More HDB upgraders turning to private property market

More HDB flats may be on the way but upgraders are increasingly turning to the private property market.

According to a report by DTZ Research, there is a rising trend of transactions made by purchasers with public housing (HDB) addresses. These buyers bought about 39 per cent of all private residential homes in Q2 2011, higher than the 37 per cent registered in Q1 2011 and the 34.6 per cent in Q4 2010.

DTZ said this could be due to more projects launched in the suburban areas therefore attracting HDB upgraders, HDB flat owners to buy for investment; or singles who are staying with their parents in HDB flats buying their own apartments.

Another trend that DTZ has identified is that these buyers are also purchasing small units that are below 1,000 sq ft in size. It found that 50.3 per cent of purchasers who bought units below 1,000 sq ft had HDB addresses, an increase over the 47.5 per cent in Q1 2011. This is also a reversal from past trends in 2010 and Q1 2011 when private property owners were investing in small units.

DTZ’s analysis also revealed that Singaporeans continued to drive demand at the lower end of the price scale. Around 75 per cent of purchases costing S$500,000 or less were made by Singaporeans in the second quarter. They purchased 69 units costing S$500,000 or less in, slightly more than double the 34 transactions in the first quarter.

Eugene Lim, Vice President of ERA Singapore, commented: “As we all know, HDB resale prices have been on the increase. People who have made money selling their HDB flats are able to upgrade into private properties.”

“They are buying more small units as smaller units are within affordable quantum – those in HDB addresses rarely have affordability exceeding S$1 million,” he added.

Based on caveats lodged for both new and secondary sales, DTZ said that overall private property sales increased more than 20 per cent in the second quarter this year, with transactions of private homes totalling 8,458 units, more than the 6,958 transactions registered in the first quarter.

Of the units sold, 3,294 units were primary sales (direct from developers), an increase of 18.4 per cent quarter-on-quarter.

However, secondary sales (or resales) jumped by 23.7 per cent quarter-on-quarter to 5,164 units.

Foreign purchases recorded 1,327 in the second quarter, accounting for 16 per cent of purchases. While this was similar to the previous quarter this year, it was, however, higher than the 11 per cent recorded a year ago.

Among non-Singaporean buyers which comprise foreigners and Permanent Residents (PRs), mainland Chinese buyers made up 26 per cent of purchases and were the top purchasers of residential properties for the second consecutive quarter.

Head of DTZ South East Asia Research, Chua Chor Hoon said that concerns over the US and Europe debt problems, as well as the slowing economy have led to more cautious sentiments in the private residential market.

“However, purchase demand for private homes will still be supported by economic growth and the low interest rate environment in Singapore,” she said.

Source : Channel NewsAsia – 18 Aug 2011

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