HDB to start tapering off construction programme from 2014

National Development Minister Khaw Boon Wan said the tapering will be done in a "measured" way to allow the housing market to gradually adjust.

The massive construction of HDB flats will start to taper off from next year as balance is restored between demand and supply in the market, Minister for National Development Khaw Boon Wan said.

But "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."

"Three years of sustained ramp-up have begun to restore the balance in our housing market," he wrote on his blog yesterday as the latest launch of 8,952 Build-to-Order (BTO) and Sale of Balance Flats (SBF) units last month drew to a close.

That exercise has been the largest single launch in the history of the Housing and Development Board (HDB), with the previous mark set in September 2011, when 8,262 units were offered.

Over the past year, HDB has delivered more than 25,000 BTO flats, and it has offered more than 77,000 BTO flats in the last three years.

The trend for the cash premium of cash-over-valuation (COV) was "symptomatic" of the balancing, said Mr Khaw, who welcomed the development.

COVs have been on a downward trend since the start of the year. The median COV in October was $12,000, according to data from the Singapore Real Estate Exchange (SRX). This is a 66 per cent drop from the $35,000 median in January.

A Straits Times report on Monday cited HDB as saying 105 units were sold below valuation in October. This translates to 7 per cent of total resale volume, compared with an average of 0.3 per cent for each month of the first half of the year.

Lower application rates for November's BTO and SBF exercise

The application rates for November exercise are relatively lower this time round.

For example, the number of applications for BTO flats in areas such as Sembawang is lower than the number of flats put up for sale.

There were 85 applicants for 174 five-room units in Sembawang. In Bukit Batok, there were 401 applicants for 591 four-room units in Bukit Batok.

Mr Khaw said another sign of a more balanced housing market was in the decline of the number of applicants per unit. The average BTO application rate has fallen from a high of 5.3 in 2010 to a low of 2.9 this year, he said.

"We have cleared the backlog of young families buying their first flats, with average BTO application rate for first-timers holding steady at below two times."

The application rate (excluding studio apartments) in the latest November exercise was 1.2, HDB data showed yesterday.

For second-timers, average application rates for BTO flats fell to 2.4 times in the latest exercise from the peak of 25.9 times in November 2011.

That said, demand from singles remained high, with average BTO application rates at 25.2 times in the latest exercise, but still down July's 57.5 times, when the government first launched projects with BTO flats set aside for eligible singles.

Analysts said the results are not surprising.

Eugene Lim, key executive officer at ERA, said: "Due to the sheer number of flats that have been put on sale, this is possibly the biggest number of flats that have been put on sale in recent times."

Mr Lim also cited the wide variety of locations and the types of flats available as possible reasons for the lower demand.

According to analysts, home buyers are also lured by the lower cash premiums in the resale market.

"Cash premiums have come down, it is nice to see valuations, or sale prices equal to valuation or below valuation. This has attracted some buyers back to the resale market again," explained Chris Koh, director of property firm Chris International.

"Moving forward, I should see more demand now coming back to the resale market because prices of the resale flats have gone down."

According to figures from the Housing and Development Board, the average number of flats transacted below valuation was five per month in the first half of 2013. The number has increased to 105 in October 2013.

And while the government has launched 25,000 new flats this year, Mr Koh believes authorities are unlikely to commit to a figure next year, and will probably monitor and adjust BTO supply after every exercise.

Source: 2th December 2013 Chanel News Asia

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HDB to start tapering off construction programme from 2014

National Development Minister Khaw Boon Wan said the tapering will be done in a "measured" way to allow the housing market to gradually adjust.

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