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07-04-2011, 06:28 AM
The title of the article itself makes it sound as if Singapore consists of a nation of property speculators! Even the first line of the article alludes to people here being "status-conscious".
Personally, I am happy to live in an HDB that I can afford and not "upgrade" to a condominium which may put me in debt for the next 25 years......
Apr 7, 2011
HDB upgraders' hopes of dream condo fading
Record prices, cooling measures deal double whammy
By Jessica Cheam , Daryl Chin and Cheryl Ong
BUYING that suburban condominium home - the dream of the quintessential HDB upgrader - is becoming harder to achieve in reality.
Standing in the way is the double whammy of record prices and cooling measures by the Government, which have made it more unaffordable and riskier for these buyers to leap into the private market.
HDB upgraders, known as home buyers with HDB addresses, typically target mass-market condos, usually in the heartland, as their ticket up the property ladder.
Just a couple of years ago, they were closer to realising their dream. Then, the narrowing of the price gap between HDB resale flats and mass-market condos enabled many HDB upgraders to sell their units at relatively high prices to enter the private market.
According to property consultancy DTZ Research, seven out of 10 buyers of private homes in the first quarter of 2009 were HDB upgraders - the highest number since the 86 per cent figure achieved in the second quarter of 2002.
But by last year, the number had halved to about 3.5 buyers out of 10. DTZ's head of South-east Asia research Chua Chor Hoon said this proportion has remained about the same in January and February this year.
Industry experts The Straits Times spoke to felt that the figure may dip even lower in the following months if private property prices continue to climb.
HDB upgraders have gone cold on mass-market condos due to two main reasons, they said.
First, cooling measures introduced by the Government in January are beginning to bite. These included a hefty 16 per cent stamp duty, levied on sellers who offload private property within a year of purchase.
The amount banks can lend for a second mortgage was also lowered from 70 per cent to 60 per cent of the home's value.
So if an HDB upgrader buys a home today, he has to think carefully about whether he can hold it for the next four years if he wants to avoid paying punitive stamp duties, noted Dennis Wee Group (DWG) director Chris Koh.
As he already owns an HDB flat and is likely to have an existing mortgage, he also faces the tricky situation of having to sell before he buys if he wants to qualify for higher financing of 80 per cent, due to the new rules, he added.
Second, the prices of suburban homes are at historic highs - with historically low interest rates fuelling property investments - and price resistance has begun to set in.
Fresh estimates out last week showed that suburban home prices climbed a further 3.1 per cent in the first quarter of this year, outpacing the 2.1 per cent rise in the previous quarter, and registering a faster pace than the overall first-quarter 2.1 per cent rise for the private market.
Several benchmark prices were set for areas such as Bedok, Simei and Jurong.
A recent report by property company CB Richard Ellis noted that three in four homes at the 561-unit Waterfront Isle in Bedok were sold at a median price of $990 per sq ft (psf).
Canberra Residences, a 320-unit project near the Sembawang MRT station, sold at the $830 psf level.
And some 250 out of 521 units at H2O Residences in Sengkang were sold at an average price of $920 psf.
At these prices, a three-bedroom unit of 1,200 sq ft would cost about $1 million or more.
But while prices rose, sales volumes took a hit.
Data from the Urban Redevelopment Authority showed the number of new suburban private homes sold in January and February fell by 27 per cent from that in the previous two months.
PropNex spokesman Adam Tan noted that while a 1,600 sq ft executive HDB flat in Bedok Reservoir now costs $620,000, a 1,000 sq ft unit at Waterfront Isle in the same area costs $1 million - which means the resale flat is 40 per cent cheaper, though it is 60 per cent larger.
Older condos in the vicinity, such as Aquarius By The Park and Baywater, are cheaper than the newer ones, but prices are in the $700 psf to $800 psf range, which means a 1,600 sq ft unit, comparable to the size of an HDB resale flat, will still cost from $1.12 million to $1.28 million.
So what options do HDB upgraders have?
Said Mr Tan: 'The feeling on the ground is the high prices may force many potential HDB upgraders to stay within the HDB bracket. If this trend continues, we will see a limited number of people upgrading to private property.'
Already, PropNex and ERA Realty are seeing a rise in their sales numbers for the HDB resale market. Cash-over-valuation (COV) figures, or the cash premium paid by buyers over a flat's valuation, seem to have stabilised and not dipped further.
National Development Minister Mah Bow Tan said last week that the median COV for HDB resale flats ranged from about $20,000 to $21,000 in the first quarter.
Industry watchers such as DWG's Mr Koh said this came as a surprise, as they had expected the COV figure to dip below $20,000 after cooling measures announced in August last year, which tightened financing and restricted the ownership of HDB resale flats, took effect.
'The HDB resale market could likely be supported by demand coming back from this segment of HDB upgraders,' he added. This means there could also be greater demand for bigger units such as five-room and executive flats, he added.
Premiere Realty director Jimmy Ng said many HDB upgraders are also choosing the wait-and-see option.
'Some have even sold their homes and are renting, while they wait for the price to drop,' he added.
Meanwhile, buying activity in the private-property market is coming from foreign investors, noted Mr Ng.
A recent report by Jones Lang LaSalle showed that foreigners bought up 32 per cent of non-landed private homes sold in the first quarter.
Mainland Chinese - including permanent residents - snapped up 241 homes in the quarter, as tighter policies in China, such as restrictions on residents of major cities buying a second or third home, prompted more Chinese buyers to look further afield.
In the current stand-off between the HDB upgrader and private developers, PropNex's Mr Tan said 'a compromise could be reached, where developers tailor their prices to stay within reach of some of the HDB upgraders'.
Analysts say some developers can afford to do so for some projects, where land was bought at cheaper levels earlier.
When contacted, mass-market condo developers such as City Developments acknowledged that while some buyers have 'taken a more circumspect approach' in the light of the recent cooling measures, 'quality developments in established towns with good amenities remain attractive to genuine buyers'.
In other words, do not expect prices to come down any time soon.
DTZ's Ms Chua has a different take: She feels the number of HDB upgraders who are buying private units may not fall as much as expected, due to the proliferation of 'shoebox' units, typically 400 sq ft to 500 sq ft, such as those at Loft@Holland, Loft@Stevens and Palmera East in the East Coast.
But they will buy not for owner occupation, but for investment.
'There will still be those HDB upgraders who will buy for investment. And these small units are selling well because their absolute price is still within their budgets,' she said.
But for upgraders dreaming of a new home such as IT engineer Sowmya Ramani, 29, the prospect of landing a suburban condo seems to be slipping away for now.
She and her husband, who have a combined income of more than $8,000 a month, own a three-room HDB flat in Toa Payoh, and have been thinking of upgrading to a similar-sized unit in a condo.
'If we could, we would definitely want to live in private property, but private homes are just too expensive now, so we're considering a five-room DBSS flat instead,' she said, referring to condo-like units built by private developers under the HDB's Design, Build and Sell Scheme.
'With the new rules, it has also become more difficult for us to get financing without selling our home first, so I think we're going to wait and see what happens in the market,' she added.
jcheam@sph.com.sg
darylc@sph.com.sg
ongyiern@sph.com.sg
Personally, I am happy to live in an HDB that I can afford and not "upgrade" to a condominium which may put me in debt for the next 25 years......
Apr 7, 2011
HDB upgraders' hopes of dream condo fading
Record prices, cooling measures deal double whammy
By Jessica Cheam , Daryl Chin and Cheryl Ong
BUYING that suburban condominium home - the dream of the quintessential HDB upgrader - is becoming harder to achieve in reality.
Standing in the way is the double whammy of record prices and cooling measures by the Government, which have made it more unaffordable and riskier for these buyers to leap into the private market.
HDB upgraders, known as home buyers with HDB addresses, typically target mass-market condos, usually in the heartland, as their ticket up the property ladder.
Just a couple of years ago, they were closer to realising their dream. Then, the narrowing of the price gap between HDB resale flats and mass-market condos enabled many HDB upgraders to sell their units at relatively high prices to enter the private market.
According to property consultancy DTZ Research, seven out of 10 buyers of private homes in the first quarter of 2009 were HDB upgraders - the highest number since the 86 per cent figure achieved in the second quarter of 2002.
But by last year, the number had halved to about 3.5 buyers out of 10. DTZ's head of South-east Asia research Chua Chor Hoon said this proportion has remained about the same in January and February this year.
Industry experts The Straits Times spoke to felt that the figure may dip even lower in the following months if private property prices continue to climb.
HDB upgraders have gone cold on mass-market condos due to two main reasons, they said.
First, cooling measures introduced by the Government in January are beginning to bite. These included a hefty 16 per cent stamp duty, levied on sellers who offload private property within a year of purchase.
The amount banks can lend for a second mortgage was also lowered from 70 per cent to 60 per cent of the home's value.
So if an HDB upgrader buys a home today, he has to think carefully about whether he can hold it for the next four years if he wants to avoid paying punitive stamp duties, noted Dennis Wee Group (DWG) director Chris Koh.
As he already owns an HDB flat and is likely to have an existing mortgage, he also faces the tricky situation of having to sell before he buys if he wants to qualify for higher financing of 80 per cent, due to the new rules, he added.
Second, the prices of suburban homes are at historic highs - with historically low interest rates fuelling property investments - and price resistance has begun to set in.
Fresh estimates out last week showed that suburban home prices climbed a further 3.1 per cent in the first quarter of this year, outpacing the 2.1 per cent rise in the previous quarter, and registering a faster pace than the overall first-quarter 2.1 per cent rise for the private market.
Several benchmark prices were set for areas such as Bedok, Simei and Jurong.
A recent report by property company CB Richard Ellis noted that three in four homes at the 561-unit Waterfront Isle in Bedok were sold at a median price of $990 per sq ft (psf).
Canberra Residences, a 320-unit project near the Sembawang MRT station, sold at the $830 psf level.
And some 250 out of 521 units at H2O Residences in Sengkang were sold at an average price of $920 psf.
At these prices, a three-bedroom unit of 1,200 sq ft would cost about $1 million or more.
But while prices rose, sales volumes took a hit.
Data from the Urban Redevelopment Authority showed the number of new suburban private homes sold in January and February fell by 27 per cent from that in the previous two months.
PropNex spokesman Adam Tan noted that while a 1,600 sq ft executive HDB flat in Bedok Reservoir now costs $620,000, a 1,000 sq ft unit at Waterfront Isle in the same area costs $1 million - which means the resale flat is 40 per cent cheaper, though it is 60 per cent larger.
Older condos in the vicinity, such as Aquarius By The Park and Baywater, are cheaper than the newer ones, but prices are in the $700 psf to $800 psf range, which means a 1,600 sq ft unit, comparable to the size of an HDB resale flat, will still cost from $1.12 million to $1.28 million.
So what options do HDB upgraders have?
Said Mr Tan: 'The feeling on the ground is the high prices may force many potential HDB upgraders to stay within the HDB bracket. If this trend continues, we will see a limited number of people upgrading to private property.'
Already, PropNex and ERA Realty are seeing a rise in their sales numbers for the HDB resale market. Cash-over-valuation (COV) figures, or the cash premium paid by buyers over a flat's valuation, seem to have stabilised and not dipped further.
National Development Minister Mah Bow Tan said last week that the median COV for HDB resale flats ranged from about $20,000 to $21,000 in the first quarter.
Industry watchers such as DWG's Mr Koh said this came as a surprise, as they had expected the COV figure to dip below $20,000 after cooling measures announced in August last year, which tightened financing and restricted the ownership of HDB resale flats, took effect.
'The HDB resale market could likely be supported by demand coming back from this segment of HDB upgraders,' he added. This means there could also be greater demand for bigger units such as five-room and executive flats, he added.
Premiere Realty director Jimmy Ng said many HDB upgraders are also choosing the wait-and-see option.
'Some have even sold their homes and are renting, while they wait for the price to drop,' he added.
Meanwhile, buying activity in the private-property market is coming from foreign investors, noted Mr Ng.
A recent report by Jones Lang LaSalle showed that foreigners bought up 32 per cent of non-landed private homes sold in the first quarter.
Mainland Chinese - including permanent residents - snapped up 241 homes in the quarter, as tighter policies in China, such as restrictions on residents of major cities buying a second or third home, prompted more Chinese buyers to look further afield.
In the current stand-off between the HDB upgrader and private developers, PropNex's Mr Tan said 'a compromise could be reached, where developers tailor their prices to stay within reach of some of the HDB upgraders'.
Analysts say some developers can afford to do so for some projects, where land was bought at cheaper levels earlier.
When contacted, mass-market condo developers such as City Developments acknowledged that while some buyers have 'taken a more circumspect approach' in the light of the recent cooling measures, 'quality developments in established towns with good amenities remain attractive to genuine buyers'.
In other words, do not expect prices to come down any time soon.
DTZ's Ms Chua has a different take: She feels the number of HDB upgraders who are buying private units may not fall as much as expected, due to the proliferation of 'shoebox' units, typically 400 sq ft to 500 sq ft, such as those at Loft@Holland, Loft@Stevens and Palmera East in the East Coast.
But they will buy not for owner occupation, but for investment.
'There will still be those HDB upgraders who will buy for investment. And these small units are selling well because their absolute price is still within their budgets,' she said.
But for upgraders dreaming of a new home such as IT engineer Sowmya Ramani, 29, the prospect of landing a suburban condo seems to be slipping away for now.
She and her husband, who have a combined income of more than $8,000 a month, own a three-room HDB flat in Toa Payoh, and have been thinking of upgrading to a similar-sized unit in a condo.
'If we could, we would definitely want to live in private property, but private homes are just too expensive now, so we're considering a five-room DBSS flat instead,' she said, referring to condo-like units built by private developers under the HDB's Design, Build and Sell Scheme.
'With the new rules, it has also become more difficult for us to get financing without selling our home first, so I think we're going to wait and see what happens in the market,' she added.
jcheam@sph.com.sg
darylc@sph.com.sg
ongyiern@sph.com.sg
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