The worst scenario for the HDB resale flat market is that, in a falling market, in order to stabilize the price and supply in the open market effectively, the government/HDB may shift the goal post further by extending the minimum occupation period, longer (
Example: You must live in your HDB flat for 10 years before you can sell it, regardless of whether you bought directly from the HDB or in the open market. The lock-in is known as the minimum occupation period, 10 years was the original HDB resale rule in the 60's then). And if HDB flat owners (BTO and resale) could not meet the new requirement, exception is granted to sell back to the HDB at the board's stipulated price, not at market price. Should this happen, late-comers (Singaporeans + PRs) who purchase their HDB flats at high prices with CPF funds + cash COV past 3 years will incur huge losses if they've no holding power.
If one analyses HDB flat as a commodity stock rather than a home, the law of supply and demand should force the HDB resale price to fall according to market forces. The HDB Resale Price Index chart (2005 to 2013) is similar to Blumont's chart, prior to its collapse. A long black marubozu (an early signal) followed by a 12% price decline will confirm a major trend reversal from bullish to bearish. (
Note: The
3 years curb on PRs buying resale flats is also quite similar to brokering firms imposing trading curb on Blumont.)
20% of resale flat buyers seek proximity grant ~ 2 Nov 2015
HDB resale prices fall for ninth consecutive quarter ~ 23 Oct 2015
Khaw Boon Wan on Proximity Housing grant ~ 7 Sep 2015
Proximity Housing Grant~ 26 Aug 2015
Prices still not going down despite worldwide depression ~ 28 Aug 2015
MND releases details on Proximity Housing Grant and other changes ~ 25 Aug 2015
Housing moves to benefit HDB sector, hit private market: Analysts ~ 24 Aug 2015
'If you don't sell today, by the time you want to sell, the prices could have gone down a lot more.'Every dog has its day every day has its way; in Chinese it's known as
风水轮流转。 "After losing $100k on my HDB flat in 2005, I now have a landed property!" ~ 4 Sep 2013
My first property foray - a HDB flat - ended in a $100,000 loss ~ 29 Aug 2013
100,000 HDB resale buyers hit by price slideBy Andrea Tan
April 28, 2001
AS many as 100,000 buyers who bought resale HDB flats in 1996, 1997 and first half of 1998 face losses if they sell their flats now.
According to latest figures from the board, public flat prices have fallen for four consecutive quarters. For the first three months of this year, public flats lost 3.2 per cent of their value compared to the preceding quarter. Viewed against the recent peak in Q1 of 2000, prices have fallen 8.5 per cent and are 25.4 per cent off the high in the last quarter of 1996.
With developers cutting prices of 99-year leasehold suburban condominiums, this means there is little or no upside for HDB flats, property agents said.
"Developers have dropped prices for 99-year leasehold suburban condominiums in order to move units and this narrows the price gap with executive condominiums (ECs)," said Albert Foo, Nationwide Realty chief executive. "If developers decide to go aggressive and lower prices of ECs, prices of bigger HDB flats can't move up and may even have to drop. There will be a domino effect."
This is sobering news for those who bought their flats in 1996, 1997 and the first half of 1998. They have watched the prices of their homes fall by up to 25 per cent, bringing prices back to levels in the third quarter of 1998 in the aftermath of the Asian financial crisis.
There are now over 100,000 flat owners eligible to sell their homes in the resale market. But they would have to take a loss in the current market.
The consolation is that demand has picked up. HDB data showed that the 10,198 resale applications for Q1 2001 is a slim 1.4 per cent improvement over Q4 and 20.8 per cent higher than the same period last year. Applications for three-room flats, however, fell 7 per cent compared with the previous quarter.
While prices are expected to fall another 5 per cent, Mr Foo said the declines would be at a slower pace as volume gradually returns.
Newer towns like Jurong West and Choa Chu Kang have been most affected by the price erosion while mature estates including Marine Parade and Toa Payoh managed to keep prices fairly steady in Q1.
Said Mohamed Ismail, director at PropNex said: "In Jurong West, the slide has been tremendous. A valuation report for an exec flat there was $410,000 in January. In April, it had fallen to $388,000. There is a simple logic - supply and demand. There are no takers for units, especially larger flats."
Mr Ismail said estates like Yishun also have to contend with new ones like Sembawang. With the new flat queue shortened considerably, buyers would rather buy a flat in a new town than from the resale market.
Add to that CapitaLand cutting prices for its two ECs - the 754-unit Floravale in Jurong West and the 696-unit Woodsvale in Woodlands - exec flat and five-room flat residents in the vicinity can expect to feel the chill even more.
At an average price of $340 per square foot for the 240 units remaining at Floravale, a 1,200 sq ft unit would cost $408,000 now against $458,000 previously. This is only 7.4 per cent more than what an exec flat in Jurong West commands. The price gap with five-room flats, while still wide at 42 per cent, has also narrowed.
Agents say buying an EC is a more attractive option if size is not an issue. A typical exec flat is around 1,500 sq ft. After all, an EC boasts condominium facilities such as swimming pool and tennis courts and gain private property status after 10 years.
"CapitaLand's move will take away a large chunk of the HDB resale market in those areas, especially if buyers can get the $30,000 grant," noted a property agent. "The problem with the 20 per cent downpayment is also partially solved with the $15,000 unit trust voucher (which can be cashed out almost immediately)."
In terms of valuation, four-room flats at $228,900 recorded the greatest fall at 4.5 per cent year-on-year and 2.3 per cent against the previous quarter. Valuations for five-room flats slipped 1.8 per cent while those for exec flats slid 1.1 per cent against Q4.
The HDB handed out $924 million worth of mortgage loans to resale buyers or 3.8 per cent less than the previous quarter. However, the amount of CPF resale housing grants rose 8 per cent to $66 million. This means more first-time buyers bought flats during the quarter.