Jump to content
Find Professionals    Deals    Get Quotations   Portfolios
Sign in to follow this  
skinny

Resale Hdb - Going Forward

Recommended Posts

Mar 2011 - HDB resale market set to cool

http://www.asiaone.com/Business/My+Money/Property/Story/A1Story20110304-266515.html

Oct 2011 - Prices of resale HDB flats up 3.8% in Q3 2011

http://business.asiaone.com/Business/News/Story/A1Story20111028-307439.html

Nov 2011 - Homebuyers less keen on HDB resale flats with new measures

http://business.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20111101-308186.html

So, the policy is not working?

 

Share this post


Link to post
Share on other sites
Looking for good contractors? Click here for your request

base on ex-HDB minister say

http://www.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20100427-212663.html

Thu, Apr 29, 2010

New HDB flats still affordable

THE hot issue of high property prices received another airing in Parliament yesterday, with the Government releasing fresh figures to show new flats are affordable to all first-time buyers.

In giving the numbers, National Development Minister Mah Bow Tan also addressed the issue of how findings can change when different base years are used to look at the HDB resale price index and household incomes.

He was replying to Mr Lim Biow Chuan (Marine Parade GRC) who had asked for housing affordability data based on how the median household income has risen in comparison to the HDB resale price index. Mr Lim also wanted to know if resale prices had risen faster than the growth of median household income in the last decade when different base years are used.

The issue of the relative pace of price and income increases first came under scrutiny early this month when Mr Mah released the two sets of figures in a Straits Times interview.

They showed that HDB home prices are not beyond reach. This is because the resale price index has risen by an average of 3.2 per cent annually from 1999 to last year, lower than the 3.9 per cent increase in median household income.

But opposition Reform Party member Hazel Poa later wrote in a blog post that the results would be different if the base year is changed from 1999, to say 2001 or 2006.

Mr Mah did not refer to Ms Poa, but said in his reply to Mr Lim: 'It is possible that prices of resale flats have risen faster than incomes when indexed against different years.'

Using more recent years like 2004 to index the growth, he said the an-nual growth in the resale price index exceeded income growth, owing to strong demand and the quick economic recovery (see chart).

But he also pointed out that if 1995 was used as the base year, it would yield a different result as resale flat prices rose by 2.8 per cent, lower than income growth of 3.2 per cent.

'Ultimately, what matters is whether at all times, first-time home buyers are able to afford HDB flats,' he said.

To that, the answer is 'yes', he said, as the Government has done two things to ensure new flats are not priced out of reach. One, new flats of different sizes and in different locations for different income groups are always available. Two, setting these flat prices so that they are well within the means of buyers in various income ceiling groups.

Elaborating on how new flats are affordable, he referred to a formula called the debt service ratio (DSR). It compares the monthly mortgage instalment to the monthly household income. The average DSR for new flats launched in the last six months when property prices surged ranged from 17 per cent to 25 per cent (see table). This applies to new flats in non-mature estates. For those in more central locations and mature estates, the DSR is around 30 per cent.

These figures are within the international benchmark for housing affordability, which ranges from 30 per cent to 35 per cent, he said.

But Nominated MP Paulin Straughan pointed out that the majority of flat owners seem to be using most of their Central Provident Fund (CPF) savings to pay for their home loans, with those living in three- and four-room flats having to top them up with cash. Will this lead to insufficient retirement savings, she asked.

Mr Mah said: 'I have to emphasise that buying an HDB flat is not an expenditure, it is an investment...because when you buy an HDB flat, at the end of the tenure of the flat or towards your retirement, that HDB flat is a very significant store of value.'

Citing a Department of Statistics survey, he said on average a Singaporean family has more than $100,000 in asset value in their flat. If that asset is monetised, they need not fear using up their CPF savings to pay for it.

'This is another vindication of our home ownership policy because if we were to use that same amount of money - 25 per cent of income - to rent rather than to buy a place, then at the end of 20 or 30 years, you will not be having this asset which you can use for retirement income,' said Mr Mah.

On whether the $8,000 household income ceiling for new flat buyers will be raised, he said the answer is still 'no'.

'We've a finite housing budget... and at the household income ceiling of $8,000 today, we're actually subsidising about 80 per cent of the population,' he said.

20100427.111321_page2hdb.jpg

 

Share this post


Link to post
Share on other sites

It's not working at all!

Because of the new measures, sellers are less willing to sell their HDB flats especially if they already holding pte apartments coz they won't be able to buy HDB flats under the new ruling.

Also, sellers are asking for high COV and that pushes up the selling price and also future valuation and thus it's a vicious cycle and the price is just going to go up and up.

Given the stand that HDB flats are not for investment purposes, why should there be COV? Shouldn't it more appropriate for HDB flats to be sold at maximum the valuation price? And in that case, they are already making good returns since the prices have went up so much for the past few years. And if there's COV, for those taking bank loans, shouldn't they allow the bank to value the HDB flats and decide on the loan amount like pte properties?

Scenario

For a relatively good location 4 room flat valued at $450,000, most of the asking COV is around $50,000 now. Thus, the amount of cash the buyer has to fork out is:

5% of $500,000 = $25,000

COV = $50,000

1% commission = $5,000

That is already $80,000 cash without including the miscellaneous fees etc. And what about renovation and furnishing?

So we need more than $100,000 cash to get a HDB flat? How many can actually afford that?

Isn't it very illogical for government subsidised housing to cost this kind of amount? And pushing out more BTOs are not helping the resale market either. Something needs to be done to the COV policy.

 

Share this post


Link to post
Share on other sites

It's not working at all!

Because of the new measures, sellers are less willing to sell their HDB flats especially if they already holding pte apartments coz they won't be able to buy HDB flats under the new ruling.

Also, sellers are asking for high COV and that pushes up the selling price and also future valuation and thus it's a vicious cycle and the price is just going to go up and up.

Given the stand that HDB flats are not for investment purposes, why should there be COV? Shouldn't it more appropriate for HDB flats to be sold at maximum the valuation price? And in that case, they are already making good returns since the prices have went up so much for the past few years. And if there's COV, for those taking bank loans, shouldn't they allow the bank to value the HDB flats and decide on the loan amount like pte properties?

Scenario

For a relatively good location 4 room flat valued at $450,000, most of the asking COV is around $50,000 now. Thus, the amount of cash the buyer has to fork out is:

5% of $500,000 = $25,000

COV = $50,000

1% commission = $5,000

That is already $80,000 cash without including the miscellaneous fees etc. And what about renovation and furnishing?

So we need more than $100,000 cash to get a HDB flat? How many can actually afford that?

Isn't it very illogical for government subsidised housing to cost this kind of amount? And pushing out more BTOs are not helping the resale market either. Something needs to be done to the COV policy.

COV is hard to control because there is competition.

What therat says is correct, lesser seller and higher demand fuels up everything. For current interest rate, the installment is much lower than rental yield. I think the price will continues to rise till rental yield near to monthly installment.

 

Share this post


Link to post
Share on other sites

I think the COV is dropping after looking through some ads and made some calls.....

:dancingqueen:

COV is hard to control because there is competition.

What therat says is correct, lesser seller and higher demand fuels up everything. For current interest rate, the installment is much lower than rental yield. I think the price will continues to rise till rental yield near to monthly installment.

 

Share this post


Link to post
Share on other sites

Actually it's not low, just lower as compared to the previous months. Now you can still get some units asking for below $30,000. Some time back, everyone was asking for above $50,000, which is really ridiculous.

Don't forget this COV thing is above valuation, which means the unit doesn't cost this much according to the market. :furious:

how low is COV?

 

Share this post


Link to post
Share on other sites

In the first place, the valuation of the flat itself is made based on recent transactions of nearby flats.

Should valuation method take into account years of lease, it will be substantially lower.

However, it is in the government's interest to keep property prices high.

They can:

- sell land at higher price

- collect more property tax

- attract foreign investors

- banks lend out more to churn the economy

- people work longer years

- many more advantages than you can imagine.

And more importantly, to keep the people busy earning money.

They will and always will try to keep property prices high, even in recession times or bad times. Though prices will be affected by external factors, they will do their utmost best to keep moving prices up.

There is no other reason to make flats cheap for people. At least, i cannot think of any.

 

Share this post


Link to post
Share on other sites

In the first place, the valuation of the flat itself is made based on recent transactions of nearby flats.

Should valuation method take into account years of lease, it will be substantially lower.

However, it is in the government's interest to keep property prices high.

They can:

- sell land at higher price

- collect more property tax

- attract foreign investors

- banks lend out more to churn the economy

- people work longer years

- many more advantages than you can imagine.

And more importantly, to keep the people busy earning money.

They will and always will try to keep property prices high, even in recession times or bad times. Though prices will be affected by external factors, they will do their utmost best to keep moving prices up.

There is no other reason to make flats cheap for people. At least, i cannot think of any.

True, but if prices were to be significantly lowered....it will also affect the people....most of our "wealth" is tied to property & their prices.

But I do believe, there are some new measures to control valuation, I don't see it moving up as fast as it did in 2010.

In 2010, there were cases where I needed to redo the valuation reports...and there was significant increases just within 3-months of about $15k-$20k.

This year, I also redid some valuations....some of them remained the same no increase despite other transactions being lodged for the same block.

In the heat of the recent escalation of prices...people have also forgotten that some HDB flats sold below valuation in the recession periods, some of the younger couples buying their first homes have this impression that prices can only go up & not down.

When my parents bought our current HDB flat in Yishun it cost between $300k-$350k in 1996/1997 (I was still young then don't really know the price), the current selling price in 2011 is in that same range...

Best,

Mark

 

Share this post


Link to post
Share on other sites

True, but if prices were to be significantly lowered....it will also affect the people....most of our "wealth" is tied to property & their prices.

But I do believe, there are some new measures to control valuation, I don't see it moving up as fast as it did in 2010.

In 2010, there were cases where I needed to redo the valuation reports...and there was significant increases just within 3-months of about $15k-$20k.

This year, I also redid some valuations....some of them remained the same no increase despite other transactions being lodged for the same block.

In the heat of the recent escalation of prices...people have also forgotten that some HDB flats sold below valuation in the recession periods, some of the younger couples buying their first homes have this impression that prices can only go up & not down.

When my parents bought our current HDB flat in Yishun it cost between $300k-$350k in 1996/1997 (I was still young then don't really know the price), the current selling price in 2011 is in that same range...

Best,

Mark

yup i agree that prices of hdb will go down at certain point in time, just like it had happened in the past. Singapore is extremely vulnerable to external shocks and no doubt prices will be affected.

my point in the earlier post was not to predict future prices but to state my observation of the government's policies towards property prices. :)

Unless PAP is no longer in power, otherwise, i would not expect property prices to go down the drain, i.e. become worthless. It may drop or it may rise, but who knows? And why bother to predict, no one will get it consistently correct. Even HDB got it wrong last time.

As they say "if you keep believing that property prices will come down, eventually you will be correct one day".

Keyword is eventually.

 

Share this post


Link to post
Share on other sites

If gov wants to depress the property price, they always can do it by increasing interest rate.

The global economic condition does not favour increase of interest rate.

 

Share this post


Link to post
Share on other sites

And if there's COV, for those taking bank loans, shouldn't they allow the bank to value the HDB flats and decide on the loan amount like pte properties?

I totally agree with icer that banks should be allowed to value the HDB properties for someone taking a bank loan. It's only fair since HDB does not want to grant loan to a 2nd timer (downgraders) and since HDB is not taking the risk for the loan, why should they still be the ONLY one to value the property.

 

Share this post


Link to post
Share on other sites

If gov wants to depress the property price, they always can do it by increasing interest rate.

The global economic condition does not favour increase of interest rate.

Besides all the benefits for govt to see prices keep going up ......there is also too much is at stake to allow for property prices here to fall.......when will something tip the balancing scale then??

 

Share this post


Link to post
Share on other sites

I totally agree with icer that banks should be allowed to value the HDB properties for someone taking a bank loan. It's only fair since HDB does not want to grant loan to a 2nd timer (downgraders) and since HDB is not taking the risk for the loan, why should they still be the ONLY one to value the property.

You can downgrade and still get a 2nd HDB loan since 2010. Anyway, HDB's valuation is to extract out $$ from your CPF, there is no qualms for banks to offer you the market rate even if it's 50k above HDB's valuation. You can always try calling the banks to try.

 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

Aura Sink download renotalk renovation guide


×