(F) Overall performance of the HDB resale market

[E.1] Punggol BTO flats more than three times subscribed

2,344 Singaporeans are vying for 750 new flats at Punggol Arcadia, the latest Build-To-Order (BTO) HDB flats in Punggol. The BTO project is located at the junction of Punggol Place and Punggol Field and was launched in mid-November 2008.

Buyers could choose from 120 three-room, 465 four-room, and 165 five-room flats. The flats cost between $181,000 and $211,000 for a three-room unit, between $268,000 and $327,000 for a four-room unit, and between $356,000 and $416,000 for a five-room unit.

The overwhelming response to the BTO project means that the underlying demand for new flats is still strong, amidst the general cautiousness. The current economic worries may have prompted more home buyers to go for the safer option of public flats.

[E.2] Pricey condo-like HDB flats drew few buyers
 
Natura Loft at Bishan, the latest HDB’s Design, Build and Sell Scheme (DBSS) flats, has drawn about 600 applications for its 480 units, a far cry from the previous overwhelming responses seen at Premiere @ Tampines, City View @ Boon Keng, and Park Central at Ang Mo Kio.

Besides the apparent economic woes, another reason for the lukewarm response might be the high asking price. For example, typical four-room 95-sq m units are asking from $465,000 to $586,000; while the five-room 120-sq m flats cost $600,000 to $739,000. On the average, the unit price works out to about $450 to $570 per sq ft (psf).

Comparatively, a new 99-year leasehold condo, Rosewood Suites in Woodlands, is being attractively priced at between $590 to $600 psf.

[E.3] HDB sub-letting rents to fall in tandem with private rents

As rents for private condos and apartments are softening and expected to continue sliding due to the deteriorating economy and increasing supply of new condos next year, HDB sub-letting rents are expected to follow suit.

In fact, the downward pressure is already being felt. First of all, the sub-letting rents for HDB flats have shown smaller increases in the third quarter (Q3) of 2008.

For example, HDB sub-letting rents for 4-room and 5-room flats in popular areas such as the Central areas, Bukit Merah, Queenstown, and Marine Parade are facing downward pressure. (See tables [14] – [17] below).

Table [14] – Median sub-letting rents for central areas in the first 9 months

Table [15] – Median sub-letting rents for Bt Merah in the first 9 months

Table [16] – Median sub-letting rents for Queenstown in the first 9 months

Table [17] – Median sub-letting rents for Marine Parade in the first 9 months

*denotes decrease in rents.

Secondly, the number of HDB flats which received the green lights from HDB for ‘whole flat sub-letting’ increased in Q3 to 21,400 units from the 20,200 approved units in Q2 2008. However, ‘whole flat sub-letting’ deals fell 4% to 3,960 cases in Q3. If the trend continues, the sub-letting rents will fall further.

Note: HDB flat owners are allowed to rent out their whole flat after having fulfilled the minimum occupation period (MOP) of three years, if the flats have been purchased from the open market without any housing subsidies from the government. The MOP is five years if the flat owners have taken the government subsidy, such as the CPF Housing Grant.

[E.4] Resale transaction in November 2008 increased by 43 cases

The total HDB resale volume in November 2008 was the third highest this year. After hitting the highest volume in September 2008, the resale activities dipped slightly in October with 2,389 resale transactions. However, with more bad news of corporate layoffs and the heightened fears for the economic uncertainties, more home buyers opted for the safety of subsidised flats; and the buying trend is likely to continue into 2009.

Table [18] – Resale HDB flat Transactions in November 2008

[E.5] Larger flats in demand – with volume of 5-room flats hitting year’s highest

The deteriorating economy may have compelled many aspiring private home buyers to switch to larger public flats (and probably also to take advantage of the subsidised home financing).

The demand for bigger flats, such as 5-room and executive flats, has increased steadily since January 2008, as the global financial crisis deepened. The resale volume of 5-room flats reached its highest level this year, hitting 699 deals in November – 64 deals more than in October 2008 and 102 deals more than in January 2008.

The resale volume for executive flats crossed the 200-deal threshold for the second time in the year, reaching 204 deals in November – 22 deals more than the previous months.

Table [19] –Comparison of monthly total HDB resale transactions from January to November 2008

Source of info – HDB inforweb

[E.6] Case Study – 5-room resale flats more expensive in November 2008

The highest resale volume of 5-room resale flats was accomplished with generally higher resale prices. Samples of resale prices of 5-room flats in the 10 largest HDB heartland estates were used in the latest case study to ascertain the price trend of 5-room resale flat across the island.

It was discovered that the 5-Room resale flats in seven out of the 10 largest HDB heartland estates experienced higher median resale prices. (See shaded areas in Table 20 below)

Table [20] compare resale prices among the most populous heartland estates

Likewise, a similar study was done on the smallest heartland estates. It was ascertained that, as the resale prices in the smallest estates are already very high, the general upswing in resale prices for larger flats elsewhere did not occur to the larger units in the smaller estates, except for Marine Parade which is still the choicest location.

Table [21] compare resale prices among the Smallest heartland estates

Findings: Only one (01) out of the three (03) smallest HDB heartland estates experienced higher median resale prices for the 5-Room resale flats.

[E.7] Higher resale prices supported by high demand for resale flats

Checks on the 5-Room flat resale volume in the 10 largest heartland estates revealed that there were 21 more resale 5-room flat transactions in November 2008. Likewise, at the smallest HDB estates, where resale prices tend to be much higher than elsewhere due to limited supplies, there were 12 more resale 5-room flat transactions.

This means that the rise in median resale prices was supported by higher demand from the buyers, many of whom are probably making the necessary financial adjustments in these tumultuous times. It also means that the underlying strengths in the HDB resale market are strong, while the country goes into an unchartered economic territory next year.

(F) News on Government Land Sale (GLS) Programme

[F.1] Government Land Sale (GLS) programme suspended

The Singapore government has suspended sale of state sites from the Confirmed List for the first half of next year. The remaining sites on the Confirmed List will be transferred to the Reserve List.

In good measures, the government has also lifted an earlier ban on converting office space in the central area to other uses, such as serviced apartments.

Any developers that need land will still be able to acquire it through the Reserve List where the government will release a site for sale if an interested party submits an application and guarantees to pay a minimum price acceptable to the state.

[F.2] No show at tender of Punggol EC site

The fourth executive condominium (EC) site launched for sale by the Housing & Development Board (HDB) received no bid at the close of the tender in November. The 242,159 sq ft and 99-year leasehold site is near Punggol MRT Station and the future Punggol Town Centre.

The no-show by developers may be due to the uncertain prospect of the property market amidst one of the worst economic crises the world has witnessed for decades.

There might be a valid concern among buyers that some resale 99-year leasehold condo units might cost the same or less than EC units as the current economic crisis takes fuller shape later.
 
[F.3] URA tries its luck with Dakota and Seletar sites

Despite the no-show at the last tender of an executive condo site in Punggol, the URA has released sales details for two Reserve List sites - at Dakota Crescent and Seletar Road.

The 1.7 ha site at Dakota Crescent is for a residential project with a gross floor area of 647,599 sq ft. It is near the future Singapore Sports Hub and upcoming Dakota MRT station.

The 2.1 ha site at Seletar Road is meant for a mixed commercial and residential development with a gross floor area of 226,042 sq ft. It is in a residential area at Seletar Hills near the future Seletar Aerospace Park.

Read the latest updates on other property segments:

Part 1: The impact of the US crisis on the Singapore property market

Part 2: Performance of the private residential property segment

Part 3: The non-residential property segment & foreign interest in Singapore