2014 likely quiet for HDB resale market

The HDB resale market is expected to slow down next year on the back of the government’s measures on permanent residents (PRs), according to analysts quoted in a media report.

Newly-minted PRs now have to wait three years before they can purchase a resale flat. There was no such requirement previous to when this regulation came into effect on 27 August.

The housing board revealed that PR households purchased an average of 323 units per month during the first eight months of the year. However, this fell to an average of 176 units per month since the introduction of the new ruling.

“Based on these preliminary figures from the HDB, the drop in demand from PRs will reduce the (overall) demand for resale flats by about 10 percent in 2014,” said Nicholas Mak, Research Head at SLP International Property Consultants.

Moreover, first-time buyers can easily purchase new flats currently, while the government is expected to raise the quota of new flats for second-timers.

This means that fewer buyers are expected to turn to the resale market.

While next year’s figure will likely be similar to 2013 – which saw “one of the lowest in years” with estimates at around 17,200 to 18,500 compared to more than 24,000 to 37,000 in annual resale volumes over the last five years – activity is expected to pick up in the second half of the year as buyers get drawn back to the market by lower prices.

The real estate agency is also “quietly optimistic that resale HDB volumes will pick up in 2014” as HDB slows down the launch of Build-to-Order (BTO) flats.

As such, resale volumes will likely be “a shade better than this year” at over 20,000 but less than the 25,000 or so recorded in 2011 and 2012.

Source: Dec 26, 2013 - PropertyGuru.com.sg

Refining the Executive Condominium Housing Scheme

The Government will implement three measures for Executive Condominium (EC) developments to bring the terms for ECs closer to that for public housing, and help support a stable and sustainable EC market. This follows a review by MND on the EC Housing Scheme, taking into account feedback from the Our Singapore Conversation on Housing. 

I. Reduce EC Cancellation Fees 
2   First, we will reduce the cancellation fees for ECs from 20% to 5% of the purchase price. This will relieve the financial burden of buyers who have to cancel their EC bookings after signing the Sale & Purchase Agreement. The new cancellation fee will be applied to EC land sales which are launched on or after 9 Dec 2013, including those where the tenders have not closed. 

3   The cancellation fee for ECs is currently set at 20% of the purchase price, similar to those for private housing. However, unlike buyers of private housing, buyers of EC units cannot sub-sell their units if they cannot complete their purchase, and have to pay the cancellation fee. This has especially imposed significant financial burden on young couples who subsequently are not able to proceed with their marriage and hence the EC purchase. 

4   We will therefore align the cancellation fees for EC units with that for HDB Build-to-Order (BTO) flats, and reduce them from 20% to 5% of the purchase price. 

II. Resale Levy for Second-Timer Applicants 
5   Second, we will now require second-timer applicants who buy EC units directly from property developers to pay a resale levy, similar to second-timer applicants who buy BTO flats. The new requirement will be applied to EC land sales which are launched on or after 9 Dec 2013, including those where the tenders have not closed. 

6   Currently, second-timer applicants who buy EC units directly from property developers benefit from the lower EC prices arising from the initial eligibility and ownership restrictions imposed on EC purchases. However, they do not need to pay a resale levy. The alignment of treatment with second-timer applicants who buy BTO flats will ensure greater parity. 

III. Revision of Mortgage Loan Terms 
7   Third, the Monetary Authority of Singapore (MAS) will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions for EC units bought directly from property developers at 30% of a borrower’s gross monthly income. This is in line with earlier measures introduced by the HDB and MAS to encourage financial prudence among buyers of public housing. It discourages EC buyers from over-stretching their finances and supports an affordable and sustainable EC market. 

8   The 30% MSR cap will apply to EC purchases where the Option to Purchase is granted on or after 10 Dec 2013.1
Enquiries 
9   For further enquiries on any of the above measures, the public can contact the HDB Sales Customer Service Line: 1800-866-3066. 

Issued by: Ministry of National Development
Date 9 Dec 2013 

Source: MND

COV for resale flats fall below S$10,000 in Nov 2013

Cash premiums for resale flats fell below S$10,000 in November for the first time since July 2009. According to flash estimates compiled by the Singapore Real Estate Exchange (SRX), the cash-over-valuation (COV) for HDB resale flats reached S$8,000 in November.SINGAPORE: Cash premiums for resale flats fell below S$10,000 in November for the first time since July 2009.

According to flash estimates compiled by the Singapore Real Estate Exchange (SRX), the cash-over-valuation (COV) for HDB resale flats reached S$8,000 in November.

Alan Cheong, research head at Savills Singapore, said: “The fall in COVs, though expected, is disconcerting. Because right now, the COV, on average, is below S$10,000. If it goes on this way, it will go into negative territory very soon.

“A falling COV like this, if wrongly interpreted in the hands of unsophisticated sellers, may trigger a panic selling situation."

Meanwhile, 13.1 per cent of HDB resale deals closed below valuation in November, up from October's 8.5 per cent. Sengkang, Choa Chu Kang, Jurong West, Woodlands and Hougang saw the most numbers of negative COV deals last month. 

Overall HDB resale prices dropped 0.6 per cent in November, reaching the lowest level since September 2012.

SRX said 1,051 HDB flats were re-sold in November, down 11.5 per cent from October (1,187). Compared to a year ago, resale volumes fell 34 per cent.

Thomas Tan, executive director of RE/MAX, said: “It would be a trend going into early 2014. Traditionally, yes, this is the lull period right up to Chinese New Year.

“We can also see that the government has released lots of supply in terms of new flats in the BTO (Build-To-Order) launches and recent measures of limiting the mortgage servicing ratio to 30 per cent, that would affect affordability for many resale flat buyers.”

Over in the private condominium market, momentum also slowed, with resale volumes falling 34 per cent in November. 

Resale prices of private homes declined 1.5 per cent in November, marking the third consecutive monthly drop in the overall resale price index.

SRX said this is also the lowest price level observed in this year, down 4.1 per cent from the peak in February.

Prices fell across the board for resale transactions across the island, with private homes in the city area contracting by 2.0 per cent.

Prices of resale homes in the suburban areas dipped 0.9 per cent, while those in the city fringe declined 0.7 per cent.

About 387 non-landed homes were resold in November, down 22.9 per cent from October. On a year-on-year basis, this represented a 62 per cent drop from the 1,019 units transacted in November 2012. 

Meanwhile, rentals of private condominiums remained flat after three months of decline, and median rentals of HDB flats dipped by S$50 to S$2,350, the first dip since June 2012.

Some market watchers expect the rental market to maintain rentals at existing rates at best, with landlords more keen to retain current tenants or sign new leases at slightly lower rents. 

- CNA/ac/ms

Source: ChannelNewsAsia 5 Dec 2013

More flats sold below valuation

As stricter home loan rules weaken demand, the volume of HDB flats being sold below their appraisal value has also increased, media reports said.

In October, 105 flats were sold below valuation, or seven percent of the total volume, based on data from the housing board. This is significantly down from the average 0.3 percent for every month of the first half of the year.

This also implies that the number of flats sold below valuation increased fourfold in October alone compared to the entire period of January to June, when an average of five such transactions were recorded each month.

As such, sellers have been forced to adjust their expectations.

For instance, Assistant Manager Raymond Koh asked for cash-over-valuation (COV) of S$20,000 for his second floor five-room flat in Punggol earlier this year. When he found no buyers, Koh lowered his COV to “S$10,000, then S$5,000, then zero”, he said. After which, “I started going negative”.

Currently his nine-year-old flat is priced S$20,000 below valuation. “Any lower and I might as well continue living here,” said Koh, who wants to upgrade to an executive apartment or condominium in Sengkang, close to his preferred school for his five-year-old son.

Meanwhile, National Development Minister Khaw Boon Wan revealed that the government will begin tapering off its “massive construction programme from 2014”.

“We will do so in a measured way, to allow the market to gradually adjust, just like what we had done to cool the property market earlier,” he said in his blog on Monday.

He noted that three years of increased supply helped to restore balance in the housing market, as indicated by the lower COV trend in the HDB resale market and the decline in average Build-to-Order (BTO) application rates – from 5.3 in 2010 to 2.9 this year.

The November BTO and balance flats exercise saw the release of 8,952 flats in a single launch, making it the largest in HDB’s history.

“With this, we have delivered over 25,000 BTO flats this year and over 77,000 BTO flats in the last three years,” said Mr Khaw.

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg

Source: Dec 5, 2013 - PropertyGuru.com.sg