Tag Archives: Housing Development Board

HDB resale prices up 0.5% on-quarter in Q2

Posted on 1 Jul 2013 | Comments Off on HDB resale prices up 0.5% on-quarter in Q2

Prices of private homes and Housing and Development Board (HDB) resale flats hit a new all-time high in the second quarter of the year.

According to flash estimates from the Urban Redevelopment Authority, private home prices increased by 0.8 per cent from the previous quarter, faster than the 0.6-per cent increase seen in the first quarter, to hit a new all-time high of 214.9 points.

Meanwhile, flash estimates from HDB showed that prices of resale flats rose by 0.5 per cent.

This was the lowest quarter-on-quarter growth since Q1 2009, signalling that the market is showing signs of stabilising.

Mass market properties in suburban areas have seen strong demand in recent months. They drove the increase in private home prices for the second quarter.

Home prices in suburban areas jumped by three per cent, almost double the 1.4-per cent rise in the first quarter.

Donald Han, special adviser at HSR Property Consultants, said: “In the month of March, we sold more than 3,000 units, including executive condominiums. Whenever developers start to reach a certain sales point of about 60, 70 per cent of sell-out, they’ll start to reduce their discount factor and this discount factor reduction basically increases the net pricing.”

Prices in the rest of the central region saw the same 0.2-per cent increase as in the first quarter.

But for the first time in more than a year, luxury homes in the city dipped by 0.2 per cent.

Some analysts said it is a sign that property cooling measures are taking effect.

As for the HDB resale market, prices are also showing signs of moderating.

Eugene Lim, key executive officer at ERA Realty Network, said: “In particular, it’s the capping of the Mortgage Servicing Ratio (MSR), which was announced earlier this year. If you take an HDB loan, your mortgage servicing ratio is 35 per cent and if you take a bank loan then it’s 30 per cent.

“With this cap, it basically limits the quantum of loan which a buyer can take from the bank, because if he exceeds his MSR, he’s forced to borrow less, so this inevitably affects the demand of properties.

“With all the cooling measures that have been put in place, and also with the HDB’s continued ramped-up supply of new flats, this is actually putting a check on the rate of price increase of HDB resale flats.”

Mr Han said: “The government has been aggressively trying to dish out the Sale of Balance Flats, which are very attractive and is a direct competitor of the demand… (for) HDB resale (flats). So the more the government comes up with the Sale of Balance Flats, it helps to take a strong component out of the resale market.

“On top of that, I think the government is starting to address special priority schemes – first-timers, second-timers, young couples with children, singles will be able to bid, some of the elderly will be able to bid on special priority scheme – this takes a chunk of demand out of the HDB resale market and into the BTO as well as the direct market affecting the Sale of Balance Flats.”

The volume of resale transactions reached an all-time low last quarter and analysts said this low transaction volume is expected to continue.

Cash premiums for HDB flats have also gone down.

Mr Lim said according to his firm’s data, the overall median Cash-Over-Valuation has gone down by 15 per cent.

HDB has also announced that starting this month there will be tighter restrictions on the use of CPF funds for those buying HDB resale flats with shorter leases. Analysts said this is likely to put some downward pressure on HDB resale flats in the months ahead.

Mr Lim said: “Places like Tanglin Halt, Commonwealth, these are some of the places that will be affected by this new restriction. Prior to this restriction, there was no restriction for HDB. So you’ll find that old flats in premium locations are asking for very high premiums, they basically follow the resale market.”

The total price rise for HDB resale flats so far this year is 1.8 per cent.

Some analysts expect the total increase in HDB resale prices this year to be about three to five per cent, down from 6.6 per cent last year.

Source – CNA – 1 Jul

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New home loan rules expected to be “quite permanent”: Khaw

Posted on 30 Jun 2013 | Comments Off on New home loan rules expected to be “quite permanent”: Khaw

National Development Minister Khaw Boon Wan said the recent tightening of property loan rules granted by financial institutions is a structural measure to ensure a more stable property market, and is expected to be “quite permanent”.

The new rules, which kicked in on Saturday, are also meant to ensure that monthly loan repayments by property buyers do not exceed 60 per cent of their income.

On Friday, Singapore’s central bank introduced a Total Debt Servicing Ratio (TDSR) framework and tighter Loan-to-Value (LTV) limits on housing loans. It said the move will strengthen credit underwriting practices among banks and encourage financial prudence among borrowers.

Mr Khaw said: “Our observation is I think those people buying for home ownership is not an issue, but we do have buyers who are stretching themselves, buying second property, third property for investments, and those are the people we worry about, because when interest rates go up, and when they find themselves (being unable to) afford the increased mortgage, what would they do? They may be forced to liquidate, and who knows, if that time combines with a time where there’s a bit of a glut in the property market, they may suffer financially. So I think the new rules are a good reminder.”

Mr Khaw also noted that the current low interest rate is not sustainable.

He said: “If you assume that today’s mortgage rate is 1.5 per cent, and let’s say you buy a property, let’s say your monthly mortgage is S$1,500. But it won’t stay 1.5 per cent forever… Interest rates will adjust and let’s say if it goes up to 3.5 per cent or 4 per cent or even higher, as not too long ago, then your monthly mortgage will suddenly increase in a very big way. And will you still be able to afford it? So I think all these prudential rules are very important, it’s for the interests of the buyers.”

Separately, he said the government is looking at ways to help multi-generational families live closer to each other.

New homes are being built in the north, in areas like Yishun, Sembawang and Woodlands, to enable the children and grandchildren to be able to buy properties near their parents or their grandparents.

Mr Khaw said: “But even outside of the north, I’m trying very hard to see where we can, to allow this strong social bonding to be nurtured. Let’s try to make it as much as possible to allow two-generation, three-generation families to stay close together. Not necessarily under the same roof but within the same HDB town or even better, within the same neighbourhood.”

Mr Khaw pointed out that a further expansion of Tampines is being planned, which will open up more opportunities.

He said: “Tampines is already a very mature town, with a big population there. As the children grow up, get married, and if we can enable them to buy property, HDB, near (the current) Tampines, in the form of Tampines North, I think that is wonderful. So Punggol is the same story, Pasir Ris is the same story.”

Mr Khaw spoke Sunday on the sidelines of the launch of the Sembawang Memory Project, initiated by the Sembawang GRC grassroots organisations.

Polytechnic students and youth volunteers will collect photos, artefacts and anecdotes from residents, which will be compiled into a book that is expected to be released next year. 100 residents will be participating in the project.

Source – CNA – 30 Jun 2013

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