More difficult for HDB upgraders to achieve their condo dreams?

By The Folks @PropTalk - October 12, 2012 5 Comments

Contrary to the popular belief that prices have stabilized in recent quarters, the cost of owing a new condo is still high, says Alan Cheong, director of research and consultancy at Savills Singapore, in his Oct 3 report. "The possibility of upgrading to a new home is slipping beyond the reach of many Singaporeans," he adds. Cheong cites the example of new suburban condos that were priced in the $700 to $900psf range pre-global financial crisis now trading at $1,000 to $1,500psf in the resale market.

Units in sought-after locations near MRT stations such as Kovan and Serangoon are being transacted at $1,300 to $1,600psf. In addition, new suburban condos near MRT stations are being launched at more than $1,000psf. "Increasing HDB prices have helped raise the support levels for the private market," he adds.

With interest rates remaining low, and more capital flowing in as a result of QE3," we are cautiously optimistic that property prices may be poised to trend higher, possibly rising by at least 10% by end of 2013", notes Cheong. "Astute international buyers are expected to seek value buys in the luxury market."

A 10% increase in residential prices by next year would be no surprise, judging from the winning bid prices achieved at government land sales, which have risen 27% in the last six months, estimates Cheong. "Developers will have to pass the higher cost back to consumers."

He sees "the influx of such hot money [precipitating] into the formation of property bubbles", which could also mean the implementation of more government cooling measures. He questions the effectiveness of the property curbs in limiting speculative purchases. "The property curbs may not have doused the strong buying sentiment nor subdued the rising prices," he says.

In a report dated Sep 25, Morgan Stanley Research expressed caution in the residential market. With interest in new launches rebounding after a seasonally slow August/September, and the post-QE3 announcement on Sep 13, there is increased risk of further policy action, says Sean Gardiner, managing director of Morgan Stanley Research, and analyst Wilson Ng. However, developers are facing higher costs and a margin squeeze, notes Morgan Stanley. Thus, the analysts are expecting prices to see a 13% decline through 2013.

Click on link below for some interesting data related to this article:



5 comments to ''More difficult for HDB upgraders to achieve their condo dreams?"

  1. folks. who do we believe?

  2. we must be eternally greateful that there are HDBs for the lesser mortals of singapore

  3. The Folks @PropTalkOctober 13, 2012 at 8:24 AM

    Anonymous (12/10/12, 10:28PM):

    Erm...God?? :)

    As per everything, there is always two sides to the coin. So what the wife and I normally do is to look at the facts, listen to what both the yea and nay-sayers have to say and then make our own decisions.

    Good luck!

  4. Being in direct competition, HK and SG try to attract Foreign direct Investments by upping against one another in terms of infrastructure/ tax/ liveability.

    Foreign labour / FT are needed to plug the gap where SG does not hv the skillset / manpower to grow its economy. Companies even get tax break for costs to relocate foreigners to come and work in SG.

    Singapore has one of the lowest corporate and personal income tax structures in the world. It has no capital gains tax nor estate duties tax. For wealthy individuals, tax exemption also applies on foreign sourced investment income remitted into SG.

    The richest gets the largest tax savings as compared to elsewhere. Thats why u see social media people, investment gurus re-locating here.

    The rich has large disposable income to invest in a varied investment portfolio in SG and across the diverse financial instruments. Thats why SG is becoming a financial hub, gold trading hub (GST is removed from 1 Oct for gold trading) and some YUAN trading hub.

    When there is an uptick, the wealthy who have properties and invests in many other forms of instruments available to them will reap exponential gain.

    The rich have already taken their positions by investing in properties before SSD, ABSD, LTV restrictions ...way way before.

    Why is SG in this situation now?

    Now where are we at this curve?

  5. hence, yes, we have to be eternally grateful (no lah...only 99 years) for HDB to build HDB for the masses and masses...STAY THERE NOW! Else WHACK u with SSD, ABSD, LTV, NO SHOE BOX etc etc etc