By Andrew Loh
For the first time in a long time, the prices of HDB flats no longer come in wild swings. Gone, hopefully, are the days when all you could do was to tear your hair out in the face of skyrocketing prices, and seeing your dream of home ownership vaporise into thin air.
Where in the past cash-over-valuations (COV) of S$50,000 to $80,000 were commonplace, sellers are now selling without COVs or below valuation. In October, the news reported that one in ten HDB flat was sold with zero COV. [See here.] The Straits Times reported in December that “around four times as many flats were sold below valuation in October alone than over the whole of January to June.”
Overall, prices of resale HDB flats fell some 1.3 per cent in the last quarter of last year.
The projection from the industry is that prices will fall further, with some predicting a 5 to 10 per cent drop in the next 2 years.
The stabilising of prices is the results of numerous cooling measures introduced by the government in the last couple of years. It must be remembered, however, that such measures were first introduced as far back as 2008/9. It was only in the last 2 years that the government took a more aggressive stance to rein in runaway prices.
These included a restriction on the purchase of HDB resale flats by new permanent residents, a cut in the mortgage servicing ratio, and shortening of the maximum loan tenure.
“Analysts added that changes such as allowing singles to buy flats directly from the government also siphoned demand from the resale market,” reported Channel Newsasia.
The idea to allow singles to buy BTO flats was raised by Prime Minister Lee Hsien Loong in 2012. Many Singaporeans had been crying out for cheaper flats before that, since the rental market was getting beyond their reach with the escalating prices. Following PM Lee’s remarks, Minister for National Development, Khaw Boon Wan, said he would look into this after he has stabilised the wider market. And indeed credit has to be given to Mr Khaw for doing just that in the last 2 years or so. He has, for now, done what his predecessor tried and failed to do – bring down prices and stabilise the market.
In March 2013, Mr Khaw announced that singles aged 35-and above would be allowed to purchase new 2-room BTOs from the HDB. [See here.]
Mr Khaw has said that this year, HDB will focus on building more two-room flats to cater to the demand from singles.
Single Singaporeans now have an option which they never had before.
Read the rest of the article at: http://freshgrads.sg/articles/current-affairs/2032-what-hdb-got-right#.U...