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HDB Resale market facing growth because of higher grants

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Quite distinct from the figures of September, October 2019 witnessed a rapid escalation in the number of resales conducted of the Housing Board Flats; this improvement can be solely attributed to the higher grants and stretching of income windows for the first time since the last month. As per the reports submitted by the real estate portal under SRX Property, a total of 2,213 HBD resale flats altered their ownership; this implies the fact that there has been an 18% increase when compared to the statistics of September.

Furthermore, if this year’s figures are placed alongside last year’s, one would find that the resale volume has grown by 10.6%. One possible source of this change could be the alterations brought into action recently in the market policies.

In September, the Government waived off the restrictions that were previously placed over the owner’ choice of the flat’s location and type; in a general address meant for public welfare, the authorities confirmed that first-time buyers can avail up to $80,000 under the laws of Enhanced CPF Housing Grant (EHG) disregarding the stages of ownership that the flat has undergone. The capitalization of this grant has been rapid; since last year’s April, the net increment has amounted to 21% more than the standard 12-month average. Out of the variants sold, 40.8% of them were four-room flats, 24.35 were five room-flats while 25.4% and 7.5% belonged to three-room flats and executive flats and multi-generation flats, leaving out the remaining portion for two-room flats.

The resale prices in the last month dropped by 0.2% than September’s figures but were still more than the last year’s digits. Additionally, the cost of non-mature estates kept surging by 1.1% every year but, the price of mature flats dropped by 1.3%. If we consider the records, the most expensive resale flat that was granted to new owners was a part of The Pinnacle’s at Duxton and was a five-room flat. In the case of the non-mature unit, an executive maisonette in Hougang was resold for $850,000. Relying upon the present status of sale, SRX has predicted that within the next three months, flats that have been certified with a five-year minimum occupation period will have at least 2,320 units sold.

Some of the analysts interviewed by TODAY on Tuesday also agreed with the Government's move to make resale flats more affordable for first-time buyers who do not wish to wait too long for a Build-to-Order (BTO) unit.

The new grant, which streamlines two existing grants and has a higher wage ceiling, was unveiled by Minister for National Development Lawrence Wong on Tuesday. The grant will remove restrictions on the type and location of flats being bought.

Mr Wong said that while the authorities need to ensure adequate supply of new flats, “it will not be possible to meet all of the growing demand with new flats alone”. This is because in some locations, particularly in the mature estates, there is not enough land to build so many new units, he noted. 

Mr Wong said that last year, 25 per cent of first-timer families bought resale flats while 75 per cent bought new units. He pointed out that the proportion of those who bought new flats was “already much higher” than a decade ago when it was 55 per cent.

“Over the longer-term, we have to ensure there is a sustainable balance in the demand and supply of flats,” he added. 

Mr Wong also announced that the income ceiling for couples and singles for various HDB schemes as well as executive condominiums (ECs) have also been raised. Last month, he said that the HDB August sale exercise would be pushed to September to make way for the “upcoming changes”, as he called them at the time, which have now been unveiled.

RESALE FLATS IN MATURE ESTATES 'SET TO SEE RISE IN DEMAND'

Property experts told TODAY that they believe the new grant will increase demand for resale flats, especially those in mature estates.

Ms Christine Ong, who is the head of research and consultancy at OrangeTee and Tie, said that young couples may consider buying a resale flat over a BTO unit due to time and location constraints.

“Not everyone would want to go for (a) BTO (unit) because they have to wait a long time and the location may not be good. There are not many BTO units in mature estates and even if they launch a project, the subscription rates are very high,” she said.

Agreeing, real estate agency PropNex’s chief executive officer, Mr Ismail Gafoor, said that he expects that resale flats in mature estates will be in “greater consideration” for first-time buyers, especially if they can afford it.

Mr Gafoor added that he believes that by the end of next year, the proportion of resale flats being bought by first-timer families may rise 10 percentage points from 25 per cent in 2018 to 35 per cent. 

Indeed, potential first-time buyer Chan Yu Siang, 23, told TODAY that the announcement has led him to consider resale flats as one of his options. Previously, Mr Chan and his girlfriend had not considered buying a resale flat due to the lack of subsidies.

Mr Chan, who is a student at the Singapore Management University, added that the grant gives him the opportunity to consider living closer to both his own parents and his girlfriend’s parents. Both of them live in mature estates.

GRANT WILL 'HELP EXECUTIVE CONDOMINIUM MARKET'

Some analysts also welcomed the move as the grant could help to increase the demand for ECs as more Singaporeans become eligible under the new household income cap, which has risen from S$14,000 a month to S$16,000.

Ms Ong said that a number of plots for new ECs have been sold and should be ready to be launched in the coming year. The new grant will “ensure more buyers will be eligible which can help to absorb the supply of ECs next year,” she said.

There are currently two EC projects available for sale- Piermont Grand at Sumang Walk and Parc Canberra at Canberra, which is between Yishun and Sembawang.

However, head of research and consultancy of ERA Realty Nicholas Mak believes that the increase in demand triggered by the changes announced on Tuesday may outstrip the current supply of ECs.

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