HDB resale price index falls 0.2%, transactions up 29.8%
The HDB resale price index dropped by 0.2% q-o-q to 130.8 in 2Q2019 from 131.0 in 1Q2019, according to data released by HDB on July 26. This was not surprising as the resale price index has remained unchanged from the flash estimate released four weeks ago, notes ERA Realty Network.
While this is the fourth consecutive quarterly decline, prices have dipped by less than 1% over the past year, indicating that the price decline has largely stabilised, notes Christine Sun, head of research and consultancy at OrangeTee & Tie (OTT).
Lee Sze Teck, director of research at Huttons Asia, says that prices were probably dragged down by flats older than 30 years. “With ageing flats in Singapore and more owners right-sizing, this proportion will likely increase,” he says. “Currently this proportion is around 40%. Many of these older flats are in their original condition and will require a fair bit of renovation. Therefore, they will not be able to command a better value than the previous transactions in the estate.”
The gradual decline in HDB resale prices appeared to attract more buyers to the resale market, despite the availability of new flats from the government, notes ERA. According to the HDB data, resale transactions rose by 29.8%, from 4,835 cases in 1Q2019 to 6,276 cases in 2Q2019. Compared to 2Q2018, resale transactions in 2Q2019 were 5.6% higher.
This is also the first time sales volumes had increased since the implementation of the cooling measures in July 2018. For 1H2019, the number of resale transactions reached 11,111 units, 6.8% more than the 10,399 units sold in 1H2018.
This also comes after the government’s announcement in May this year, of changes regarding the use of homebuyers’ funds in their Central Provident Fund (CPF) for the purchase of older leasehold residential housing and HDB flats. Homebuyers will be able to obtain bigger housing loans for their property purchases, so long as the property's remaining lease covers the youngest buyer till the age of 95. The revised CPF policy also favours middle-aged HDB homeowners who may want to buy older resale HDB flats to live near their parents. This will then increase the demand for older HDB flats and create a “positive impact” on the HDB resale market once its effect comes into full swing, notes ERA.
There has already been an increase in buying interest for older flats. “After the policy changes in May, we have observed an increase in sales inquiries and a greater buying interest for older flats recently,” says OTT’s Sun. “We have also observed more en bloc owners purchasing older flats after collecting their sales proceeds. Some may regard older flats as affordable given their low price quantum and large living spaces, and they get to keep a sizeable balance amount of their sales proceeds for retirement or reinvestment.”
Sun feels sales volume may continue to trend upwards in the coming months, although she reckons a price recovery may not be as quick given the increasing supply of HDB resale flats. “Given the influx of HDB flats reaching their five-year minimum occupation period this year and potentially more sellers vying for buyers, prices of flats may continue to face downward pressure for some locations. We maintain our price projection of between -1% and -2% for the whole of this year,” she says.
HDB will offer about 3,300 Build-To-Order (BTO) flats in Punggol and Tampines in August 2019 and about 4,500 BTO flats in Ang Mo Kio, Tampines and Tengah in November 2019. There will also be a concurrent Re-Offer of Balance Flats (ROF) exercise and Sale of Balance Flats exercise in August and November 2019 respectively.
Meanwhile, unselected ROF flats are available for open booking by eligible home buyers throughout the year.
Lakepoint Condominium in Jurong West has been launched for collective sale, announced marketing agencies Strata AMC and SLP International Property Consultants. The asking price will be disclosed only in discussions with interested developers, the agencies say.
The 36-year-old condo is next to the Jurong Lake District and was developed by Jurong Town Corporation in the 1980s. The development sits on a 562,285 sq ft plot which has about 63 years left to its 99-year lease. The 304-unit condo comprises maisonettes, studios, townhouses, penthouses, and five shop units.
The site has a gross plot ratio of 1.4 under the 2019 Draft Master Plan, and the development has a baseline record of 962,034 sq ft that points to potential intensification. A pre-application feasibility study indicates that the site is able to support a higher density based on traffic impact studies.
“Given its positive, large site attributes, Lakepoint Condominium is likely to gain strong keen interests from established developers, both local and overseas,” the agencies say.
New private residential developments are in limited supply around the Jurong Lake District area. The last government land tender in the vicinity was in 2015 and the site has been developed into the 710-unit Lake Grande, they add.
Lakepoint Condominium is a five-minute walk to the nearby Lakeside MRT Station on the North-South Line. It is also close to shopping malls such as JEM, Westgate, IMM, and JCube. Nearby educational institutions include River Valley High School, the Canadian International School, and Nanyang Technological University.
The tender for the collective sale closes on Sept 10.
The private property resale market continued to be in the doldrums even as new private home sales increased in the second quarter of 2019, revealed a Huttons report.
About 2,400 resale transactions were registered in Q2 2019, down 50 percent over the same period last year.
According to Today Online, the real estate firm attributed the poor sales performance partly to the significant gap in expectations between buyers and sellers.
“The plethora of new launches in (the second quarter) also drew away demand from the resale market. Nevertheless, prices in the resale market held steady,” said Huttons.
With 17 new launches in Q2 2019, developer sales climbed six percent year-on-year to around 2,500 units.
“The pickup in demand shows the underlying strength of the market and a return of confidence in property as a good store of value against uncertainty and inflation in the mid to long term.”
Huttons noted that the number of new units has been on the uptrend since February.
The average monthly sales in Q2 2019 stood at around 836 units, up from Q1 2019’s 613 units.
Treasure at Tampines was the best-selling new project, followed by Amber Park. Completing the top five best-selling new projects are Parc Botannia, The Florence Residences and The Tre Ver.
Looking ahead, Huttons expects private property sales for this year will to outpace that of last year, given that transaction volume for 1H 2019 is already higher compared to the same period last year.
Over the past 10 years working as a full time real estate salesperson, we have seen too many costly mistakes by Singapore property investors.
Here are 7 of the common yet painful mistakes investors commit:
No. 1 Not buying below market value! In fact, many bought above market value!!! It is the basic but often forgotten.
No. 2 Banking of Capital Appreciation and Overlook the importance of yield & cash flow.
No. 3 Not doing sufficient research, buying purely based on discount, emotion, many screw up here.
No. 4 Sell the property when there is a profit, this is like killing a goose that is laying golden eggs.
No. 5 Buying oversea, off plan, out of area, may lose 100% of your investment, get stuck and unable to find next buyer, happens way too often with oversea purchase.
No. 6 Getting emotional about the numbers, the numbers don't tell lie, getting emotional / not trusting the numbers will come back to hurt you.
No. 7 Over focus on the importance of Freehold and forget about location!!! Location is still the number one factor in property investment!!!
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