Is Singapore Public Housing Really All Doom And Gloom?
I just stumbled upon this article titled 'Why now is the best time to buy a HDB resale flat'. It was published 2 months ago on one of the popular property web portals in Singapore.
It was quite an interesting read, and a good contrast to all the doom and gloom surrounding the continuous downward price trend for HDB properties since 2013.
By now we have surely read to death the news articles on the decaying 99-year leases of our public housing, how not all HDB flats will be eligible for Selective En bloc Redevelopment Scheme (SERS), as well as sponsored posts by my many agent colleagues on how you can turn your HDB liability into an asset... among other HDB related topics.
Reality is, when I analyse history, last year (2017) was the only time since the HDB price index was tracked in 1990 that an uptick in private property prices was not in tandem with a similar movement in the HDB index.
Is this a sign of changing public sentiment towards our HDB flats?
Government has the responsibility to ensure that public housing still remains accessible to the masses. As the prices of private property ownership continue to rise, an increasing number of the population would have no choice but to look towards resale flats.
The article's first point illustrates how prices have dropped since before 2014.
Taking it further as I am currently selling a couple of HDB Maisonettes at Toh Yi Drive, I decided to run the figures on my analyzer system to better understand how prices there have changed over the last 5 years. To share some findings, interestingly, while the overall HDB index and the HDB executive flat index followed the same down trend since 2013, when I ran exclusively for executive apartments in Toh Yi, the data actually shows a slight uptrend!
In fact, resale prices there first hit the 1Mil mark in May 2013. Then in 2017 two units sold for $1.015 million and nearly $1.019 million in May and September respectively. Last I checked, in Aug 2018 (post cooling measures), there was a transaction at 1.058 million. Impressive!
Curious, I took the analysis a step further to the other areas of Singapore with executive apartments to identify which areas contributed more significantly to the fall in the index. Turns out to be the less mature estates such as Sembawang, Sengkang, Woodlands etc. And the most expensive estates to buy executive apartments? Not to be the ever popular Bishan, but actually Toh Yi and Queenstown.
I mean, you certainly can understand why these plus sized homes remain in such high demand among buyers despite the general market concerns. We like a big space to live in, don’t we?
Within that price range, our other options in the market are:
a) A 1bedroom condo at a new development, approx. 500sqft
b) A 2bedroom resale condo, approx. 700-800sqft
Did I mention that the HDB executive flats are in excess of 1,500sqft? If you have a family with 2 to 3 kids, it’s quite a clear choice, I think. Plus, you get to stay in a mature estate like Toh Yi or Queenstown!
For Queenstown, I guess its value stems from being the executive apartments closest to the CBD (No executive apartments in the central districts or Bukit Merah/Tiong Bahru areas), also only a short walk away to Queenstown MRT station. While for Toh Yi, despite being further away, it fulfils 4 key criteria in identifying a good location to stay:
1. Education: Good School within 1km in Pei Hwa Presbyterian Primary School
2. Food and Amenities: Bukit Timah Food Centre, Chun Tin Road and Cheong Chin Nam late night eateries
3. Entertainment: Shopping at Beauty World Centre, Bukit Timah Plaza, and Movies at King Albert Park Residences
4. Transport: Beauty World Downtown Line station which links direct to key locations within the City
All within short walking distance to the cluster!
More titbits... I found that in 2012, our then Minister for National Development Mr Khaw Boon Wan said that the government would no longer be building any more executive maisonettes. This is because the current executive condominium (EC) scheme provides "a wider range of flats to cater to Singaporeans' diverse preferences", Mr Khaw said.
Scarcity + Mature Estate + Spacious ➡️ High Demand ➡️ Price Growth
Would the prices of the EAs and EMs drop some day? I’m sure they would as the rate of depreciation from the decaying lease would outpace any further price growth. As the lease falls it also becomes tougher for buyers to make large quantum purchases due to CPF and loan restrictions. This reduces the affordability of prospective buyers and sellers would therefore have to lower their selling prices to match. Speaking of which, I think the impact of the decaying lease is something which society underestimates. Topic of discussion for another day…
Having said that, I doubt the buyers of such units today would really care too much about the price they are paying now as well as the future value. They know they are buying something rarely available, a part of Singapore’s history, and may simply want a comfortable spacious home to stay for the rest of their lives.
Selling a property requires a combination of marketing effort for outreach and analysis to find angles. Been advising buyers for quite a bit recently, so time to turn it around. 😉
Link to the original article here.
Another article of interest I read during my exploration was on the 4 key predictions for the HDB market in 2019. It also led me to do some analysis and I think that HDB prices as a whole are bottoming out. There are a few indicators which help to support the price from further falling. Commentary for another time!
This was a long long writeup so thanks for reading till the end and hope you enjoyed it in some way. Regardless of your thoughts, remember that knowledge is power and anyone looking to transact something in property should seek consult from someone you trust. It could be true that now is the best time to buy a HDB resale flat, but it may not be the most suitable purchase for you!
The agents of tomorrow are equipped with the right knowledge, skillsets, tools and most importantly on the ground know-how to value add your decision making process and plan efficiently your property road-map for the next 15 to 20 years. I wouldn't go as far to say that he/she/I would always be right, but have faith & trust to work things out together.
The agent-client relationship is a long term one 👍