Oct 15

Will prices drop in 2014, 2015, 2016…?

I compiled this: HDB Median Resale Prices by Town .XLS showing HDB price trends since 2007. The gaps in lines in Excel chart are because HDB do not provide median price if less than 20 flats were transacted per quarter.
During 2014 prices dropped with $10.000-60.000, depending by town. If you are tenant and wonder if is the right time to buy a flat or wait for prices to fall more… depending by your rental fee and preferred towns, you may or not save money by staying tenant and buy a resale flat when prices drop further.

HDB resale flat prices 1990-2015

As you can see in the chart, Singapore HDB flat prices DOUBLED in last 5 years due of insufficient supply of new flats.
Would you like prices dropping next 5 years to the early 2000s value? Think about owners who worked hard to pay current flats which will lose half of value! Would you like prices growing so you and everyone else can make profit selling? Think about your kids, how hard they will need to work to buy their first home!

Demand for apartments in Singapore was high, until 1997 Asian Crisis, which came when 80.000 flats were under construction, resulting in about 40000 unsold completed flats in the year 2000. 2003 SARS outbreak affected economy too, so 5 years were necessary to clear the stock of unsold flats.
Queue selling system (Registration for Flat) was suspended in 2002, Build-To-Order was introduced to prevent oversupply, and Walk-In-Selection was used temporarily to clear the stock of unsold flats. Resale prices were constant because new flats were available immediately.
As the stock of unsold flats vanished, Walk-In Selection ended in 2007 and was replaced by Sale of Balance Flats that is only twice per year thus the battle is 6 people per each flat. Residents who cannot wait 3-4 years construction time for BTO and fail at SBF, need to go in resale market. Resale prices started rising.
Economy recovered in late 2000s but HDB failed to anticipate, ramped up the BTO supply too late and too slow, they offered 5500 BTO flats in 2007, 7800 in 2008, 9000 in 2009 (global recession), 12000? 16000 in 2010, 22000 25000 in 2011, 25000 27000 in 2012, plus DBSS flats and Executive Condos. (strikethrough numbers are initial numbers announced at beginning of year).
Rising supply of BTO became visible in 2012, a small reduction in resale prices growing rate.
HDB lowered minimum application rate to 50% in 2011 (was 70% or 80%, not sure), but since mid-2000s to 2013 no BTO had application rate under 100% (except elderly Studio BTO flats).

Failed prediction of price dropping

Analysts predicted that the prices in Singapore will start dropping in 2012 (example), as they predicted in 2011, 2010 too. In my forecast, resale flat prices will NOT fall even in 2012, but will continue to grow for as many years as HDB refuse to build ahead of demand, forcing us to wait 4 years via BTO!
The cooling measures from 2011 such as Minimum Occupation Period lengthen to 5 years for resale flats (does anyone know when 5-year MOP was introduced for new flats?) just made people angry as they can sell their flats only after 9 years since the date they apply for BTO. Stupid MOP cause less flats to enter resale market in the coming years, the number of people not eligible for buying directly from HDB (for example PR and singles) is growing.
Most of BTOs launched in the 3 years 2009, 2010, 2011 will be completed in only 2 years 2013-2014… ~ 30000 flats to be completed in 2014 alone + 5 years MOP = this may lead to a market crash in 2019. I am not saying that prices will not start to fall earlier, but the biggest price fall can be in 2019.

Note: The above text was written by my personal research at end of 2011. Later I found a similar research on h88.com.sg dating from Feb 2012, that confirm my hypothesis  They say that prices will drop no sooner than 2017! Oh dear…

Prices are finally dropping!

Multiple cooling measures, such as 3 year waiting period for permanent residents to buy resale flats have created fear that the housing market may crash. I don’t think that PR have big impact on prices, AND there’s one more reason for prices to RISE in 2013-2015: few new flats will enter resale market because HDB increased minimum occupation period in 2010 from 3 to 5 years.
Unbelievable, prices dropped with 0.7% in 3rd quarter and 1.3% in 4th quarter of 2013 (first drop in 5 years). Such minor drop in prices may cause panic, many owners rush to sell their flats before prices fall more, leading to a chain reaction in price drop, OR if the panic may be just temporarily and prices will rise back in 2014.
However, there are no signs to recover. Every quarter of 2014 added 1-2% drop in prices. Expect the same to happen in 2015. No significant drop but still enough to make analysts angry that HDB cooling measures were too powerful.
Note that HDB can also invent anti-cooling measures in case prices drop with more than 10% in one year, and these anti-cooling measures can fail like how most of the cooling measures failed. HDB wants to stabilize prices, a too sudden drop can be disastrous for entire Singapore economy.

Stupidity: instead of providing an adequate supply of flats, they kept supply low during 2000s despite of population increase, low number of flats entered in resale market while the demand was rising, then during 2010s HDB artificially slowed down demand for resale flats with cooling measures, and when prices started to drop, instead of keeping supply high and lift the cooling measures, they announced to decrease supply of new BTO flats 24300 units in 2014 to 16900 units in 2015. Idiot decision! BTO launches do not affect resale prices directly so we expect to see prices dropping and further decrease of BTO supply in 2016, thus the 2008-2013 price bubble risk to happen again during 2020s!
Personalty I hope that HDB will let the price index to drop slowly to 150 (2009 level), THEN lift the cooling measures, but keep the supply of at least 25000 BTO flats per year.

For more exact predictions, we need to know how much % of the resale flat buyers are PR or singles (ineligible for new flats), and how many are eligible for buying directly from HDB but choose to buy resale flats for whatever reason (waiting time for BTO, unsuccessful applications, small size of new flats, etc).
Many people blame the PR, but in my opinion they are just a small insignificant percentage. From my personal experience in chatting with website visitors, many people apply only for popular BTO projects that always get oversubscribed, fail to get a good queue number, then decide to go on resale market. I met also rich people who don’t care paying $100K COV to get a good flat.
Some (how many?) BTO buyers sell their existing flats as soon they get the keys of BTO. This helps increasing supply of resale flats before 2019, the year when many flats will fulfill MOP.

New BTO flat prices won’t fall according resale price index, they were traditionally priced 20% cheaper than resale flat prices, but since 2011 they were “de-linked” and priced 30% cheaper (even if we exclude grants for first timers) as the HDB anticipated price fall. even if the prices fall 10% for 3 consecutive years, BTO flat owners will still have profit from selling their flats. This does not apply for DBSS flats which were overpriced at their launch in 2011-2012. Prices of new flats 2008-2013 are available on http://data.gov.sg/Agency_Data/HDB/2315020000000001583W.xls

In February 2015 there was a call to raise income ceiling from $10k to $12k, if this will happen, BTO prices will go up. Source: http://www.channelnewsasia.com/news/singapore/raise-qualifying-income/1670794.html.

What you should know

– Upgrading programmes and upcoming MRT lines also drive up the nationwide resale price index.
– The size of today flats may encourage people to go in resale market for flats built before 1998 (NOT SURE if this push up the resale prices, record of psf is now hold by resale flats built in 2000s).
– Prices fall faster in young towns, Punggol suffered biggest price fall in late 2013, as results of over-speculation during last years, this after it was the cheapest town in mid-2000s.
– In mature towns prices fall faster in the old 10-storey blocks of Queenstown and Toa Payoh that are getting shadowed by the new 40-storey blocks.

Affordability of HDB flats

Yes they are still affordable!
Proof: every launch, the higher priced BTOs (better locations) gets most applicants.
HDB Website shows application rate. See how 3-room remained unsold and how big is the battle for 5-room despite of higher prices. See the TRUTH about shrinking HDB flat sizes!


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  1. spkgladys

    I am contemplating applying for a 5rm BTO flat in a mature estate, which will be completed in 2019/2020. Do u think that the the price of resale will drop so much that there is a chance that I will be overpaying for my new flat when 2019/2020 comes, considering the price of the flat is gonna be set now?

    1. Teoalida

      Nobody can predict price trends so many years ahead, we all see that prices are currently falling, but if HDB keep reducing supply of new flats and lift cooling measures, we risk to have another price bubble in few years. I suggest to buy it in mature estate if you can, and sell at next price peak.

  2. Winnie

    You know what? This is what i have been telling my husband about the crash in 2019. So we have to sell as soon as our hdb hit mop in 2016. I am also predicting that in the next 10 to 15 years (till 2030), HDB resale price will not reach its 2013 level again. never. Unless Gov changed it’s regulation drastically. Good luck to those who bought at the high price, even BTO in 2011 and 2012 were also sold at very high price. Today you might be able to get a BTO flat at price lower than your big brother who bought it few years ago. Gov want us to buy HDB for staying, not for capital gain. Who on earth will increase your home asset value and still get your complaint of house is so expensive that your children might not be able to buy one?

  3. Winnie

    Thanks writer for your analysis and the chart. From your analysis, i feel that you have high quality brain cells. Jiayou. You will do very well. =)

  4. Eileen

    What will the HDB resale price heading from present till 2016 ?

  5. hopeful l gal

    I do have a challenge here and is stuck-

    my 3 room flat in AMK was bulit in 1979, under joint name with Mum which i bought in 2011, with 35k COV. ( back then valuation was only 245K and COV at this level was decent) Thanks to all the restricted cooling measures, I slogged hard to fully paid up for the house since my mum is retired with no income, the only way for me to buy another place ( private or HDB ) is to remove my name in the flat and transfer the flat to her name. That comes with a penalty, upon transferring, i will need to wait for another 5 yrs before i can sell. ( that will be in 2019) ! my AMK flat will be more than 40 years..

    My initial thought is that i can then rent out my existing 3 rm flat in AMK when i purchase another flat. ( as passive income)

    Now comes the challenge ! With the leading indicator of HDB dropping, I am thinking if i should sell in this current environment ? selling the flat meant i will be looking at a depressed price ( merely break even) and i need to start looking out without a roof on my head.

    Really having a headache, what is your suggestion,,,, or anyone can give some sound advice.:)

    1. Teoalida

      I am not the best person to advice in this field…
      What penalty? If you can afford condos why do you care about little money loss due of falling prices? Anyway, median price in AMK for 3-room is $322.000, same level like in 2011, how did you bought so cheap? You still can sell in profit, especially as price falling slowed down.
      An alternative idea is to sell that 3-room in 2016, buy another HBD for yourself then your mom can apply for a Studio flat.

  6. bb

    You are doing a great service! Your efforts are really appreciated.

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