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HDB resale market still buzzing

Posted on 24 Sep 2009 | Comments Off

In contrast with 2006 and 2007, the current run is not supported by a buoyant economy and buyers will resist paying too much cash

WITH 80 per cent of Singapore’s population staying in HDB flats, one would expect the HDB market to be affected by the current recession and unemployment situation. But both the primary and secondary HDB markets appear unscathed by the current crisis. Can we expect this to continue? Resale prices

Hot property: Except for the first project, Premiere @ Tampines (above), that has been fully sold, the other five projects have sold out their 4-room flats, while some of their 5-room types have yet to find buyers

From a modest 2 per cent increase in 2006, HDB resale prices rose 17.5 per cent in 2007, and 14.5 per cent in 2008. According to HDB’s numbers, even though HDB resale prices saw a slight dip of 0.8 per cent in the first quarter of 2009, they quickly rebounded by 1.4 per cent in Q2 to a new peak of 140.2 points. Over the past three-and-a-half years, resale prices have increased by some 38 per cent.

Current resale prices are some 2.4 per cent higher than the Q4 1996 peak. This means HDB homeowners who had bought their flats during those times can now get more than they paid if they resell their flats. Quarter-on-quarter, Q2 data show that the price increase has tapered off to just 1.4 per cent compared to the average quarterly increase of 4 per cent for 2007 and 2008.

However, the surge in resale HDB transactions that started in Q2 carried through into Q3. Transactions done by ERA’s agents, who collectively have a 45 per cent share of the HDB resale market, show that resale prices have gained some 3 per cent in Q3 over Q2. Continue reading →

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Tagged HDB, HDB resale market, Housing Development Board

Residential market needs a rework

Posted on 24 Sep 2009 | Comments Off

Changing policies as market conditions change reflects pragmatic and adaptive policymaking which should be applauded

THE big picture driver of real estate wherever is the economy. A residential property buyer pays a certain amount for a particular location because he likes to work, live and play there. Should Singapore execute successfully on mega projects like the integrated resorts, improve her infrastructure, grow her economy and become an increasingly important global city, the trend for property prices is up.

Balancing act: Changing policies as market conditions change reflects pragmatic and adaptive policymaking which should be applauded. Moreover, well-timed pre-emptive moves deserve the most kudos. However, perhaps there is a case for adopting a framework where only supply measures change while demand measures remain unchanged

But how fast should prices rise? Is there excessive speculation in the Singapore private residential property market? These are tricky questions and governments everywhere, through their policies, play a major role in impacting the property market. Recently, the Singapore government, acting to pre-empt any speculative bubble from forming, unveiled both supply measures such as reinstating the confirmed list of land sales in the first half of 2010 and demand measures such as disallowing the interest-absorption plan and interest-only loans being offered to buyers of uncompleted private homes.

Changing policies as market conditions change reflects pragmatic and adaptive policymaking which should be applauded. Moreover, well-timed pre-emptive moves deserve the most kudos. However, perhaps there is a case for adopting a framework where only supply measures change while demand measures remain unchanged. This is not just about letting free market forces reign as adopting such a stand creates more certainty for developers and property buyers, both of whom are committing to sizeable investments. Whenever large sums of investment are being made, consistent regulations are called for and the residential property market should be no exception. For example, let’s be clear whether we want schemes like deferred payment or interest absorption all the time, not at all, or some of the time. Continue reading →