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More home buyers seem to be setting their sights on resale flats as private home prices and mortgage rates remain high.
"In just the first three weeks of this month in January 2024, more than 60 'million dollar' HDB resale flats were transacted" said Kiwi Lim, real estate professional from the largest private real estate agency in Singapore - Huttons Asia. "if this trend continues, I expect to see close to 1,000 units of HDB resale flats sold above the million dollar mark this year in 2024."
Last year, in 2023, there were a total of 470 flats that were sold for S$1 million or more, which was 27.4 per cent higher than the number sold in the previous year of 2022. It is important to note that million dollar flats only accounted for a tiny portion - equivalent to 1.8 per cent of the total transactions in 2023.
4-room resale HDB near Buangkok MRT in Sengkang area sold for S$808,888
A record-breaker for 4-room HDB transactions in Sengkang Central near Buangkok MRT was recently sold for S$808,888. Situated near Buangkok MRT in Block 272A, this spacious 969 square feet 4-room flat is located on a high floor between the 13th to 15th floors at around S$834 per square foot. TOP in 2009, this 15 year old 4-room HDB flat still has 84 years of remaining lease left.
Sengkang may see its first million dollar flat transacted in the market soon, since its last 5-room premium transacted last month was at S$963k. Sengkang Central, specifically Buangkok area has attracted a lot of keen interest from buyers especially after the opening of Sengkang Grand shopping mall managed by Capitaland, the recently opened and very popular hawker center as well as the upcoming community centre and bus interchange. Buangkok vicinity has become a prime location with great accessibility with Buangkok MRT station within a stone's throw away and 24 hour NTUC supermarket and 24 hour Kopitiam plus lots of eateries and amenities.
Record $1.568 mil transacted for a 5-room HDB DBSS in Toa Payoh
A 5-room Design, Build and Sell Scheme (DBSS) at The Peak @ Toa Payoh which was completed in 2012 situated at 139A Lorong 1 Toa Payoh located between the 40th to 42nd floor was transacted for S$1,568,888 in January this year, breaking the record for the most expensive resale flat sold in Singapore. The Peak @ Toa Payoh consists of two blocks of 42 storeys each and three blocks of 40 storeys each, with a total of 1,203 units, ranging from three-room to five-room flats. A five-room unit at The Peak @ Toa Payoh ranges in size from 1,184 square feet (sq ft) to 1,259 sq ft.
The Design, Build and Sell Scheme (DBSS) was a public housing program in Singapore introduced by the Housing and Development Board (HDB). It was launched in 2005 to provide an alternative housing option for the middle-income population. The DBSS flats were built by private developers, in contrast to the typical public housing flats that are constructed by HDB.
The DBSS scheme faced criticism over the years due to various reasons, including concerns about the affordability of these flats and the perception that some projects were priced too high for their target audience. In 2011, the Singapore government announced a temporary suspension of the DBSS program to review its policies and there hasn't been any new development of DBSS flats since then.
There are currently 13 Design, Build and Sell Scheme (DBSS) projects in Singapore.
Over the last five years, prices of four-room flats in Singapore have risen by about 35 per cent, climbing slightly faster than that of five-room HDB resale flats. Despite the climbing price range, four-room flats are still more highly sought-after than other Housing and Development Board (HDB) flat types amid a booming property market.
Four-room flats are selling faster than five-room flats as 4-room flats are still relatively more affordable than the larger 5-room HDB flats, EM or EA flats. 4-room flats also appeal to younger families and some seniors who are looking to right size to a smaller home.
Home buyers who felt priced out of private residential homes may be switching their attention towards HDB resale flats as prices of private residential properties rose 6.8 per cent in 2023 which is slightly lower than the 8.6 per cent increase of private home prices the year before in 2022.
"I believe private home prices will stabilise in 2024 as home buyers are increasingly worried about macroeconomic uncertainty even though interest rates are not expected to rise" said Kiwi Lim "prices of private residential homes may see an average price increase of about 3% this year, however, I expect HDB resale prices to see a much higher percentage of price increase in 2024 as compared to private homes."
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The strong take-up rate for Lumina Grand reflects the keen interest among first-time buyers and HDB upgraders for well-located and thoughtfully designed properties
As at 12 pm today on 28 January (Sunday), City Developments Ltd (CDL) announced that Lumina Grand executive condominium (EC) sold 53 per cent of its total number of units on the first weekend of the launch of possibly the only new EC project in 2024 at an average price of S$1,464 per square foot (psf).
A total of 269 units which is equivalent to 53 per cent of 512 total available units at Lumina Grand EC were sold following the development’s official launch the day before. An early bird discount of S$8,000 was offered for all unit types on Saturday by the developer City Developments Ltd (CDL).
The full quota limit for second-time home buyers was also reached for Lumina Grand EC during the initial launch. Under government regulations for executive condos, only 30 per cent of the EC project can be allocated to second-time buyers.
As usual, larger units like the three-bedroom premium and four-bedroom units were the most popular, and some buyers even “snapped up the rare high-ceiling penthouses”, said the developer City Developments Ltd (CDL).
The three-bedroom units ranged from 936 sqft priced from S$1.338 million, while the three-bedroom premium units were priced from S$1.388 million. Four-bedroom units were sold for S$1.628 million and the 1,496 sqft typical five-bedroom units sold from S$2.098 million.
An additional 3 per cent was applied to the average launch price for units sold under the deferred payment scheme.
Lumina Grand EC - possibly the only EC project to be launched in 2024
The Lumina Grand Executive Condominium (EC) site at Bukit Batok West Avenue 5 drew attention from developers with a total of four bids, making it a closely contested plot in September 2022. City Developments Limited (CDL) came out on top, winning the bid at an offer of $336.068 million. The land rate was calculated at $626 per square foot per plot ratio (psf ppr), slightly higher than the second-highest bid of $625 psf ppr from Sim Lian Group.
Lumina Grand EC is conveniently situated at the junction of Bukit Batok West Avenue 5 and Bukit Batok Road near the upcoming Tengah Town. The project comprises 10 residential blocks of 12 to 13 storeys on a land parcel site area of around 179,000 sqft within walking distance to quite a few good schools, e.g. St Anthony’s Primary School, Dunearn Secondary School – as well as the future Bukit View Primary School and Anglo-Chinese School (Primary) which was relocated from Bukit Timah.
What are Executive Condominiums (ECs)?
Executive condominiums (EC) are a type of housing in Singapore that combines elements of public and private housing, catering to the needs of the "sandwich class" which includes households whose income exceeded the eligibility for subsidized public BTO housing but yet find private residential condos out of their financial reach.
Below are some key requirements and features associated with Executive condominiums in Singapore:
- Eligibility Criteria:
- Citizenship: At least one of the applicants must be a Singapore citizen.
- Age: Both applicants must be at least 21 years old.
- Family Nucleus: ECs are typically available for purchase by Singaporean families, including singles, married couples, or families with children.
- Income Ceiling:
- There is an income ceiling for EC eligibility. The combined monthly household income of all persons listed in the EC application must not exceed $16,000 per month to be eligible to purchase an EC.
- Ownership of Property:
- Applicants must not currently own any private residential property and not have disposed of any private residential property within 30 months before the EC application.
- Minimum Occupation Period (MOP):
- EC buyers are required to occupy the unit for a Minimum Occupation Period, which is usually five years. During this period, the EC cannot be sold or rented out.
- Balloting System:
- Due to the high demand for ECs, the selection of eligible buyers is often done through a balloting system. Applicants who meet the eligibility criteria enter a lottery system for a chance to purchase an EC unit.
- Design and Facilities:
- ECs are designed to offer amenities and facilities similar to private residential condominiums. They often include features such as swimming pools, gyms, and landscaped areas.
- Resale Restrictions:
- There are resale restrictions on EC units during the MOP. After the MOP, the EC can be sold to Singapore citizens or permanent residents. After ten years, the EC becomes fully privatized, and any eligible buyer can purchase it.
"It's important to note that specific details and requirements may vary depending on government policies, the particular EC development, and the prevailing regulations at the time of application. Prospective buyers may check with their real estate agents, relevant authorities or the developers for the most up-to-date and accurate information." said real estate consultant Kiwi Lim from the largest private real estate agency in Singapore - Huttons Asia.
Executive condo projects are a hot favorite among eligible home buyers due to their relatively more affordable pricing when compared with other new launch private residential condo projects. In addition to that, developers of EC projects may offer a Deferred Payment Scheme to home buyers, giving these buyers - especially young couples more financial flexibility by allowing them to pay for the EC in two installments - the first during the construction period and the second when the EC is completed. However, it is useful to note that developers usually will impose additional markup, e.g. 3 per cent to the average launch price for EC units sold under the deferred payment scheme.
"I believe buyers who are looking for new ECs have limited choices as there are very few unsold brand new ECs currently available in the market. Altura EC is about 90% sold and North Gaia EC in Yishun is nearly 65% sold. Moreover, Lumina Grand EC may be the only brand new EC project to be launched in the year 2024" said real estate consultant Kiwi Lim, "prices of upcoming new EC projects to be launched next year are also expected to be higher than Lumina Grand EC".
The executive condo land parcel site at Plantation Close achieved a top bid of S$703 psf ppr and a record land price for the executive condo project along Tampines Street 62 (Parcel B) was awarded to Sim Lian Land and Sim Lian Development in Oct last year at a whopping S$721 psf ppr.
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The relationship between the property market and the economy of a country is intricate and interconnected. The property market, particularly the real estate sector, plays a crucial role in the overall economic landscape of a country - especially for a small country like Singapore.
Real estate is a significant component of the economy, contributing to investment and construction activity. A thriving property market can stimulate economic growth through increased construction, job creation and many related industries contributing to overall economic well-being of a country. Conversely, a slowdown in real estate activities may result in job losses and sluggish economy. Government budgets can also be influenced by the health of the property market.
"If you are waiting for a recession to buy property because you believe that a recession will lead to a property market downturn, you may not be aware that the property market may help to predict a recession before it happens." say real estate professional Kiwi Lim from the largest private real estate firm - Huttons Asia.
Comparing GDP and Property Prices from quarter 2 in 1975 to quarter 4 in 2023 - Huttons Research
The chart above from Huttons Research shows that the property market fell first before the economy contracts. Prices in the property market tend to fall ahead of the economic contractions or slightly before a crisis or recession.
The chart above also shows that the recovery in the property market is also instantaneous with the economic recovery and most of the time the recovery in the property market is sharp and swift catching most buyers off-guard if they are not watching closely.
It is also important to note that real estate markets are not isolated because they can be influenced by a combination of factors, e.g. global economic conditions, calamities or geopolitical developments like war that may unfold anywhere in the world especially in the Asia-Pacific region. Shifts in international investment patterns and economic stability may adversely impact the property market of a specific country - even for a prominent financial center like Singapore.
Property market as a leading indicator of the economy
The property market is often considered a leading indicator of the economy, meaning that changes in the real estate sector can precede and provide insights into broader economic trends. Here are some ways in which the property market can act as a leading indicator:
Consumer Confidence: Changes in property values impact household wealth. As property values increase, consumers may feel more financially secure and be more willing to spend. This can contribute to economic growth. Conversely, a decline in home values may have the opposite effect.
Investment and Construction Activity: A surge in real estate investment and construction can signal economic expansion. Increased construction activity generates jobs, income, and economic activity.
Credit Conditions: Central banks often use interest rates to manage the economy. Changes in lending standards, interest rates or the ease of obtaining a mortgage can impact the property market and the economy.
Kiwi Lim believe that with the current TDSR and the cooling measures that the government had imposed earlier, most homeowners will be able to hold onto their properties during a recession. The TDSR assumes that the buyer is still able to pay their monthly mortgage at 4% interest rate even if they suffer a 45% salary cut. Therefore, if home owners are able to hold their properties beyond the economic downturn into the recovery stage, buyers waiting for a fire sale during recession may be disappointed.
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Last year, the Housing and Development Board (HDB) launched 22,800 BTO flats across four sales exercises
The Housing and Development Board (HDB) announced last week that for the first time since 2015, HDB will hold three Build-to-Order (BTO) sales launch exercises instead of the usual four this year.
Last year, the Housing and Development Board (HDB) launched 22,800 BTO flats across four sales exercises which is an average of 5,700 BTO flats per sales exercise. This year, HDB decided that a total of 19,600 new public housing flats will be launched in three batches across three exercises in February, June and October 2024. The reduction in the number of BTO flats offered in the sales launches this year is also due to lower application rates from first-timer buyers for all flat types as HDB saw a drop in the overall BTO application rates for 2023. The median number of applicants for each available unit was 1.9 in 2023 when compared 3.7 in 2019, before the COVID-19 pandemic.
With three BTO launches instead of four, the Housing and Development Board (HDB) believe that home buyers can now look forward to a bigger housing supply at each sales launch enabling them to select from a wider range of flats and locations, e.g. there will be an average of 6,533 per sales exercise this year when the 19,600 new BTOs are divided over three BTO sales exercises instead of four.
This new proposal will now allow applicants at every BTO sales launch exercise to enjoy a higher chance of success in finding a flat that meets their budget and needs and will reduce the extent of overlap between the selection exercises and provide greater certainty for home buyers.
BTO Sales Launch Exercise
In Singapore, the Housing and Development Board (HDB) conducts regular BTO sales launch exercises. These BTO sales launch exercises offer newly constructed flats to eligible buyers. BTO flats are new residential properties constructed by the HDB. These flats are usually offered in various housing estates, and buyers can apply for them during specific BTO sales exercises.
To participate in a BTO sales exercise, individuals or families must meet certain eligibility criteria. These criteria may include citizenship status, income ceilings, and family nucleus requirements. During each BTO sales launch exercise, HDB will announce the available flat types (e.g., 2-room, 3-room, 4-room, etc.) and the specific housing estates where these flats are being offered. A balloting system is then used to allocate the flats and successful applicants will be notified on how they can proceed with the flat purchase process.
BTO sales exercises are scheduled events during which eligible individuals or families can apply for the available flats. These exercises are typically conducted multiple times a year, and they cover different locations and flat types and split into 3 categories: Standard, Plus or Prime BTO flats.
HDB BTO flats will be split into 3 categories from 2H2024: Standard, Plus or Prime (credit: HDB)
Standard, Plus or Prime BTO Flats
Under the new classification framework announced last year, HDB BTO flats will be split into 3 categories from the 2nd half of this year in 2024: Standard, Plus or Prime.
a. Standard flats will form the majority of the housing supply, with standard subsidies and restrictions such as the existing 5-year minimum occupancy period (MOP).
b. Plus flats will be located in choicer locations within each region across Singapore (e.g. near MRT station, town centre). Flat owners will enjoy more subsidies, but tighter restrictions compared to the Standard BTO flats.
c. Prime flats are in the choicest locations within Singapore, usually closer to the city centre. They will come with the most subsidies across the 3 categories and will have the tightest restrictions. These flats are currently offered under the Prime Location Public Housing (PLH) model.
"Buying a home is indeed one of the most significant financial commitments that individuals or families make in their lifetime" said Kiwi Lim, an experienced real estate professional from the largest private real estate agency in Singapore - Huttons Asia. "With the new BTO classification, the government is trying to emphasize that the purchase of HDB flats is to provide affordable housing for Singaporeans, instead of viewing it as a means to “profit” from the sale."
More housing options for singles in Oct 2024
Currently, singles who are above 35 years old can only apply for a 2-room flexi flat in a non-mature estate. However, singles can look forward to the BTO sales launch exercises in October 2024 which will see more locations available for them.
With the new classification, eligible first-timer singles can:
a) Apply for 2-room Flexi BTO flats in all locations across Standard, Plus and Prime housing projects
b) Buy a Standard or Plus flat of any size (except 3Gen flats) in the resale market
c) Buy a 2-room Flexi Prime flat in the resale market
While singles are still restricted to the size of BTO flats they can buy, they will now have more choice of locations.
About 4,100 BTO flats will be offered in the February 2024 BTO exercise. These flats will be in Bedok, Queenstown, Choa Chu Kang, Hougang, Punggol and Woodlands. Around 1,500 Sale of Balance Flats (SBF) units will also be available next month in February 2024.
Resale flat prices for 2023 rose by 4.8 per cent, less than half of the 10.4 per cent increase in 2022, according to the Housing and Development Board (HDB)’s flash estimates.
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The Johor Bahru - Singapore RTS Link will connect both countries through a viaduct 25m above the Straits of Johor
Milestone completion of The Johor Bahru - Singapore RTS Link's 65% construction
Both Singapore's and Malaysia's Prime Ministers met today on Thursday 11 Jan 2024 to mark the milestone completion of 65% construction on both the Singapore side and the Malaysian side of the Johor Bahru - Singapore RTS Link connecting both countries to ease traffic congestion on the Causeway which is known globally as one of the world's busiest border crossings.
The Johor Bahru - Singapore RTS Link tunnels will connect to a viaduct 25m above the Straits of Johor, bridging the Woodlands North station in Singapore to the Bukit Chagar station in Johor Bahru which is expected to serve an estimated 10,000 passengers per hour each way on a journey that takes about five minutes to help ease traffic congestion on the Causeway.
The CIQ (customs, immigration, quarantine) facilities of both countries will be co-located at the Woodlands North and Bukit Chagar stations, which means passengers only need to clear immigration authorities once - at their point of departure.
Estimated to cost RM10 billion (US$2.15 billion) with Singapore footing 61 per cent of the bill, this landmark project will cement the friendship between both countries further. Based on the progress achieved on both sides, we may expect the upcoming Johor Bahru - Singapore RTS Link to be ready for commencing passenger services by the end of 2026.
The Johor Bahru - Singapore Rapid Transit System (RTS) Link
Singapore Prime Minister Lee Hsien Loong and Malaysia Prime Minister Anwar Ibrahim signed commemorative plaques symbolising a shared commitment to The Johor Bahru - Singapore Rapid Transit System (RTS) Link. This rail link project that improves connectivity between Johor Bahru in Malaysia to Woodlands in Singapore will be expected to benefit both countries in terms of:
Enhanced Connectivity:
The Johor Bahru - Singapore Rapid Transit System (RTS) Link aims to enhance transportation connectivity between Johor Bahru and Singapore, making it easier for people to travel between the two locations for work, leisure or other purposes.
Reduced Traffic Congestion:
The Johor Bahru - Singapore Rapid Transit System (RTS) Link provides an alternative mode of transportation to help alleviate road congestion at the Johor-Singapore Causeway which is a busy crossing point for vehicles traveling between the two countries.
Time Savings:
The Johor Bahru - Singapore Rapid Transit System (RTS) Link is designed to offer a faster and more efficient mode of travel compared to road transport. Commuters could potentially save time on their daily journeys, especially during peak hours.
Economic Benefits:
Improved connectivity is expected to contribute to both countries' economic growth by facilitating the movement of people and goods. The Johor Bahru - Singapore Rapid Transit System (RTS) Link could stimulate economic activities on both sides of the border.
Environmental Impact:
Promoting the use of public transportation, such as The Johor Bahru - Singapore Rapid Transit System (RTS) Link can have positive environmental effects by reducing the reliance on private vehicles and reduce both countries' overall carbon emissions.
Cross-Border Collaboration:
The Johor Bahru - Singapore Rapid Transit System (RTS) Link represents a critical collaborative effort between Malaysia and Singapore, fostering deeper diplomatic and economic ties between the two countries.
Integrated Transport Systems:
The Johor Bahru - Singapore Rapid Transit System (RTS) Link project may contribute to the development of integrated transport systems in both Johor Bahru and Singapore, providing seamless connections between various modes of transportation in future.
Will More Singaporeans Consider Moving To Johor?
Johor, Malaysia is generally known for having a lower cost of living compared to Singapore. Individuals or families may find that housing, goods and services are more affordable in Johor when compared to Singapore. The property market in Johor might offer more affordable options compared to Singapore and some Singaporeans may consider relocating to Johor for housing opportunities that are more within their budget.
Singaporeans will have to consider the quality of life they can achieve in Johor compared to Singapore, e.g. lifestyle, safety, amenities, educational, recreational as well as work opportunities in their decision to move their families from Singapore to stay in Johor.
"Proximity to workplaces in Singapore and the ease of commuting will be a crucial factor of consideration. Once operational, the Johor Bahru - Singapore Rapid Transit System (RTS) Link could increase the convenience of commuting between Johor and Singapore. Once completed, the Johor Bahru - Singapore Rapid Transit System (RTS) Link may be seen as a 'cooling measure' for the property market in Singapore," said real estate consultant Kiwi Lim.
