Due to lower interest rates, affordability for mass market resale condominiums has improved compared with the peak in Q4 2007
MASS market projects, which were laggards in the 2007 boom, are leading the recovery this time round. In 2005 and 2006, only 36 per cent of the private residential transactions were for private homes outside the central region (OCR). In comparison, 48 per cent of transactions in H1 2009 were for homes in OCR (Chart 1).
 |
In 2007, demand for homes in OCR rose to 40 per cent of total private residential transactions. However, as the average price of mass market resale condominiums shot up by 26 per cent that year, buyers with HDB addresses accounted for a historical low of 22 per cent of transactions (Chart 1).
This resulted in pent-up demand among this group of buyers who saw their chance when developers started to launch mass market projects at competitive prices in Q1 2009. Buyers with HDB addresses accounted for 56 per cent of transactions in Q1 2009.
The projected completion of private homes from 2009-2013 is estimated to be 11,313 units per annum, 31 per cent higher than the past 10- year average of 8,671 units. However, this has to be seen in the context of less overall housing supply since the Housing and Development Board (HDB) switched to the build-to-order (BTO) system in 2001.
Compared to 1996-2000, which saw 43,000 homes (both private and public) completed per annum, the number of homes completed in the past five years plummeted 70 per cent to around 13,500 units per annum as the HDB cut back on the building of public homes.
On the demand side, the resident population grew steadily at a compounded annual rate of 1.4 per cent over 1996-2008. In 2008, the net increase in resident population was 59,600. Assuming an average household size of 3.5 persons, this could translate to a housing demand of 17,000 units.
Demand for subsidised flats was evident when the half-yearly sale exercise of HDB three-room premium, four-room and bigger flats in April was over-subscribed by 23 times. The four- and five-room flats in Punggol and Sengkang in the June-August BTOs saw four to seven applications for every unit offered. Unsuccessful applicants could switch to buying resale HDB flats or mass market private homes. The demand for resale HDB flats would also spill over to the private property segment as existing owners of HDB flats upgrade to private homes. Continue reading
Lush Dream Home 