Tag Archives: Private Residential Property

Singapore homes seriously unaffordable

Singapore’s market cooling measures have been effective in reducing the prices of HDB flats and private homes over the past few years, but housing costs here are still seen as too high, revealed findings published by a global report last month.

According to the 12th Annual Demographia International Housing Affordability Survey, Singapore has a “seriously unaffordable” rating of 5.0, no change from last year’s survey.

The report used the median multiple indicator, which is the median house price divided by gross annual median household income, to rate housing affordability across 367 cities in nine countries.

A grade of 3.0 and below is considered affordable, 3.1 to 4.0 (moderately unaffordable), 4.1 to 5.0 (seriously unaffordable) and 5.1 and over (severely unaffordable).

Despite being seen as expensive, the report noted that “Singapore has been far more successful in controlling housing affordability than in markets that have followed the British urban containment model”.

Specifically, the HDB was recognized for ramping up the supply of new flats and reducing new home prices.

“One strategy has been to increase what are effectively “across the board” subsidies for all new houses (not counting special grants, such as for first home buyers).

“Should the present policy continue, it is likely that resale house prices will rise slower or even fall in the future, improving Singapore’s housing affordability,” said Demographia.

Eligible first-time buyers of new HDB flats currently enjoy up to $80,000 in housing grants, comprising up to $40,000 in Special CPF Housing Grants and up to $40,000 in Additional CPF Housing Grants.

Meanwhile, Hong Kong has the least affordable housing in the world, with a median multiple of 19.0. This rating is also the highest recorded in the 12 years of the Demographia Survey.

Home buyers must set realistic aspirations: Shanmugam

While the government will continue to help Singaporeans own homes and have put measures in place to protect first-time buyers from a hot housing market, “they must have a realistic pathway to achieving their aspirations”, said Home Affairs and Law Minister K. Shanmugam.

During a dialogue session with over 2,000 property agents from ERA Realty on Wednesday (3 Jan), the minister recalled how a 28-year-old President’s Scholar had lamented to him about not being able to afford a private property in Katong, despite his many achievements.

“These are unrealistic aspirations for someone who’s only in his 20s,” said the minister. He noted that Singaporeans can afford to purchase property based on income levels, and have the option of buying private property, “but they need to start somewhere”, he said in reference to those eager to move up the property ladder.

Properties in Tanjong Katong are generally more expensive compared to other areas in the East, due to their prime location and accessibility to good amenities.

One of the more recent project launches in the neighbourhood is Amber Skye, a 109-unit condominium which was relaunched in March 2015 at an indicative price range of $1,680 psf to $2,500 psf.

Owning a condominium in Singapore is seen as a dream among many Singaporeans, as it is one of the 5Cs, with the other aspirations being a car, country club membership, cash and credit cards.

Despite this, Eugene Lim, Key Executive Officer at ERA Realty, has observed that fewer HDB dwellers are now jumping straight into buying private property.

Instead, he is now seeing a trend of a “fair amount of buyers upgrading to larger flat types since the second half of last year”. For instance, there are more four-room HDB flat owners shifting to five-room flats and executive flats.

“The trend of moving to larger private properties is constrained by the Total Debt Servicing Ratio (TDSR),” he said.

Introduced in June 2013, the TDSR limits the amount of a borrower’s gross monthly income that can be spent on debt repayments to 60 percent.

This has severely impacted private property sales in recent years, with transactions down to about 14,000 units in 2015 compared to around 38,000 in 2012 before the measure was introduced, revealed statistics from the Urban Redevelopment Authority (URA).