28th June to 4th July 2022
The Housing and Development Board (HDB) unveiled two additional rehousing options under the Selective En bloc Redevelopment Scheme (SERS) to provide more choices and meet the different housing needs of residents. Meanwhile, Singapore saw private home prices and HDB resale prices increase at a faster rate in Q2 2022, compared to the previous quarter.
1) HDB offers two new rehousing options for SERS flat owners
The Housing and Development Board (HDB) unveiled two additional rehousing options under the SERS to provide more choices and meet the different housing needs of residents.
Under the first option, SERS flat owners will be given the option to buy three-room or larger replacement flats on a shorter 50-year lease, instead of a fresh 99-year one, provided it is able to last the flat owners until at least the age of 95.
The second option allows seniors at the SERS site to take up the Lease Buyback Scheme (LBS) for their existing flat.
The additional options will be offered to eligible flat owners, starting from Ang Mo Kio Ave 3 SERS site.
“It takes into consideration feedback from some older residents who feel they do not need a fresh 99-year lease for their new replacement flat and would like to move into a replacement flat of similar size as their existing flat without any cash top-up,” said HDB.
It added that the two new options will “also be extended to flat owners of blocks 212 to 218 Marsiling Crescent/Lane whose flats were announced for acquisition on 26 May 2022 for the redevelopment and extension of Woodlands Checkpoint”.
This move comes after several affected flat owners expressed concern over having to pay more to acquire similar-sized flats in the same neighbourhood. Over 600 households were impacted by the latest Ang Mo Kio SERS exercise. Additionally, the Minimum Occupation Period (MOP) guideline for replacement flats under SERS has been modified by HDB. Buyers can only sell their replacement flats on the open market five years after receiving their keys.
2) Singapore private home prices climb 3.2% in Q2 2022
Private home prices in Singapore climbed at a faster rate of 3.2% in the second quarter of 2022, or almost five times than the 0.7% increase registered in the previous quarter, showed flash estimates from the Urban Redevelopment Authority (URA).
Catherine He, Head of Research at Colliers, attributed the price growth to “the well-received launches, which were sold at higher benchmark prices”.
“Units at Piccadilly Grand were sold at a median price of $2,175 psf while those at LIV @ MB were sold at a median price of $2,405 psf. That pushed prices up by 6% in 2Q 2022,” noted Huttons Asia.
With this, private home prices rose 3.9% in the first half of 2022, despite the cooling measures rolled out by the Government in December 2021.
“The sheer weight of demand is simply outpacing the backlog of supply as Singapore normalises from the pandemic years,” said Leonard Tay, Head of Research at Knight Frank.
According to Dr. Tan Tee Khoon, Country Manager, PropertyGuru Singapore, given the potential capital appreciation of private property and the current strong performance of the private rental markets, demand for private property will probably persist among buyers seeking an investment property. Still, they will have to weigh the potential gains against having to pay the increased Additional Buyer’s Stamp Duty (ABSD).
3) HDB resale prices up 2.6% in Q2 2022
Flash estimates from the Housing and Development Board (HDB) showed that resale prices of HDB flats rose at a faster rate of 2.6% in Q2 2022 compared to the 2.4% hike registered in the previous quarter.
On an annual basis, HDB resale prices rose 11.8%.
Christine Sun, Senior Vice-President of Research and Analytics at OrangeTee & Tie, said the continual price growth came as no surprise amid the substantial improvement in buyers’ confidence.
“Our economy is almost fully reopened and growth has picked up faster than in many other countries. Further, the public housing market is usually less susceptible to macroeconomic fluctuations, unlike investment properties.”
Meanwhile, Huttons Asia noted that the interplay of “market dynamics from an increased supply of BTO flats and price resistance from buyers has worked well in stabilising the pace of price increase”.
Huttons expects HDB resale prices to grow by up to 10% for the whole of 2022, following an adjustment towards more stability in the second half of 2022.
There are a few reasons driving the rise of HDB resale prices, according to Dr. Tan Tee Khoon, Country Manager, PropertyGuru Singapore. Aside from the persisting BTO construction delays pushing young families into the resale market, there is an enduring buying preference for larger resale flats in mature HDB estates on the city fringe.
Looking at HDB resale transaction data for Q2 2022 (as of 1 July 2022), the most sought-after flat type are 4-room flats (42.7%), followed by 5-room flats (25.8%). Both HDB upgraders and first-time buyers are gunning for these more expensive flats, keeping demand and prices up.
4) HDB launches EC site at Bukit Batok West Avenue 5
A 16,623.7 sq m executive condominium (EC) site at Bukit Batok West Avenue 5 has been put up for sale under the Confirmed List of the Government Land Sales (GLS) Programme for the first half of 2022, revealed the Housing and Development Board (HDB).
The 99-year leasehold site is expected to yield around 495 residential units.
The tender for the site will close on 13 September and will be batched together with two other Urban Redevelopment Authority (URA) residential sites at Lentor Central and Lentor Hills Road.
Huttons Asia noted that the launch of the site marks “the third site for EC development within the span of a year”.
“The three sites can potentially offer up to 1,500 EC units for sale,” it said.
Huttons expects the Bukit Batok West Avenue site to attract up to eight bids, with the estimated bids ranging between $640 and $680 per sq ft per plot ratio (psf ppr).
The site is close to a range of primary and secondary schools, as well as Millennia Institute. Le Quest shopping mall and West mall will provide future residents F&B and entertainment options. The nearest MRT station is Bukit Batok MRT station on the North South Line, but that is likely set to change as the Jurong Region Line (JRL) begins running from 2024 onwards.
5) Singapore ranked 53rd most affordable housing market
The city-state has been listed as the 53rd most affordable housing market by Demographia in its International Housing Affordability rankings, reported Singapore Business Review.
This comes as Singapore registered a housing affordability median of 5.8. Notably, a median of 5.1 and above is considered severely unaffordable, while a median of 3.0 and below is affordable.
“Singapore’s median multiple rose from 4.6 in 2019, to a severely unaffordable 5.8 in 2021, reflecting the impacts of the pandemic shock,” said Demographia.
It noted that HDB’s goal of encouraging Singaporeans to have their own home has been achieved in 2020 when the homeownership rate stood at 88%.
For this year’s ranking, Pittsburg, Pennsylvania in the United States emerged as the most affordable housing market, while the least affordable is Hong Kong.
Demographia’s study rates middle-income housing affordability across eight countries – namely, Australia, China, Canada, New Zealand, Ireland, Singapore, the United States and the United Kingdom.
Million-dollar HDB flats in Singapore continue to make headlines, though these flats only make up less than 1% of all HDB flat transactions. However, as HDB resale prices continue to climb, so do the million-dollar HDB flat transactions.
As of 1 July 2022, 163 million-dollar flats have been transacted in 2022. Notably, Woodlands and Pasir Ris saw their first million-dollar flats in May 2022. Should this momentum keep up, we will be looking at another record-breaking year for million-dollar flats in 2022.
6) Jansen Mansions sold en bloc for $19.1mil
Jansen Mansion in Kovan has been sold en bloc to Macly Capital for $19.1 million, slightly above the owners’ $18.9 million reserve price, revealed marketing agent PropNex Realty.
The collective sale tender closed on 28 June 2022 and follows two previous failed attempts by the owners in 2021 and 2018.
PropNex noted that the sale price works out to a land rate of $863 per sq ft per plot ratio (psf ppr), after factoring in the development charges and the 7% bonus balcony space.
“This year, we saw more interest in this plot of land compared to last year. Some of the attributes of Jansen Mansions that appealed to interest parties were the 999-year land lease, the bite-size quantum, and its location amidst well-established neighbourhoods of Serangoon and Kovan,” said Tracy Goh, Head of Investment and Collective Sales at PropNex.
Located at 25 Jansen Road, near Serangoon MRT interchange station, the 12-unit Jansen Mansion occupies a 1,541.5 sq m site that is zoned for residential use under the 2019 Master Plan with a plot ratio of 1.4.
7) Singapore home loan rates reach a new high at 3.08%
Singapore saw home loan rates push past 3% to a new high as UOB raised the rate for its three-year fixed rate package to 3.08% per annum, from 2.8% previously, reported The Straits Times.
The previous high in recent times was in mid-2019 at 2.88%.
Home loan rates within the city-state have been steadily increasing since Q4 2021 when three-year fixed rates were pegged at 1.15%.
DBS Bank has raised the rate for its two- and three-year fixed rate packages to 2.75%, while Citi confirmed that its new two-year fixed rate package is offered at 2.95% for Citigold clients.
The hike in interest rates comes as the US Federal Reserve started to aggressively increase rates to combat inflation. So far this year, the Fed has raised rates three times by a total of 1.5 percentage points or 150 basis points, bringing its benchmark rate to the range of 1.5% to 1.75%.
According to Paul Wee, Vice President, PropertyGuru Finance, PropertyGuru Group, such adjustments are expected and the likelihood of banks withdrawing their fixed-rate packages altogether increases significantly when interest rates become too volatile.
“Many banks in Singapore have withdrawn fixed packages given the steadily rising interest rates. We expect banks to continue monitoring these packages closely and replace them with fixed-rate packages with higher rates, as and when there are significant movements in the reference rates.”
8) Choosing the right home loan package – fixed, floating or hybrid
With interest rates on the uptrend, borrowers are faced with the task of choosing which home loan package works best for them – fixed, floating or hybrid.
Lee Meng Choe, Executive Director (advisory) at Gen Financial Advisory, said fixed rate packages will suit those with stable incomes and are averse to risks or uncertainty since a fixed amount is payable every month – making it easier for household budgeting, reported The Straits Times.
However, a fixed-rate package is not suitable for those looking to pay down their home loans or sell their homes in the next few years since it usually comes with pre-payment penalties, said OCBC Bank’s Head of Home Loans Maryanne Phua.
For those looking to offload their property or pay down their mortgage soon, she recommends the SORA-pegged floating packages, which are offered with shorter lock-in periods.
Related article: SIBOR vs SOR vs SORA: What Do These Rates Mean for Your Home Loans?
Lee explained that floating rates are suitable for borrowers who can tolerate uncertainty as well as prepared to look around for better deals.
The hybrid loan packages, on the other hand, are suitable for those who do not mind a little risk from a floating rate package while enjoying the benefits of certainty from a fixed-rate package, he added.
9) Borrowers should exercise caution amid a hike in interest rates
The recent hike in rates for home loans is a stark sign that the era of cheap financing is over.
Notably, Singapore’s biggest lender DBS Bank raised its fixed rates on mortgages to 2.75%, while dropping its five-year fixed-rate package.
OCBC Bank offered a fixed-rate package at 2.65%, while UOB raised its rates for its three-year fixed-loan package to 3.08% from 2.8%.
With interest rates expected to increase further, the risk of defaults among Singapore borrowers is “mitigated by the Total Debt Servicing Ratio (TDSR) framework which takes into account various debt obligations in working out how much buyers can borrow”, said The Straits Times.
It added that financial prudence should remain the watchword in case interest rates increase rapidly and continue to be elevated in the next couple of years.
“This is especially so as the challenges from higher interest rates are taking place amid ongoing geopolitical tensions. There is the handling of the Covid-19 situation in China and Hong Kong, the Russia-Ukraine crisis, as well as concerns over the mid-term elections in the US,” it said.
During such volatile market conditions, there are several steps you can take, according to Paul Wee:
- Refinance to fixed-rate loan packages to mitigate the likelihood of higher SIBOR or SORA reference rates.
- Consider making partial or full repayments if rates become too high via cash and/or CPF to manage cash flow demands.
- Consider increasing the use of CPF for monthly loan servicing.
- Split or refinance loans into separate fixed or variable loans to spread the risk between two portfolios.
10) Government launches seven sites under 2H 2022 Industrial GLS programme
The Government has launched seven sites, totalling 6.36ha, under its Industrial Government Land Sales (IGLS) programme for the second half of 2022.
Of these, four are on the Confirmed List and three are on the Reserve List. All seven sites are zoned for Business 2 use, which means general and special industries are to be located here.
The four Confirmed List sites are located at Jalan Papan, Tampines North Drive 5 and Gul Drive. The Tampines North Drive 5 site has a leasehold tenure of 30 years, while the rest have 20 years.
The Reserve List sites, on the other hand, are in Woodlands Industrial Park, Jalan Papan and Tampines North Drive. The Jalan Papan site has a leasehold tenure of 20 years, while the other two have 30 years.
“The Government will continue to release sufficient land through the IGLS programme to ensure an adequate supply of industrial space in Singapore,” said the Ministry of Trade and Industry.
Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: firstname.lastname@example.org.