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PR Newswire
28-05-2011, 07:12 AM
May 28, 2011
Measures may affect private home prices too
Pent-up demand will ease and property prices should fall, say analysts
By Cheryl Lim
BUILDING more HDB flats, and doing so more quickly, will help ease pent-up demand and may also eventually reduce home prices, say property analysts.
They also believe the impact of building 3,000 more new HDB flats this year could cascade right through the market, affecting both HDB and private homes.
They say the additional new flats, and the move to cut waiting times, would help ease pent-up buying demand.
These analysts also anticipate a softening of prices for resale flats and even mass market private homes.
They note that recent build-to-order (BTO) HDB projects had been oversubscribed, sometimes by as much as seven times the number of flats on offer.
The flood of new homes could mean buyers who had been looking at resale HDB flats would turn to new flats.
'Those who have been looking to the resale market because they didn't want to wait for a BTO flat, they might shift their focus back. Especially with the easing of the income ceiling, it would also change the minds of some people,' said Ms Chua Chor Hoon, DTZ head of South-east Asia research. The Government has flagged a move to ease the $8,000 a month income ceiling for buying new flats.
Associate Professor Sing Tien Foo, of the National University of Singapore's department of real estate, said the knock-on effect of the new supply might not be confined to just resale HDB flats.
Some buyers now looking at private mass market homes might switch their attention to resale HDB homes.
'Both the public and the private housing sectors are interlinked. So it's not just mass market. Prime property could also be affected,' said Ms Chua.
'I expect prices to soften slightly but it will be a gradual movement. Cash over valuation (COV) will be hit first, and once it moves down even further, then prices will eventually be hit as well,' she said.
Any price effects will take at least two to three years to filter through, said Prof Sing. It will take some time for the public sector to absorb the pent-up demand.
The additional 3,000 new HDB flats to be launched this year will make a total of 25,000 new flats. If this pace of building continues, it will signify the launch of a large supply of new public homes in the next few years. Dr Chua Yang Liang, head of research at Jones Lang LaSalle, said that this would help ease the immediate shortage but would also coincide with the anticipated oversupply of private homes expected to hit the market within that same period: 'This could become an issue if it becomes a reality.'
Prof Sing agreed on this point: 'It depends on exactly how much pent-up demand is in the market. But it won't be difficult for the HDB to predict because they would have numbers on how many people are in the queue.'
But he said sizing up the actual demand could be more complicated.
'Even though projects have been oversubscribed, there have also been a lot of people who have rejected the chance to select a new flat. You have to look at what is the effective take-up rate as well.'
Some market experts say the move to provide more new homes might result in a muted response.
Dennis Wee Group director Chris Koh said although it will 'solve some unhappiness', buyers who look to the resale market have different needs from those looking at snagging a new flat.
'There will be some who are sitting on the fence who will be convinced to choose BTOs but there will always be those who will definitely stick to the resale market,' he said.
cherlim@sph.com.sg
Measures may affect private home prices too
Pent-up demand will ease and property prices should fall, say analysts
By Cheryl Lim
BUILDING more HDB flats, and doing so more quickly, will help ease pent-up demand and may also eventually reduce home prices, say property analysts.
They also believe the impact of building 3,000 more new HDB flats this year could cascade right through the market, affecting both HDB and private homes.
They say the additional new flats, and the move to cut waiting times, would help ease pent-up buying demand.
These analysts also anticipate a softening of prices for resale flats and even mass market private homes.
They note that recent build-to-order (BTO) HDB projects had been oversubscribed, sometimes by as much as seven times the number of flats on offer.
The flood of new homes could mean buyers who had been looking at resale HDB flats would turn to new flats.
'Those who have been looking to the resale market because they didn't want to wait for a BTO flat, they might shift their focus back. Especially with the easing of the income ceiling, it would also change the minds of some people,' said Ms Chua Chor Hoon, DTZ head of South-east Asia research. The Government has flagged a move to ease the $8,000 a month income ceiling for buying new flats.
Associate Professor Sing Tien Foo, of the National University of Singapore's department of real estate, said the knock-on effect of the new supply might not be confined to just resale HDB flats.
Some buyers now looking at private mass market homes might switch their attention to resale HDB homes.
'Both the public and the private housing sectors are interlinked. So it's not just mass market. Prime property could also be affected,' said Ms Chua.
'I expect prices to soften slightly but it will be a gradual movement. Cash over valuation (COV) will be hit first, and once it moves down even further, then prices will eventually be hit as well,' she said.
Any price effects will take at least two to three years to filter through, said Prof Sing. It will take some time for the public sector to absorb the pent-up demand.
The additional 3,000 new HDB flats to be launched this year will make a total of 25,000 new flats. If this pace of building continues, it will signify the launch of a large supply of new public homes in the next few years. Dr Chua Yang Liang, head of research at Jones Lang LaSalle, said that this would help ease the immediate shortage but would also coincide with the anticipated oversupply of private homes expected to hit the market within that same period: 'This could become an issue if it becomes a reality.'
Prof Sing agreed on this point: 'It depends on exactly how much pent-up demand is in the market. But it won't be difficult for the HDB to predict because they would have numbers on how many people are in the queue.'
But he said sizing up the actual demand could be more complicated.
'Even though projects have been oversubscribed, there have also been a lot of people who have rejected the chance to select a new flat. You have to look at what is the effective take-up rate as well.'
Some market experts say the move to provide more new homes might result in a muted response.
Dennis Wee Group director Chris Koh said although it will 'solve some unhappiness', buyers who look to the resale market have different needs from those looking at snagging a new flat.
'There will be some who are sitting on the fence who will be convinced to choose BTOs but there will always be those who will definitely stick to the resale market,' he said.
cherlim@sph.com.sg
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