The Housing and Development Board (HDB) resale market could see a slight increase in interest from buyers hard-pressed to buy a private property after new cooling measures were introduced last week, but the overall demand is unlikely to be substantial enough to make much of an impact on the market, analysts said.
In a surprise announcement on Jul 5, the Government raised Additional Buyer’s Stamp Duty (ABSD) rates and tightened loan-to-value (LTV) limits on residential property purchases, in an effort to “cool the property market and keep price increases in line with economic fundamentals”.
The move came several days after official data showed that private home prices had jumped by 9.1 per cent year-on-year in the April-to-June period, with analysts predicting that prices could soon recover to 2013 peak levels.
Some analysts have called the measures – which include a 5-percentage-point increase in stamp duties for citizens and permanent residents (PRs) buying second and subsequent homes, as well as 5-percentage-point reduction in borrowing for loans from financial institutions – “heavy-handed” and “draconian”, given that the property market “is in the early stages of a recovery”.
The new measures do not affect stamp duties for first-time buyers who are Singaporeans or permanent residents, nor loans from HDB.
Experts that Channel NewsAsia spoke to said that although the HDB market could see some additional interest from buyers who now find it more difficult financially to purchase a private property, the demand is unlikely to be substantial enough to have much on an impact on the public housing market.
“In terms of real numbers, I would guess it would be several hundred (units) a year,” said Mr Ku Swee Yong, CEO of International Property Advisor.
“It is only beneficial to people who probably wanted to upgrade from HDB to a private property, but given the new measures and the more negative outlook, they decide to upgrade to HDB instead,” he said.
“There is some incremental (increase) but it is not solid enough to push resale prices up,” he added.
Resale prices for flats inched up 0.1 per cent in the March-to-June period compared to the previous quarter, with the Resale Price Index (RPI) coming in at 131.7, according to HDB’s flash estimates earlier this month. That was the first increase in six quarters.
Compared with the same quarter last year, however, resale prices for flats are still down 1.5 per cent.
Mr Nicholas Mak, executive director of ZACD Group, said that regardless of the cooling measures, most first-time home buyers generally buy HDB flats – be it resale or Build-To-Order (BTO) – for affordability reasons.
As such, he believes the HDB resale market is likely to remain at “status quo”.
“In the first place, they are already going to buy an HDB, so the cooling measures have no impact. It is those living in HDB flats and thinking of buying a condominium, these people will be affected,” Mr Mak noted. “There will be some turning from private to resale properties, but this number is so little that it’s not going to make a difference.”
Mr Chris Koh, director of property firm Chris Koh International, added: “On the ground, we’re not seeing any impact on the HDB market … The HDB market is quite distinct from the private sector. People who sell a HDB flat usually buy another one, without looking at private property.”
He added: “I don’t see an influx in terms of many taking advantage of this.”
Going forward, some analysts said, pricing is likely to weigh on buyers’ minds.
“Historically, the second and third quarter are good quarters,” said Mr Koh. “So if the second quarter can register good stablisation, it will attract buyers to come back into the market. Many want to let prices slide further, but when they realise that prices are not sliding anymore, then they will come back into the market.”
Source: Channel NewsAsia – 9 Jul 2018