The Population White Paper: A look at the hot spots

The Population White Paper released earlier this year drew public ire with its projection that the population in Singapore could reach 6.9 million by 2030, a figure that most agree would put a tighter squeeze on resources in an already crowded city.

While it brought demographic challenges into the spotlight, the White Paper stoked an underlying concern which resonated among many Singaporeans: The price of purchasing a home in Singapore.

The reaction against the prospect of having a massive influx of people into Singapore stemmed partly from a deep-seated fear of not being able to afford a place to live in, especially so in the case of Housing and Development Board (HDB) flats, which house more than 80 per cent of the population.

This fear is not without its reasoning. Based on economic fundamentals where price is determined by demand and supply, surely an increase in demand for housing well beyond supply would result in a surge in prices.

To be sure, the Government has ramped up its building programme in recent years and in January capped mortgage servicing ratios to curb over-borrowing and try to stabilise a surging HDB resale market that had seen prices rising 70 per cent since the end of 2007. But prices have continued to rise, albeit at a slower rate.

Will higher prices persist further into 2013 or will they lose steam over time? And if the market continues on its upward trajectory, how will the price growth pan out across Singapore?

Calculations based on HDB data for the last two years from the beginning of 2011 to the end of last year throw up some surprises. For this analysis, HDB estates are sub-categorised based on where they are located by way of a colour scheme as seen in Diagram 1:

The blue region represents the north, comprising a mix of old and new HDB districts such as Toa Payoh, Bishan, Ang Mo Kio, Yishun, Sembawang and Woodlands.

The yellow region represents the east, consisting of older districts such as Bedok, Tampines, Geylang, Kallang/Whampoa, Pasir Ris and Marine Parade.

The red region covers the west, where many educational institutions are situated, comprising Jurong West, Jurong East, Clementi, Queenstown and Bukit Merah.

The green region covers the north-west, made up of Choa Chu Kang, Bukit Panjang and Bukit Batok.

The purple region represents the north-east, containing new estates such as Punggol, Sengkang, Hougang and Serangoon; while

The brown region represents the central region, made up of Outram, River Valley, Tanjong Pagar and Rochor HDB estates.

PRICE GROWTH FOR ALL, SOME MORE THAN OTHERS

Based on the prices transacted in Diagram 2, all the regions experienced similar increases of about 15 to 19 per cent for all HDB property types.

Most notable are the trends in the eastern, western and north-eastern regions. What is surprising is the steep gain in prices in the eastern region, where at the beginning of 2011, the average valuation was among the lowest at around S$418,000, before it surged 19 per cent in two years to hit S$497,000 by the end of last year.

Much of this has been attributed to the rise in transactions for resale flats in the Kallang/Whampoa district, where the highest price appreciation in the whole of Singapore of 37 per cent was achieved from 2011 to 2012.

Prices in the north-east and western regions followed suit, climbing an average of 18.1 and 15.7 per cent, respectively, over the same period. Not surprisingly, Serangoon led most of the gains in the north-east, with an average growth of 19 per cent, likely tied to the full opening of the Circle Line and other key amenities in the area.

As for the western region, resale flats had one of the highest average transaction prices of over S$505,000 by the end of last year, with Queenstown showing the strongest performance of 22 per cent growth.

By flat type, four-room units enjoyed the highest price rise of over 16 per cent. However, while the north-east region experienced the largest rate of growth of 18.4 per cent by the end of 2012 in this category, the western region was well ahead in terms of absolute transaction price. Four-room units averaged S$560,600 in the west as compared to S$481,125 in the north-east.

In the five-room category, Bedok in the eastern region came up tops with price growth of 20 per cent and an average valuation of S$630,000 at the end of 2012. This is the case, too, for executive flats which fetch an average price of S$670,000 in the east.

As prices continue to rise, perhaps those who fear a home is getting further out of their reach can take some comfort in signs that the market is slowing down.

While all regions saw an increase in value across all HDB property types between 2011 and last year, the rate of price growth for resale flats has fallen for two straight quarters this year to 1.3 and 0.5 per cent, respectively, following the cooling measures in January.

And with the additional measures in June and a fresh supply of homes in the pipeline, perhaps there is a chance that price increases will be further kept in check going into the second half of the year.

By Adam Rahman – Senior Marketing Executive at PropertyGuru

Source : Today – 9 Aug 2013

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