2-room Flexi HDB scheme to be implemented
Studio apartments and two-room flats are to be offered through a single scheme called “2-room Flexi”. National Development Minister Khaw Boon Wan announced the new development on MediaCorp’s Capital 95.8FM on 23 June, Tuesday. The scheme aims to provide a flexible lease tenure that ranges from 30 to 99 years to a wider pool of Singaporeans such as seniors, singles and low-income families. Presently, studio apartments have a fixed lease of 30 years to enable seniors above the age of 55 to monetise the older HDB they reside in. The short lease also keeps prices low. On the other hand, two-room flats come with a 99-year lease, meant for families or singles. The scheme is expected to be ready in August in time for the next (Build-To-Order) BTO exercise and will be implemented with limitations. For example, a lease below 99 years will not be applicable for young couples who will likely outlive the lease.
HDB is also investigating the possibilities of raising the income ceilings for prospective HDB and Executive Condominiums (EC) buyers. Mr Khaw noted that while 80 per cent of applicants meet the income requirement, income levels have been rising steadily since 2011. Income ceilings were last increased in 2011, from S$8,000 to S$10,000 for BTOs and from S$10,000 to S$12,000 for ECs. ERA Key Executive Officer Mr Eugene Lim said to Channel NewsAsia that he speculates a reasonable increase from S$10,000 to S$12,000 for BTOs and ECs from S$12,000 to about S$15,000 in the new adjustment. More details will be released in August.
Additional support for couples buying resale units near parents
National Development Minister Khaw Boon Wan announced in a blog post on Friday, 19 June that the government will be looking into further support for couples opting to purchase resale units near their parents. For the last five years, 36 per cent of homebuyers in mature estates have applied under priority schemes to live near their extended families. This is above the national average of 24 per cent.
Mr Khaw acknowledged that despite the ministry’s best efforts, there is a lack of land in mature estates for building new flats. However he noted the strong uptake of priority schemes by applicants who wished to continue a close living arrangement with their extended families. In 2014, 90 per cent applied under the Married Child Priority Scheme (MCPS) while ten per cent applied under the Multi-Generation Priority Scheme (MGPS), up from five per cent the year before. A total of 284 pairs of parents and children submitted applications based on the enhanced MGPS since September 2013.
Mr Khaw highlighted the upcoming BTO project of Bidadari, providing assurance that applicants’ with parents living in Toa Payoh, Potong Pasir, or within the 2km radius will be given priority.
UOB Kay Hian: End to property cooling measures nearing
A report from UOB Kay Hian suggested that property cooling measures are likely to be lifted by early 2016. UOB Kay Hian analysts Vikrant Padey and Derek Chang highlighted sluggish home sales in May and extreme cutbacks in land supply for private residential properties as indicators that a softening in policies is likely to happen. May’s decline in units sold demonstrates a dip in home-buying sentiment, which could bring the government to ease policies curbing demand, since the cutback in supply was likely meant to avoid an extreme price amendment.
BNP: Private properties to drop another 10 per cent in next two years
BNP Paribas believes that private property prices will continue to plummet by a further ten per cent until price-to-income ratio reaches approximately 8.5 times, assuming that domestic income growth is at five per cent per annum. The report by BNP also warns that the Total Debt Servicing Ratio (TDSR) is likely to persist to manage purchasing power.
Analysts at BNP said, “A combination of weakening regional growth prospects, macro-prudential tightening and a sizeable supply-demand imbalance has taken the steam out of Singapore’s property market. The general consensus appears to be that the authorities have sufficient control over the property market to maintain the existing desirable slow bleed in residential prices”. Citing the impact of TDSR as two-fold, BNP noted that it managed demand by capping the number of households and promoted long-term financial security.
Other issues cited by the report include excess supply in the private property market due to the government’s strict stance on immigration. Foreign and Permanent Resident (PR) population have been driving Singapore’s economic growth, be it in purchases or rentals. Strict immigration regulations were introduced just as new units are being released in the market at an unexpected pace.
Creative efforts deployed by EC developers
More executive condominium (ECs) developers are getting innovative to entice buyers and differentiate themselves amid weak market circumstances. As of last month 4,176 EC units remained unsold. This is an increase from 2,738 in May 2014.
The Vales EC in Sengkang is marketing two-storey villa units which are 159 square metres each with private parking lots. While prices are not fixed, it is expected to compete with Bellewaters EC which boasts a median price of S$813 per square feet (psf). Booking is expected to start on 18 July.
Meanwhile, cycling is the main attraction at Westwood Residences which launched on 30 May. It boasts 500 bicycle lots, a maintenance area and a shared velodrome, an arena for track cycling. Lake Life which launched in November, on the other hand, offers residents a variety of classes ranging from baking to fitness-related lessons.
Price trends in the property market have caused EC developers to get creative. While ECs are popular when the price gap between private and public housing widens, the recent narrowing prices have caused some stress on developers, Mr Nicholas Mak, Executive Director of Research and Consultancy at SLP International Property shared.
Toa Payoh and Dundee Road tenders draw competitive bids
A leading bid of S$345.86 million was placed by Evia Real Estate and Malaysia’s Gamuda Bhd, outdoing 13 other developers for a prime 99-year lease residential site in Toa Payoh. Similarly, an attractive bid of S$483.2 million by HY Realty topped nine other bids for a 99-year lease Dundee Road residential site.
The 12,154.6 square metre (sq m) Toa Payoh site is situated at the junction of Lorong 6 and Lorong 4 Toa Payoh, and estimated to be S$755 per square foot based on the bid. The 10,516 sq m site at Dundee works out to be approximately S$871.14 per square foot per plot ratio (psf ppr). The Toa Payoh site can accommodate 535 private residential units, or potentially a mix of flats and private homes if developers seek prior written approval while the Dundee Road site can yield 645 units.
The top bid by Evia and Gamuda was only 1.1 per cent more than the next highest bid of S$342.1 million, the narrowest gap reported since last year’s auction over Choa Chu Kang Drive which saw a 2.2 per cent difference. Dr Chua Yang Liang, Head of Research and Consultancy at Jones Lang Lasalle Singapore, said in an interview with Channel NewsAsia that the close bids reflected potentially more consistent views among developers that will be further supported by “more transactional data” that help developers determine market demand.