Mr Tan said.

He added that with the safe separation of cyclists and pedestrians from cars, Singaporeans could also save on travel costs.

So instead of having super high-rises, Mr Tan hopes these homes will be a maximum of 50m to 80m high, or 15 to 20 storeys.

He said a good place to start would be older HDB towns such as Serangoon, Ang Mo Kio or Toa Payoh.

However, he envisions linking up the largely residential north as a “north constellation of hubs”.

Under his proposed master plan, the green spaces in central Singapore could be preserved, as there would no longer be any need to eat into them.

Mr Tan also has plans for some of the major trade and communications infrastructure.

He proposes what he calls the “south world corridor” – which includes the airport and ports and will take time to evolve – “built to engage the world and present the best with tourist icons”.

Additions he is suggesting include V-shaped office towers, which would allow more open space below, and a Marina South extension to Gardens by the Bay which will again leave ground space for public use.

“We built a city with low- cost housing. I’m sure we can build a future with low-cost land,” said Mr Tan.