A recent housing report by S&P Global Ratings said cooling measures have had some success in controlling house price inflation in the residential property market of Singapore. The report said that residential property markets in Asia-Pacific remain resilient amidst favourable economic conditions, tight labour markets and an accommodative monetary policy or cheaper money have supported the trend.
The report noted that while the private residential property market improved in the first quarter this year following a long period of price falls, public housing in Singapore is still undergoing “mild price declines”.
The price of HDB resale flays has not kept pace with the positive property market sentiments, fueled by several high-profile en bloc sales since the 3rd quarter of 2017. HDB resale flat prices fell by 0.8 per cent, from 132.6 in 4th Quarter 2017 to 131.6 in 1st Quarter 2018.
The median resale prices of HDB flats continue to drop even as the public housing developer announces the release of thousands of new Build-To-Order (BTO) flats.
The median resale prices in the various towns tabulated by HDB for the 1st Quarter of 2018 indicated that HDB resale flats in the Central region and Queenstown commanded top prices. 4-room HDB resale flats in Central region commanded a median resale price of $850,000, while flats in Queenstown commanded a median price of $722,500. At $650,000 and $640,000, the median resale prices in the estates of Bukit Merah and Clementi came in at third and fourth highest respectively.
Median resale prices of 4-room HDB flats in several estates came in at the $500,000 range. These flats include those in the estates of Bishan, Geylang, Kallang/Whampoa and Toa Payoh. 4-room HDB resale flats in Choa Chu Kang and Woodlands commanded the lowest median resale prices at $331,000 and $330,000 respectively.
S&P Asia-Pacific economist Vishrut Rana noted that out of the markets his firm covered, prices in the latest quarter fell in only three places – “mainland China’s tier-one markets, public housing in Singapore and Sydney.”
He added: “Several indicators, including residential transactions and housing starts, are showing cyclical downturn. Macroprudential policies have been effective in slowing down new mortgage borrowing, particularly by investors.”
A report by RHB Invest cautioned a few days ago that a high number of supplies coming onwards – following a surge of en-bloc sales – are likely to dampen residential property market over the next few years. “This is because developers have to build, sell and complete en-bloc land projects within a 5-year period to avoid higher charges,” it noted.
On the demand side, affordability in the residential property market has improved with the recent rebound in property prices, driven mainly by local buyers. However, low rental yields are likely to keep away property investors who are chasing for good returns.
The report suggested that property prices are likely to grow by 5-10 per cent in 2018, with the pace of increase to slow in second half with the oncoming rise in supply. Property prices are also expected to reach a peak within the next few years. But liquidity from en-bloc, and replacement and pent-up demand, should allow the
property cycle to last for a few years.
RHB said that in its view, Singapore is likely to see prices increase up to 20 per cent more from the current value before tapering off.
Chief mortgage consultant of icompareloan.com, said that despite the falling prices or resale HDB flats, its lessees are “sitting on stagnant equity in the form of their HDB house that is fully paid up or mostly paid up.”
The consultant, Mr Paul Ho added that “actually a sizable number of HDB flat lessees may buy 2 condos if they sold their HDB flat.”
“Those that don’t want to buy 2 condos, may instead opt to buy 1 condo, or simply buy another HDB flat. But the effect is the freeing up of equity which can be used for a child’s University education or simply to buy a retirement plan so as to retire better,” he said.
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