Nov 10

Will prices drop in 2014, 2015, 2016…?

This Excel chart may help to see if the prices grow or fall in your town: HDB Median Resale Prices by Town .XLS.
Showing price trends since 2007, updated 24 Oct 2014 (every 3 months). The gaps in lines in Excel chart are because HDB do not provide median price if less than 20 flats were transacted per quarter.

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!

HDB resale flat prices 1990-2015

Demand for apartments in Singapore was high until 1997 Asian Crisis, about 80.000 flats were caught 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, and Walk-In-Selection was used temporarily to clear the stock of unsold flats. Resale prices were constant because new flats were available immediately.
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 are forced to go in resale market. Resale prices started rising.
HDB failed to anticipate economy recovering, and 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).

SOLUTION to stop prices from rising: launch at least 30000 units of BTO per year, until the applicant ratio drops under 1:1, and set bigger price difference between mature and non-mature estates to harmonize the applicant ratio and avoid oversubscription of certain projects! The leftover flats could be sold later through SOBF.
Also, HDB should NOT increase MOP because this is lengthening price rising.

Price drop prediction failures

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, just made people angry as they can sell their flats only after 9 years after applying 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) 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 finally started to fall!

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 Q3 and 1.3% in Q4 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, 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 in 2016 further decrese of supply, 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.

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 buyers will still have profit from selling their flats. This does not apply for DBSS flats which were overpriced at their launch in 2011-2012. New flat prices 2008-2013 are available on http://data.gov.sg/Agency_Data/HDB/2315020000000001583W.xls

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!

surveys & polls


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  1. Ling

    I totally agreed with you, Teoalida. I don’t see that PR as a significant cause of super high resale price.

    I’ve just completed my resale purchase recently.

    While searching then, my heart sank whatever the news announced a flat had sold with how much COV. The announcement would make owners insisting on their extremely high asking COV.

    I can understand that buyer wants to buy low and seller wants to sell high. But when high is so high, only super cash rich people will be able to buy without much hesitation. Sadly I’m not one of them… which was why I took almost a year to found one.

  2. Teoalida

    A crazy guy is trying to convince me that HDB will die, that after 2015 construction of new flats will slow down and stop some day, HDB resale prices will rise, etc. Read entire chat: http://www.teoalida.com/offtopic/chat-2013-10-04/

  3. Will

    Think about it: if hdb cost you 400k today, while your dream home costs a million. So you sell one and buy the other, you out of pocket another 600k.

    If same hdb drop to 200k, and the private home dip in line to 500k, you’d effectively pay 300k for upgrading. How is that a bad thing? If you bought high, I’m sorry but there are no high return, zero risk investments and I hope you didn’t spend beyond means.

    Ultimately, those who get burned are those who buy investment properties, but would you cry if I told you I lost money stocks our casino?

  4. Lanky

    Hi, need some advise here.

    I am a single 37 this year and planning to buy a 1969 (left 54 years lease) Havelock Road, 3-room, high floor corner HDB unit, lift upgraded.
    Beside the block is a group of brand new 40-storey SERs HDB blocks. Tiong bahru MRT is nearby and amenities are aplenty. Planning to buy at around mid $400K (fair price based on recent transaction)

    Will the price of this unit drop drastically, since the maximum loan tenure will be reduced each passing year for anyone who wants to take a loan of maximum 25 years? (Banks only allow loan tenure to stretch to until lease is left with 30 years) Meaning, say 5 years down the road, an interested buyer’s loan tenure is only up to a maximum of 19 years?

    I am concerned starting from this year, each passing year will reduce loan tenure will reduce and hence make it difficult for buyers to purchase this flat with loan and ultimately reducing the value of this flat.

    thanks in advance!

    1. Teoalida

      Can someone else advise this person?
      Personally I have no knowledge about banking, but if this make people paranoid to buy flats with just half of lease passed, then what is the purpose of 99-year leases? I think that banking rules should be changed and allow loans regardless of lease.
      PS: there are people who buy flats without taking loans, having money from selling other flat.

  5. Anonymous

    Hello, its good post about media print, we all understand media is a fantastic source of information.

  6. Jason

    Can you give your review on TDSR and MSR?

  7. Anonymous

    Appreciate the recommendation. Let me try it out.

  8. Property Investment Singapore Blog

    I would think it is very certain that property investment downtrend of 2014 will continue in 2015 – 2017. Why? Supply exceeds demand and coupled with TDSR restriction

    1. Teoalida

      Nice SPAM bro… leaving 5 comments on various pages for purpose of linking your blog! But sadly… you won’t benefit, links in comments are NOFOLLOW and I think that just ONE at 1 million visitors are clicking the links in comments!

  9. fernadiz

    with property cooling measures in singapore, the property prices are definitely coming down and need to maintain at the lower level due to the over investment scene in singapore by ultra rich foreigners and investors, prevention of a singapore property bubble formation and burst which will impact so many small time investors who uses rental income to pay for their multiple condos or landed property!!

    i found many other property articles here for singapore and other countries, hope it help u too

    1. Teoalida

      How that article should help me?
      That article sucks… there are some mistakes, bad writing and keyword-stuffed it for SEO. “The occupants were allowed to sell the flat to foreigners only after tenure of 5 years.” 10 years! “Choa Chu Kang offered $140,000 to $169,000 for 3 room condo and $225,000 to $278,000 for a 4 room condo” despite that is clearly referring at HDB flat prices.

      The income ceiling is necessary, all countries with public housing programmes have such income limits, without it everyone could buy HDB and prices of new flats would rise like average of buyer salaries, and lowest class of population could no longer afford flats of desired size so will raise the demand for smaller flats and further downsize the flats. The problem is the profit-hungry developers who set prices too high for current income ceiling. Here is a discussion on same issue http://www.teoalida.com/singapore/hudclist/comment-page-1/#comment-13364

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