Private home, HDB resale prices climb at slower pace in Q3 2022, 15-month wait-out period to keep HDB resale flats affordable, and Reserve Residences
27th September to 3rd October 2022
Singapore saw prices for private homes and Housing and Development Board (HDB) resale flats climb slower in the third quarter of 2022. Meanwhile, National Development Minister Desmond Lee said the 15-month wait-out period imposed on private property owners, under the new September 2022 property cooling measures, would moderate demand for HDB resale flats, keeping them affordable, particularly for first-time home buyers.
1) Private home, HDB resale prices climb at a slower pace in Q3 2022
Singapore saw prices for private homes and HDB resale flats climb at a slower pace in the third quarter of 2022.
HDB resale prices rose 2.4% in Q3 2022, marking its 10th consecutive month of quarterly growth, reported The Business Times citing flash estimates. This was slightly slower compared with the 2.8% growth posted in the previous quarter.
On an annual basis, HDB resale prices rose 11.4%.
Meanwhile, private home prices increased 3.4% in Q3 2022, also a bit slower compared with the 3.5% growth posted in Q2 2022, according to flash estimates from the Urban Redevelopment Authority (URA).
The hike was led by the Outside Central Region (OCR), where prices rose 7%, compared with the 2.1% increase seen in the previous quarter.
The Rest of Central Region (RCR) posted a 2.5% hike in prices, while the Core Central Region (CCR) saw prices climb 2.3%.
HDB and URA said they will release the full details for Q3 2022 on 28 October 2022.
According to Dr. Tan Tee Khoon, Country Manager, PropertyGuru Singapore, the 6.2% growth observed for overall private property prices in Q3 2022 was largely fuelled by the new condominium launches – Lentor Modern, AMO Residence, and Sky Eden @ Bedok. Growth in this segment is likely to cool in the coming months, as the new property curbs are expected to be felt most significantly in sales of mass market condominium projects that rely on demand from HDB upgraders.
2) 15-month wait-out period to keep HDB resale flats affordable
National Development Minister Desmond Lee said the 15-month wait-out period imposed on private property owners would moderate demand for HDB resale flats, keeping them affordable, particularly for first-time home buyers, reported TODAY.
He noted that private homeowners generally have more means to purchase resale flats compared to first-time home buyers or existing HDB flat owners. As such, they tend to pay higher cash over valuation (COV) when they acquire resale flats, said Lee.
Related article: 60 Freshly MOP-ed HDB Resale Flats in Singapore to Expect in 2022/2023
Meanwhile, analysts believe the tighter housing loan limits unveiled by the government as part of its new property cooling measures are “timely and well-calibrated” and are expected to “instil discipline and prevent buyers from overleveraging”, reported CNA.
Notably, the Loan-to-Value (LTV) limit for HDB loans has been lowered from 85% to 80%. “Lowering the LTV for HDB loans by 5% and introducing a 15-month wait-out period for private property downgraders tampers with the bullish HDB market. This will relieve pressure from the market and is likely to have a significant impact,” said Paul Wee, Vice President, PropertyGuru Finance, PropertyGuru Group.
Loans from private financial institutions, on the other hand, saw the medium-term interest rate floor that is used to compute the Mortgage Servicing Ratio (MSR) and Total Debt Servicing Ratio (TDSR) raised by 0.5%.
Catherine He, Director and Head of Research for Singapore at Colliers, said the adjustments to loan limits protect a public who may be unaware that the low-interest rate environment enjoyed from 2013 to 2021 would be “very different” from the impending era of higher interest rates.
With the new measures, some condominium owners are shelving plans to downgrade to an HDB flat, reported CNA.
3) Million-dollar HDB resale transactions to slow amid new cooling measures, say analysts
Property analysts expect the new cooling property measures unveiled by the Government to slow down the transactions for million-dollar resale flats, albeit they warn that prices for four-room flats may increase, along with rental units, reported TODAY.
In a joint statement, the Monetary Authority of Singapore (MAS), the Ministry of National Development (MND) and the HDB unveiled measures to ease the demand for public housing.
These include tightening the maximum loan quantum limits through interest rate floors in view of the rising interest rates, lowering the LTV for HDB housing loans and a 15-month wait-out period for current and former private residential property owners looking to acquire a non-subsidised HDB resale flat.
The measures come as more HDB resale flats are being transacted for over $1 million, with analysts pointing to private property owners seeking to downgrade as the likely driving force behind such transactions.
Related article: Million-Dollar HDB Resale Flat vs a Condo in Singapore: Which Is Worth Buying? (2022)
Mohan Sandrasegeran, One Global Group’s Senior Analyst for Research and Content Creation, believes the 15-month wait-out period to acquire an HDB flat may cause this group of buyers to think twice before selling their home.
4) Parry Avenue site launched for private assisted living development
The Urban Redevelopment Authority (URA) and the Ministry of Health (MOH) have launched a land parcel at Parry Avenue for sale by public tender.
The 12,912.1 sq m site, located within Rosyth Estate, is for a pilot private assisted living development with senior-friendly housing features. It has a maximum gross floor area (GFA) of 18,077 sq m and a minimum GFA of 16,270 sq m.
At least 60% of the maximum GFA must be used for assisted living – which includes individual assisted living units and communal spaces. At least 20% of the maximum GFA will be for health and medical care use – including the 100 mandatory nursing home beds.
The 60-year leasehold site also comes with a building height control of up to five storeys.
URA and MOH adopted a concept and price revenue tender for the site, where tenderers “are required to submit their concept proposals and tender prices separately”.
The tender for the site closes on 21 March 2023.
5) Demand for BTO flats in prime areas to remain decent
Demand for Build-to-Order (BTO) flats offered under the Prime Location Public Housing (PLH) model is expected to remain decent, despite the lower application rates seen for such flats during the August BTO exercise, reported CNA.
Analysts attributed the slower demand for PLH flats during the August 2022 BTO exercise to longer wait times and stringent criteria, and the distance of the flats from the city centre.
“At the start, buyers had the impression that these will be for prime, central locations like the city centre and the Greater Southern Waterfront,” said Lee Sze Teck, Senior Director for Research at Huttons Asia.
However, the initial euphoria for PLH flats died down when they began appearing in locations that were further away from the city centre such as Ghim Moh.
“Combined with the 10-year Minimum Occupation Period (MOP) and certain resale and leasing restrictions, it is possible that some applicants could have decided not to apply for the PLH projects,” said PropNex Realty’s Head of Research and Content Wong Siew Ying.
6) Serene Centre up for sale; Sultan Plaza owners to lower reserve price
Freehold mixed-use development, Serene Centre has been put up for sale carrying a reserve price of $120 million, reported The Business Times citing Cushman & Wakefield.
The four-storey property near Bukit Timah Road belongs to a single-family owner and occupies five land plots spanning 32,225 sq ft. Under the 2019 Master Plan, the development – which has a gross floor area of 47,475 sq ft – is zoned for commercial and residential use.
The tender for Serene Centre closes on 14 November 2022.
Separately, the owners of Sultan Plaza plan to lower their asking price for the 45-year-old property from $360 million to $325 million after securing the 80% mandate needed.
The shopping mall was first launched for collective sale in 2019, with a reserve price of $380. It was relaunched in December 2021 and again in May 2022 with a reserve price of $360 million.
“We just need one to two units more to cross the 80%, which will happen very soon,” shared marketing agent Teakhwa Real Estate.
The tender for Sultan Plaza closes on 26 October 2022 after the 80% mandate is obtained.
7) HDB awards executive condominium site at Bukit Batok West Avenue 5
The tender for the executive condominium (EC) site at Bukit Batok West Avenue 5 has been awarded to CDL Zenith, which submitted the highest bid of $336 million, revealed HDB.
Launched for sale on 28 June 2022, the 99-year leasehold site has an area of 16,623.7 sq m and a maximum gross floor area of 49,872 sq m. It could yield about 495 housing units.
The tender for the site closed on 28 September 2022, with four bids received.
Tricia Song, Head of Research for Southeast Asia at CBRE, attributed the less-than-stellar interest for the land parcel to “looming headwinds such as the uncertain economic environment and steeper interest rates which not only increase development costs but could also undermine the demand for new homes”.
8) 950,000 HDB households to receive the third tranche of GST vouchers in October
About 950,000 households living in Housing Board flats will get their third quarterly goods and services tax voucher (GSTV) – U-Save and GSTV – service and conservatory charges (S&CC) rebates in October.
The rebates are part of the permanent GSTV scheme as well as the Household Support Package (HSP) unveiled in Budget 2022, explained the Ministry of Finance (MOF).
It noted that the rebates “provide continuing help to defray the GST and other living expenses of lower- to middle-income Singaporean households”.
“Eligible households will receive GSTV – S&CC rebates to offset between 1.5 and 3.5 months of their S&CC each year,” said MOF.
In FY2022, eligible households will get double their regular U-Save.
This amounts to around eight to 10 months’ worth of utility bills for the average household staying in one- and two-room HDB flats, and around four to six months’ worth of utility bills for the average household staying in three- and four-room HDB flats.
“Households whose members own more than one property are not eligible for GSTV – U-Save,” said MOF.
Related article: Budget 2022 Property Tax in Singapore: Higher Property Taxes, Doubled GST Vouchers and U-Save Rebates, and More
9) The Assembly Place crosses the 1,000-room milestone, and eyes 3,000 rooms by 2023
Starting from six rooms in 2019, co-living start-up The Assembly Place (TAP) is now on track to hit 1,250 rooms by end-2022.
In fact, it has crossed 1,000 rooms to date across over 90 locations in Singapore and targets to achieve 3,000 rooms by 2023.
TAP took over its first co-living hotel – The Assembly Place @ Mayo – in mid-July, revamping the property and giving it a refreshed look. During its soft launch in the first week of September, the hotel achieved an average occupancy of 85%.
It will launch its second co-living hotel along Veerasamy Road, which will be positioned as a sustainability hotel, by January 2023.
TAP has also made its first foray into the overseas market, entering into a contract for a 66-room purpose-built co-living space in Kuala Lumpur, Malaysia.
“Currently, there is no purpose-built co-living space in KL as many of the units are being operated out of strata apartments and we believe that this new space will set us apart from the rest. TAP targets to add another 250 rooms in KL by June next year,” said Eugene Lim, TAP Founder and CEO.
Related article: Studio Apartments vs Co-living Spaces: Which Is Better to Rent in Singapore? (2022)
10) Prime grade office rents climb 1.4% in Q3 2022
Singapore saw prime grade office rents within the Raffles Place / Marina Bay precinct increase 1.4% quarter-on-quarter in the third quarter of 2022, averaging $10.51 per sq ft per month (psf pm), said Knight Frank in a report.
On an annual basis, rental growth increased by a cumulative 5.3% since rents bottomed out over the same period last year.
With many businesses bringing employees back to the office, occupancy levels within the Raffles Place / Marina Bay precinct “remained healthy at 95.4% with the overall CBD occupancy maintaining 93.6% during the quarter”, said the report.
Demand drivers include business service companies in the Asia-Pacific region relocating their headquarters to the city-state due to geopolitical tensions, technology start-ups from South-East Asian countries like Indonesia as well as private equity firms and family offices attracted by Singapore’s sophisticated financial infrastructure and political stability.
“With occupancies steadily tightening and leasing activity to remain firm for the rest of 2022, Knight Frank maintains its forecast of 3% to 5% growth in rents for the whole of the year with the sector increasingly becoming a landlord’s market going into 2023,” added the report.