The issue of short-term rentals has been a contentious topic in Singapore’s real estate landscape. Recently, an article highlighted the government’s intensified efforts to clamp down on illegal short-term rentals, revealing significant statistics and regulatory actions. 

This article aims to educate readers on the detrimental impacts of short-term rentals and underscore the need for stringent enforcement to preserve the sanctity of residential communities.

Context and Overview

Since 2019, the Housing and Development Board (HDB) and Urban Redevelopment Authority (URA) have actively investigated and penalised those offering illegal short-term accommodations. To date, 64 offenders have been fined, and 15 prosecuted for such violations in private residential properties. In public housing, seven offenders faced fines. Current regulations stipulate a minimum stay of three consecutive months for private properties and six months for public housing flats, reflecting the government’s commitment to maintaining stable and secure residential environments.

Illegal short-term rentals have found their way onto various online platforms, despite the clear legal framework. Platforms such as Airbnb, Facebook Marketplace, and Carousell have seen listings for short-term stays, prompting these companies to take corrective measures when violations are reported. The HDB and URA have emphasised the critical role these platforms play in ensuring compliance with local laws and have taken a stern approach to enforcement, including severe penalties for repeat offenders.

Impact of Short-Term Rentals

Negative Effects on Residential Communities

Short-term rentals significantly disrupt the residential character of neighbourhoods. Frequent turnover of short-term occupants often leads to increased noise levels, security concerns, and a general sense of instability among long-term residents. These rentals can undermine the sense of community, making it challenging for residents to form lasting relationships and trust within their neighbourhoods. The constant influx of short-term tenants can also strain communal facilities and resources, exacerbating tensions among residents.

Economic and Social Implications

The proliferation of short-term rentals can lead to housing shortages and inflated rental prices. Property owners, enticed by the higher returns from short-term leases, may withdraw their units from the long-term rental market. This reduces the availability of affordable housing options for local residents and exacerbates the housing affordability crisis. Additionally, the focus on catering to short-term tenants can shift investment priorities, diverting resources away from essential long-term community developments and amenities.

Regulatory Challenges

Enforcing regulations on short-term rentals presents significant challenges. The sheer volume of listings and the dynamic nature of online platforms make it difficult for authorities to monitor and regulate these activities effectively. Despite the government’s efforts, illegal listings continue to appear, often disguised or misrepresented to evade detection. This ongoing cat-and-mouse game between regulators and violators underscores the need for more robust and innovative enforcement strategies.

Government Actions and Policies

Current Measures

The HDB and URA have implemented several measures to curb illegal short-term rentals. These include strict enforcement of minimum stay requirements, heavy fines for offenders, and proactive monitoring of online platforms. First-time offenders face fines of up to $5,000, while repeat offenders or those involved in large-scale operations can be fined up to $200,000 per charge. In severe cases involving HDB flats, penalties can include written warnings, fines up to $50,000, or even compulsory acquisition of the property.

Proposed Solutions

To strengthen enforcement, the government could consider additional measures such as enhancing collaboration with online platforms to identify and remove illegal listings more effectively. Implementing a more sophisticated system for tracking and verifying rental activities, possibly leveraging artificial intelligence and data analytics, could also improve regulatory oversight. Furthermore, increasing public awareness and encouraging community reporting of suspicious activities can play a crucial role in deterring illegal short-term rentals.

Case Studies and Examples

Several high-profile cases illustrate the severe consequences of illegal short-term rentals. For instance, a Singaporean woman was fined over $175,000 for renting out three units on Airbnb for nearly three years, earning about $162,000. Another significant case involved a man fined $1.4 million for operating an illegal short-term rental business across 19 properties, utilising former maids to help manage the operations​​. These cases highlight the substantial financial penalties and legal actions taken against violators, serving as a deterrent to others considering similar activities.

What More Can Online Portals Do?

Online platforms have a significant responsibility in ensuring compliance with local rental regulations. While some measures have been taken, there is room for improvement. Here are several steps that online portals can implement to help eradicate illegal short-term rental listings:

1. Enhanced Verification Processes

Online portals can introduce more rigorous verification processes for property listings, ensuring that only those that comply with local laws are allowed to be advertised. This could involve requiring proof of long-term rental permits or authorisation from relevant authorities before a listing is approved.

2. Regular Audits and Monitoring

Platforms can conduct regular audits and monitoring of listings to detect any illegal short-term rentals. Automated systems can flag suspicious listings based on certain criteria, such as frequent availability for short stays or unusual pricing patterns, for further investigation.

3. Collaboration with Authorities

Strengthening collaboration with local authorities can enhance the efficacy of regulatory enforcement. Online portals can establish direct communication channels with government agencies to share data on suspicious listings and receive guidance on compliance requirements.

4. User Education and Reporting Mechanisms

Educating users about local rental laws and the consequences of non-compliance is crucial. Online platforms can provide clear information on legal requirements and encourage users to report any illegal listings they come across. Implementing an easy-to-use reporting mechanism can facilitate swift action against violators.

5. Transparent Listing Policies

Establishing and enforcing transparent listing policies that align with local regulations can deter property owners from attempting to circumvent the law. Clear guidelines on what constitutes a legal rental and the penalties for non-compliance should be prominently displayed on the platform.

6. Technology-Driven Solutions

Leveraging advanced technologies such as machine learning and AI can help in identifying and removing illegal listings. These technologies can analyse large volumes of data to detect patterns indicative of short-term rentals and flag them for further  scrutiny.

In Conclusion

The issue of illegal short-term rentals in Singapore is a pressing concern that demands urgent action. The negative impacts on residential communities, economic stability, and regulatory challenges underscore the need for stringent enforcement and innovative solutions. Government agencies have taken significant steps, but more can be done, especially with the cooperation of online platforms.

By implementing enhanced verification processes, conducting regular audits, collaborating with authorities, educating users, enforcing transparent policies, and leveraging technology, online portals can play a pivotal role in eradicating illegal short-term rentals. This collective effort will help preserve the integrity of Singapore’s residential communities and ensure a stable and secure housing market for all.

Thank you for reading. Stay tuned for more insights into Singapore’s dynamic real estate market. Have any burning questions about the market? Contact our experienced real estate consultants here. At PropertyLimBrothers, we are dedicated to helping you achieve your real estate goals with precision and care.

The post Why Illegal Short-Term Rentals are Wreaking Havoc on Singapore’s Housing Market appeared first on Insights by PropertyLimBrothers.

Many aspiring Singaporean homeowners believe that government grants and subsidies are essential for achieving their dream of owning a Built-To-Order (BTO) Housing Development Board (HDB) flat. These financial aids make homeownership possible for many who might otherwise find it out of reach. However, there’s also a perspective that these subsidies and grants contribute to the inflation of HDB flat prices. This price inflation can then extend to the private housing market, as the profits from selling subsidised HDB flats often fund the purchase of private residences, further driving up their prices.

Are subsidies and grants for HDB buyers a boon or a bane for Singapore’s real estate market? Let’s explore the benefits and drawbacks of these financial aids, and predict what might happen if they were eliminated.

Arguments Against Subsidies and Grants

Though some may dismiss the arguments against the provision of subsidies and grants as unfounded, it is prudent to consider this perspective to gain a comprehensive understanding of Singapore’s real estate market. As previously mentioned, some argue that the subsidies and grants available to eligible HDB flat buyers contribute to rising home prices. These financial aids enhance purchasing power, making homes more affordable and boosting demand. This increased demand naturally leads to higher home prices. When HDB homeowners sell their flats, they often reinvest the profits into private residences, further driving up demand and prices in the private housing market. This continuous cycle of heightened demand, fueled by subsidies and grants in the public housing sector, which in turn boosts demand for private residences from HDB upgraders, is seen by some as the main driver behind the persistent upward trajectory of residential property prices.

Another critical argument is that subsidies and grants can sometimes lead to overconsumption and speculative behaviour in the housing market. For instance, young couples who might otherwise live with their parents may choose to buy their own BTO flats to take advantage of the financial aid while hoping for future profits. Similarly, individuals might purchase larger flats than necessary, driven by the prospect of higher resale gains. This overconsumption can strain resources and lead to an inefficient allocation of housing. Additionally, speculative behaviour can inflate prices further, making it increasingly difficult for genuine home buyers to afford housing.

By examining these arguments, we can better understand the complexities of the housing market and the potential unintended consequences of well-intentioned policies. The interplay between subsidies, demand, and housing prices underscores the need for a balanced approach that ensures affordability without inadvertently fueling price inflation or speculative practices.

Benefits of Subsidies and Grants For The Real Estate Market

Subsidies have been a cornerstone of Singapore’s public housing policy, playing a crucial role in supporting high home ownership rates. By making HDB flats more affordable, subsidies have enabled a large proportion of the population to own their homes. This policy has helped Singapore achieve one of the highest home ownership rates in the world, fostering a sense of stability and belonging among its citizens.

Home ownership has been a significant avenue for wealth creation for many Singaporean families. Subsidies have allowed families to purchase homes at lower costs, and over time, the appreciation of property values has enabled homeowners to build substantial equity. This wealth creation through home ownership has been particularly beneficial for lower and middle-income families, helping them achieve financial security and upward mobility.

The stability in housing provided by subsidies contributes to the overall economic stability of Singapore. When families have secure and affordable housing, they are less likely to face financial distress, which can lead to broader economic problems. Stable housing markets also encourage consumer spending and investment, supporting economic growth. Additionally, home ownership fosters a sense of community and social cohesion, further contributing to a stable and prosperous society.

Subsidies not only provide economic benefits but also yield significant social advantages. Affordable housing allows families to settle in stable, secure environments, promoting family stability. It also facilitates community building, as people who own their homes are more likely to invest in their neighbourhoods and engage with their communities. This sense of belonging and community engagement strengthens the social fabric of Singapore, contributing to a harmonious and cohesive society.

What Will Happen To The Real Estate Market Without Subsidies and Grants?

If subsidies and grants for public housing were reduced or eliminated, the landscape of Singapore’s real estate market would experience significant shifts. Subsidies have historically kept the prices of HDB flats affordable, making home ownership accessible to a broad segment of the population. Without these financial aids, the market dynamics would change, potentially leading to reduced affordability and altered demand patterns.

Without subsidies, the prices of new BTO flats would likely increase, as buyers would have to bear the full cost of these properties without financial assistance. This could lead to a decrease in demand for new BTO flats, as potential buyers may be unable to afford the higher prices. Consequently, the resale market for HDB flats might also experience a downturn, as the overall demand for public housing declines. The reduced affordability could result in slower price appreciation or even a stagnation in HDB resale prices.

The private housing market could also be significantly impacted by the reduction or elimination of subsidies. Currently, many HDB homeowners use the profits from selling their subsidised flats to finance the purchase of private properties. Without these gains, fewer people might be able to afford private housing, leading to decreased demand and potential price corrections in the private housing market. Developers might face lower profits and reduced incentives to build new projects, impacting the overall supply of private housing.

The removal of subsidies would disproportionately affect lower and middle-income families, who rely heavily on these financial aids to afford their homes. Without subsidies, these groups might find themselves unable to enter the housing market, leading to increased income inequality and housing insecurity. Higher-income groups, on the other hand, might be less affected, as they have more financial resources to cope with the higher housing costs.

Economically, the reduction or elimination of housing subsidies could have far-reaching consequences. The construction sector, which is a significant contributor to Singapore’s Gross Domestic Product (GDP), might experience a slowdown due to decreased demand for new housing projects. This could lead to job losses and reduced economic growth. Additionally, lower home buying activity might dampen consumer spending and investment in related industries, further impacting the broader economy. 

Housing Measures Strengthens Singapore’s Real Estate Market

Singapore’s real estate market is bolstered by a series of targeted housing measures designed to ensure affordability and stability. These measures not only facilitate homeownership but also contribute to the robustness of both public and private housing sectors.

Loan-to-Value (LTV) Ratio

The LTV ratio limits are crucial in maintaining market stability and ensuring that homebuyers have sufficient equity in their properties. For HDB flats, the LTV limit is currently set at 80% for the first home, allowing buyers to finance up to 80% of the flat’s value through a loan, reducing the initial cash outlay and making home purchases more accessible. In the private residential market, the LTV limit is set at 75% for first-time buyers. With these LTV levels, the risk of homebuyers leveraging mortgage loans for speculative profit-making ventures is significantly mitigated. It ensures that buyers are genuine and not those looking to exploit higher LTV limits for investment purposes, thereby reducing the risk of mortgage defaults and contributing to the overall stability of the housing market.

Income Ceiling for HDB Flat Buyers 

The income ceiling for HDB flat buyers ensures that subsidies are targeted toward those who need them most. Currently, the income ceiling is set at $14,000 for families and $7,000 for singles. This policy keeps HDB flats affordable for lower and middle-income families, promoting social equity and preventing over-speculation in the public housing market. By maintaining affordability, the government supports a broad base of homeownership, which underpins social stability and economic resilience.

Additional Buyer’s Stamp Duty (ABSD) 

The ABSD helps to moderate demand and curb speculative buying. This tax is imposed on property purchases by foreigners, permanent residents, and Singapore citizens buying second and subsequent properties. By cooling excessive demand, the ABSD ensures that property prices remain within reach for genuine homebuyers, contributing to a more balanced and sustainable real estate market.

Wait-Out Period for Private Residential Owners 

Private residential property owners must observe a 15-month wait-out period before they can purchase a resale HDB flat, or 30 months for a BTO HDB flat. This rule prevents immediate transitions between private and public housing markets, stabilising demand and supply dynamics. The wait-out period ensures that the HDB market remains primarily for first-time buyers and those in genuine need of affordable housing, maintaining the integrity and robustness of the public housing sector.

In Summary

At PropertyLimBrothers, we believe that subsidies and grants are vital for the real estate market. These financial aids have enabled many Singaporeans to achieve their dream of homeownership, fostering economic and social stability. While it is important to recognise the potential for rising property prices and speculative behaviour, the benefits of these subsidies and grants cannot be overlooked.

The implementation of policies such as the LTV ratio, income ceilings for HDB flat buyers, ABSD, and wait-out periods for private residential owners helps mitigate these risks and maintain a balanced market. These measures ensure that the real estate market remains robust and sustainable, supporting the long-term economic health and social cohesion of Singapore.

By balancing financial aids with policies that curb speculative demand, the housing market remains accessible to genuine homebuyers, ultimately contributing to a more equitable and resilient society. In conclusion, while there are challenges to be addressed, the positive impacts of subsidies and grants on Singapore’s real estate market are significant and far-reaching.

Thank you for reading. Stay tuned for more insights into Singapore’s dynamic real estate market. Have any burning questions about the market? Contact our experienced real estate consultants here. At PropertyLimBrothers, we are dedicated to helping you achieve your real estate goals with precision and care.

The post The Hidden Costs of Housing Subsidies: Are They Inflating Singapore’s Real Estate Market? appeared first on Insights by PropertyLimBrothers.

Just a few months ago, two separate property listings were posted with a price tag of $2M. Although they were eventually taken down by the authorities (one for the misleading ad and the other for an “unrealistic” listing price), that triggered discussions about when we might actually see a $2M resale HDB transaction.

Well, we have officially gotten much closer, courtesy of a 5-room resale HDB flat at SkyOasis @ Dawson transacting at a record $1.73M. This surpasses the previous high of $1.48M for a 5-room flat in the same development, which occurred last year. The last record-breaker, a 5-room flat at CityVue @ Henderson, which sold for $1.59M, is also located nearby. The sale has sparked discussions about the future of Singapore’s housing market and the concerning trend of million-dollar HDB flats. Let’s take a closer look at this transaction and its implications for the property landscape.

Most Expensive HDB Transaction To Date

SkyOasis @ Dawson, located in the sought-after Queenstown area, is a relatively new development completed in 2021. The project is part of HDB’s efforts to rejuvenate mature estates and offer modern living spaces with excellent amenities. Some key features of this development include:

• Strategic location in Queenstown, a mature estate with a rich history
• Proximity to multiple MRT stations (Queenstown and Redhill)
• Easy access to city centre and business districts
• Modern design with sky gardens and community spaces
• Unblocked panoramic views of the surrounding area

The flat that fetched the record price is a 1,195 sqft 5-room corner unit on the 45th floor of 39 Margaret Drive, two blocks away (and 4 storeys higher) from the flat that fetched the previous record price of $1.48M in the development. Like the previous record brokered by PLB Realty, this flat is a SERS replacement flat from those that were displaced from Tanglin Halt, which allowed the owners to fulfil the Minimum Occupation Period (MOP) with a balance lease of around 96 years.

It was originally listed at an initial asking price of $1.838M before receiving offers from two groups of buyers and eventually closing at the record price of $1,725,888. The unit had only been on the market for less than a month. 

With a similar facing, it boasts perpetual unblocked views as the GCB enclave right in front of SkyOasis @ Dawson is gazetted as a conservation area. The residential plot right beside also has a plot ratio of 2.1 translating to a maximum building height of 24 storeys, meaning that it will not obstruct the views from the 45th floor.

Is The Price Tag Justified?

Despite all the inherent attributes of the unit, is this flat really worth such a steep jump from the previous record price? Did the buyers overpay for this flat? Yes, we know – willing seller, willing buyer. But some food for thought: would HDB have taken this listing down if this had been listed on the HDB resale portal? And because of this “success story”, will more sellers be encouraged to push the envelope and list their flats at crazy prices?

If we really zoom in to the area, there are only 7 stacks across 4 developments in Queenstown that offer 5-room flats with this kind of elevation and view. And out of the 4 developments, SkyOasis @ Dawson is the closest to the MRT. Given the extremely low supply of flats with these attributes, along with the combination of factors, it did set the stage and created the perfect storm for high-value transactions in the area. So the more important question should be: 

Will This New Benchmark Pricing Ever Become The Norm? 

We think it’s unlikely, and here’s why.

Here’s a look at the top 10 most expensive HDB flats (all transacted in 2024): 

The top 10 most expensive HDB flats at the time of writing have all surpassed the $1.5M mark, but if you take a closer look, most if not all of these developments are flat models that are no longer in production or being offered by HDB. Six out of the top 10 are DBSS flats in the Bishan and Toa Payoh area. We may continue to see high-value transactions coming out of these developments, but it is rather unlikely for this to become the norm when there is a limited supply of such flats with rare and highly sought-after attributes. 

Furthermore, we do expect HDB to step in at some point if prices get even more rampant and out of control. We have already seen a major shift in the public housing market with the reclassification of HDB flats, namely the shift from the mature and non-mature classification of towns to the Standard/Plus/Prime models. With this new framework, stricter resale conditions such as a $14,000 income ceiling were also put in place, which effectively creates an upper limit for future flats with highly desirable attributes. After all, when these flats hit the resale market, it is not possible for buyers to afford a $2M HDB flat with a combined income of under $14,000 – although we would not rule out possible gaps in the system such as retirees with no income downsizing from private properties to such flats. But the pool of buyers that can exploit these potential gaps are going to be very limited as well, which prevents sellers from overinflating these flats (who can the buyers eventually sell to and not make a loss if it’s not a forever home?) and allow the market to correct itself.

Which Existing Flats Could Possibly Surpass $2M?

Aside from the developments already recording high-value transactions, more townships in the Outside Central Region (OCR) have been recording million-dollar transactions. For example, Sengkang recently recorded its first million-dollar HDB flat in April 2024, with the sale of an executive maisonette at Compassvale Lane. 

However, these million-dollar HDB transactions are mostly coming from flat models that are no longer in production, especially those that surpass $1.5M. With that said, we can’t deny that the number of million-dollar HDB transactions has been on the rise. The number of million-dollar HDB transactions hit an all-time high this year, with over 200 of such transactions in May and June combined. 

Despite the number of such transactions climbing, the average transacted price of million-dollar HDB flats is still hovering around $1.1M –  and this average is unlikely to climb to $2M anytime soon, given that the government is closely monitoring the public housing market. 

While we do not have a crystal ball to predict the future, if an HDB flat were to surpass $2M in the next few years, it would likely be an existing 40+ storey 5-room flat in one of the Queenstown developments.

The Silver Lining

Looking at the bigger picture, over the past 3 years, million-dollar HDB transactions make up less than 2% of the total number of resale HDB transactions. That’s 1,644 out of 83,969 transactions. The average transacted price of resale HDB flats as a whole in the same 3-year period is at $565,648 – significantly lower than the million-dollar transactions that make the headlines every time. 

If we were to look at only 5-room or larger HDB flats, million-dollar transactions still only make up less than 4% of total transactions over the past 3 years (3.77% to be exact – 758 out of 20,096 transactions). And the average transacted price of 5-room or larger HDB flats is at $672,492, which is not as bad as the headlines make it out to be.

Closing Thoughts

Even though these million-dollar (possibly soon-to-be $2M) transactions are outlier deals that make up a very small percentage of overall market transactions, many have taken to social media to voice their concerns for the future generations. And these concerns are not completely unwarranted – if prices of public housing continue to rise at this rate, and million-dollar HDB flats inevitably become the norm, how will the next generation be able to afford a roof over their heads without relying on the great wealth transfer, or old money, so to speak?

However, with the government closely monitoring the public housing market and steadily increasing the supply of BTO flats, the increase in pricing will not see too drastic of a jump. And as we continue to propagate in our podcasts and webinars, there are still affordable options that are within reach for Singaporeans, now with even more support from the government in the form of additional grants. 

If you are on the hunt for your next home and want a second opinion, feel free to contact us here. Our experienced consultants stand ready to assist you every step of the way in your search for a dream abode. PropertyLimBrothers, always happy to show you the place.

The post 5-Room HDB Flat At SkyOasis @ Dawson Sold For Record $1.73M: Here’s What We Make Of It appeared first on Insights by PropertyLimBrothers.

Turf City was a commercial complex known for its horse riding schools, riding arenas, and other equestrian facilities. Along with these facilities, the complex also housed a variety of entertainment offerings including retail outlets, restaurants and occasionally community events such as car shows and flea markets.

Recently, redevelopment plans have been announced by the Ministry of National Development (MND) to transform this prominent site from a commercial hub to a residential neighbourhood. In this article, we explore the rich history of Turf City, delve into the specifics of these redevelopment plans, and analyse their potential impact on the surrounding areas. Furthermore, we examine the significance of introducing HDB projects in this district for the first time in nearly four decades, highlighting the transformative potential of this shift.

History of Turf City and Bukit Timah

Singapore’s Turf City has a rich history dating back to the early 20th century and post-World War II. Let’s look at a brief overview of the history of this iconic location.   

Introduction of Horse Racing in Singapore

The Singapore Sporting Club was established in 1842 in Farrer Park as a primary venue for horse racing and social gatherings. The club was known for introducing horse racing in Singapore, its prestigious events, and a range of facilities.   

Singapore Turf Club

By 1924, the club’s name had been changed to Singapore Turf Club from Singapore Sporting Club. This was also the year the city-state held its first thoroughbred horse race, the Singapore Gold Cup. Then, in 1933, the club was relocated to its current location in Bukit Timah. With Bukit Timah as the new home of the Singapore Turf Club, the club had a larger racecourse, a grandstand and amenities that catered to the growing interest in horse racing in Singapore.  

World War II

From 1941 to 1946, racing activities at the Bukit Timah Turf Club ceased due to World War II. During this period, the club was repurposed for military and administrative uses under the Japanese Occupation of Singapore. However, the club resumed operations in 1947, re-establishing itself as a venue for horseracing and various leisure activities.

Turf City (The Grandstand)

Turf City is the site that was formerly known as the Bukit Timah Turf Club (renamed Singapore Turf Club again in 1994) racecourse, which operated from 1993 to 1999 before relocating to Kranji.  

The Grandstand, which was originally part of the Singapore Turf Club’s racecourse, was a prominent feature in the area for many years. Over time, it has evolved into an entertainment and commercial hub for visitors to enjoy the range of retail stores, dining options, and recreational facilities in Turf City.  

Impact of New Developments on the Surrounding Areas

The redevelopment of Turf City, with up to 20,000 public and private homes being planned, will have a significant impact on the surrounding areas across various aspects including infrastructure, transportation, and the overall urban environment. Additionally, the redevelopment plans will greatly influence property prices in the Bukit Timah area over time.   

URA and HDB’s Plans for Redevelopment 

The Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB) have created a comprehensive plan to transform the former site of Turf City into a highly accessible and inclusive residential area that is integrated with a host of amenities, green spaces, walkable connections, and easy access to public transportation

URA’s exhibition, which was launched to showcase the plans for Bukit Timah, highlights several key elements that are expected to be incorporated into the estate in the near future. These include the conserving and reusing 27 heritage structures, including the North and South Grandstands, and retaining forested areas like the Eng Neo Avenue Forest and Bukit Tinggi. 

Moreover, like with redevelopment plans in general, the URA has placed an emphasis on the integration of green spaces and proximity to MRT stations. As we mentioned previously, there will be ample space with greenery due to the retention of forested areas. Additionally, Bukit Timah Turf City will be connected to the Downtown Line (DTL) and the upcoming Cross Island Line (CRL), providing residents with access to public transport options within walking distance. 

Another key element of these redevelopment plans include fostering a sense of community by creating cohesive neighbourhoods that foster social interactions, engagement and a sense of “home” and belonging. This is done with the help of recreational facilities, community gathering spots, entertainment hubs and other spaces for social activities to take place.   

How is This Going to Affect Surrounding Areas? 

Enhanced Livability:

The introduction of more green spaces, common facilities, and heritage conservation initiatives that are a part of the redevelopment plans can improve the overall livability of the surrounding areas by offering residents, both new and those in nearby neighbourhoods, with newly built and well-designed public spaces, recreational opportunities and cultural heritage sites.

Improved Infrastructure: 

With a point of focus for the URA being the creation of pedestrian-friendly connections, locations that are great for walking and cycling, and various sustainable design elements, there could be an upgrade to infrastructures in surrounding areas. This may include newly built roads, improved walkways, and more amenities like shops and eateries  that can be beneficial for both residents and visitors in Bukit Timah. 

Spillover Effect:

Redevelopment plans for Turf City are likely to generate spillover effects on the surrounding neighbourhoods as a result of the creation of more amenities, green spaces, and improved connectivity and accessibility. These elements can enhance the overall attractiveness of the area, cause a surge in demand for property as new projects are built, and potentially lead to increased property values in nearby areas as well. 

Economic Development:

Bukit Timah will undergo significant economic development due to the URA’s plans. The new housing estate is set to stimulate economic growth through increased foot traffic, fostering cultural attractions that boost local businesses, creating new commercial opportunities, and expanding job opportunities in Bukit Timah. This initiative could potentially cultivate a vibrant hub that supports the growth of both new and existing businesses in the area.  

Significance of new HDB projects in an estate

The introduction of new HDB projects after decades in an area like the former Turf City entails significant implications for several factors including housing affordability, sustainability, and social diversity. Additionally, it increases the potential for an Exit Audience, a factor in our PLB MOAT Analysis.

Housing Affordability

The introduction of HDB flats in an upscale area like Turf City will provide more opportunities for a larger, more diverse group of people to access affordable housing options in a prime location. This will be a key factor in addressing the housing needs of a broader segment of the population, offer first-time homebuyers with good housing options, and promote social inclusivity.   

Sustainability

The integration of HDB projects in Bukit Timah after a long absence of public housing options may also encourage more sustainability within and near residential neighbourhoods. This can be done through sustainable urban development practices such as the creation of green spaces, the use of renewable energy sources, and eco-friendly designs for infrastructure. 

In addition to these elements, promoting efficient land use to provide high levels of accessibility to amenities and public transport will further enhance the livability and eco-friendliness of the projects. Moreover, as stated by URA, efforts to preserve sections of Eng Neo Avenue Forest and Bukit Tinggi will also be given high priority alongside the aforementioned initiatives.

Social Diversity

Having HDB projects in an area predominantly filled with landed and non-landed private housing will play a key role in promoting social diversity, inclusivity and the formation of integrated communities. This will not only be beneficial in terms of creating a more diverse housing mix for families with different income levels, but also make schools in Bukit Timah, which are highly popular, more inclusive for families with school-going children.  

As residents from varying income levels and backgrounds come together in close proximity, fostering a diverse and vibrant sense of community can become more feasible and promote less disparity. 

MOAT Analysis Factor: Exit Audience

In our MOAT Analysis, the Exit Audience refers to the demographic that a property could potentially be sold to. For our analysis, we primarily focus on HDB upgraders as the key target audience for property sales.

A higher score on this aspect of the MOAT Analysis indicates a large pool of HDB upgraders. Statistics provided by HDB state that, as of 2018, there are a total of 2,555 HDB units in Bukit Timah with plans for up to 20,000 new public and private homes to be built. As such, with a larger number of HDB projects in the Bukit Timah area, over time there may also be a larger pool of homeowners looking to upgrade from public to private housing within the same neighbourhood. 

This can be beneficial for the overall development of the neighbourhood, increase demand for housing in the area, and lead to a more competitive property market. 

Closing Thoughts

The URA’s ambitious vision for a new housing estate within Bukit Timah’s Turf City marks a significant renaissance in the area’s history. With plans to introduce over 20,000 public and private homes to the area, the redevelopment initiatives will usher in a period of growth and transformation. 

The blend of modern amenities, green spaces, and community-centric design elements within the estate has the potential to both reshape the landscape of Turf City and positively impact the surrounding neighbourhoods. 

If you are interested in learning more about the world of real estate and its offerings, or are seeking guidance on your property journey, feel free to connect with us here. Our team of seasoned consultants will be more than happy to assist you. 

As always, see you in the next one!

The post First Bukit Timah HDB in 40 Years: A Turf City Renaissance With URA’s Vision For New Housing Estate appeared first on Insights by PropertyLimBrothers.

Great news for HDB home sellers who are looking to Do-It-Yourself, there is a new portal available for you to utilise. Gone are the Carousell days! Or are they? 

On 30 May 2024, HDB launched the resale flat listing service which will allow HDB homeowners to directly list and advertise their homes for sale on the HDB website. In recent years, with readily available information on the process of selling and buying properties, some homeowners are choosing to embark on the process themselves instead of engaging a professional. This trend is not limited to just HDB flats, we’re also seeing more of these practices for private homes such as condominiums and landed properties.

What does this mean for the general market consumer, whether you are a buyer or a seller, in the real estate market? In this article, we explore some considerations we can expect on the DIY process as well as whether engaging a professional is still necessary.

HDB Resale Flat Online Listing Portal

Before HDB launched the resale listing portal, the usual platforms for most DIY HDB home sellers in the market were Carousell and OhMyHome. For those that have embarked on the arduous journey of putting your property up for sale on Carousell, you would know that the experience is highly unlikely to be all positive. Defending against “trolls” trying to “low-ball” your home’s listed price point is an unavoidable situation. We have had clients who, prior to engaging our team, tried it for themselves. Some had positive experiences while some had to deal with unqualified buyers who simply enjoy viewing houses as a weekend activity.

The new HDB resale listing portal serves to eradicate such experiences for HDB home sellers, ensuring that every buyer that walks through your door is a sincere potential buyer. Sellers would be required to register online in order to list their homes. At the same time, buyers are required to have a valid HDB Flat Eligibility (HFE) Letter in order to schedule a viewing with the sellers. The portal will also automatically populate information such as the original floor plan, size of the unit, the ethnic quota applicable and any unbilled HDB upgrading works. 

The portal will also require sellers to input information that may affect the transaction such as requiring HDB’s Contra Facility and if they require an Extension of Stay. This will serve to improve both party’s experiences and ensure transparency. 

However, there are some limitations to the portal, such as the most important sale factor – price. Currently, the portal draws the estimated price range of the listed HDB flat from the last 6 months within a 200m radius to provide a gauge. Any home that is listed above 10% of the recent highest transacted price will receive a flagged notification. And at the time of writing, after exploring the portal, there seems to be a limitation on how much more HDB will allow you to list your property for. What happens if there has been significant price growth in the area but no transaction within the last 6 months to reflect this growth? For example, a newly MOP-ed BTO cluster that is surrounded by older clusters. Potential sellers in this situation may miss out on achieving a higher price as the most recent transactions may not reflect the actual market environment due to the lack of accurate recent transactions. 

The portal also does not limit buyers who may not have a sufficient approved budget from their HFE Letter to arrange a viewing. It currently only requires buyers to have a valid letter to arrange the viewing. This means that some buyers who schedule viewings, even with a valid HFE letter, may still be unqualified to make an offer that falls within the seller’s expectations.   

Should you DIY your HDB Sale & Purchase? 

Doing it yourself is the most economical way of maximising returns from the sale of your flat. Any part of the cost you save is extra money in the pocket. But, just because you can do it, does it mean you should? 

Take this reference for consideration, you can represent yourself in court (hopefully you’d never have to be in such a situation), save on costly lawyer fees – but would you do it? Or as every old folk’s expertise in a cough with phlegm means you are “heaty” and you just need to drink more water – does it mean you should skip on a trip to the doctor’s for medication? 

In most cases, engaging a professional is a more assuring route. If you prefer to do it yourself, here is our comprehensive guide on the HDB Resale process. But if you are on the fence, then let us share with you some potential considerations on why you should engage a professional.

Putting Yourself Out There

The HDB’s new resale listing portal serves as another passive method of marketing your property, which might not be that different from a buyer looking through other portals such as PropertyGuru or 99.co. Yes, it may be more ‘legit’ given that HDB is vetting and monitoring these listings. But if a potential buyer never comes across your listing on any portals, then it is a missed opportunity. 

That is why at PropertyLimBrothers, we adopt an aggressive marketing approach using targeted ads and Home Tour Videos to market a property to its fullest potential. But hey, you can film one for yourself too and adjust the targeted ads accordingly. You just need to have the time to manage the marketing process. And that brings us to our next point. 

Time

After marketing and getting enquiries, you may still need to spend some time to filter out potential buyers amongst the shoppers. You want to make sure that the people you open your house to are sincere buyers and not just here to shop around as a weekend activity. After all, this is your home we are talking about. Having to do all that while juggling your day job may not be worth the stress. Trust us, we know how stressful it can be selling houses.

Another factor to consider is the timeline of your potential buyer. This is usually part of the filtering process where we ensure that the buyer’s timeline for the transaction matches the requirements of our sellers or vice versa. Managing the Option period to ensure that the buyer exercises within the timeframe, syncing up on the resale submission date, managing any extension of stay – all these need to be taken into consideration when you are issuing or receiving an Option To Purchase. It is a delicate process but a satisfying one when all your checkpoints are met.  

Dollars and Cents 

Then comes the finances, ensuring that the sale of your property is a positive sale and not a negative one is crucial. Especially if your CPF funds are in deficit. You must reimburse the funds back into your Ordinary Account using the sale proceeds. You will also want to be sure that the costs involved for the process are all accounted for. The last thing you want is to get caught in a situation where you find out that you may not be receiving as much as you expected during the sale transaction. But not to worry, there is plenty of information online to aid you through this process if you decide to embark on the DIY journey. 

Referencing our earlier consideration, how do you ensure that you are fetching the right price for your property? HDB has set out some prompts through their portal to ensure that sellers get the fair value out of their property based on the most recent transactions. But what if the most recent transactions are not that recent, or if you want to challenge a new record breaking price like this unit at Tiong Bahru? While we are unsure of the limitations of the system at the point of writing, there have already been reports of listings being taken down for justified reasons. But one thing is clear, HDB is keeping a close eye on the system to ensure that the resale portal is a fair market place and prices are kept realistic. 

Final Thoughts

Don’t get us wrong, we are excited for this new system. After all, it is a free-to-use tool even for property agents as long as they have been appointed by the HDB owners, or potential buyers with valid HFE letters. There is also sufficient, highly accurate information for buyers who are considering one of the listings on the portal. 

We do expect some sellers to utilise the portal for the sale of their property especially if it is a rather simple sale and purchase transaction. However, for more complicated cases, our advice is still to consult with a professional before signing off on the Option To Purchase. 

If you find yourself uncertain about navigating the resale market and want guidance to make the most informed choice, do not hesitate to contact one of our consultants here. At PropertyLimBrothers, we are dedicated to providing assistance and ensuring your experience is as seamless as possible. 

Disclaimer: Information provided on this website is general in nature and does not constitute financial advice.

PropertyLimBrothers will endeavour to update the website as needed. However, information may change without notice and we do not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyLimBrothers does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Except insofar as any liability under statute cannot be excluded, PropertyLimBrothers, its employees do not accept any liability for any error or omission on this web site or for any resulting loss or damage suffered by the recipient or any other person. 

The post HDB’s New Resale Flat Online Listing Portal: Should You DIY Your Sale & Purchase? appeared first on Insights by PropertyLimBrothers.

Additional Buyer Stamp Duty (ABSD), the bane of any enthusiastic residential real estate market participant in Singapore. Why can’t we just buy more properties if we can afford them? Well, the answer is simple: it keeps the market regulated and lowers speculative purchases. Serving the same function is the Seller’s Stamp Duty (SSD). Both these duties, unlike Buyer’s Stamp Duty (BSD), function as deterrent costs to a quick turnaround of a sale & purchase.

ABSD is applicable to a few groups of participants. Namely, Singapore Citizens purchasing their second property, Singaporean Permanent Residents (SPR), Foreigners, Entities, and Housing Developers. The loophole which has been highlighted in question is mainly applicable to Singaporean participants. Now, do not confuse the “99-to-1” ABSD loophole with decoupling if you currently own a property with another individual in a 99 to 1 tenancy-in-common holding manner. One is perfectly legal and the other is a rather questionable situation. 

In this article, we will explain the difference between decoupling and the ABSD loophole that IRAS is clamping down on.

The Legal Method 

For the slightly more informed, decoupling should not be a novel term to you. It is a planned property strategy to allow participants to expand their property portfolios by selling a portion of their share. This is to release their name and purchase another property without incurring ABSD, as they will no longer have a residential property count after the sale. 

In order to facilitate this method in a more economical manner, the buyers of a property will have to opt for a tenancy-in-common agreement during the purchase. This will allow them to decide the percentage of shares each party will hold. In a joint tenancy, all buyers will have an equal percentage share of the property. So in most cases, a couple, it would be a 50/50 share. Whereas a tenancy-in-common will allow you a 99% to 1% share. This is a more economical method when it comes to selling your share (after clearing SSD Period) to the co-owner of the property. Take this for example: 

Assuming Valuation of Property at time of Sale/Decoupling: $1,000,000

Existing home loan balance: $500,000

From the simple example above, some key benefits you may already have noticed is the lower mortgage loan for the remaining owner of the property and lower expenses incurred due to a lower stamp duty on the purchased share. This is a potential route for portfolio expansion assuming that in the foreseeable future, one party will be financially able to purchase another property on their own name and the remaining owner of the existing property is eligible to sustain the mortgage loan purely on their own financial standing. 

The typical timeline of planning such a route is foreseeing at least 3 years ahead at the point of purchase in order to clear the SSD period. This may seem like a slightly complicated process, so do speak to a professional before proceeding with this method.

The Questionable Method

Now, what if there is an opportunity that you happen to chance upon and you are unable to offload your existing property and yet not want to let go of this opportunity to expand your property portfolio? There are various reasons why some participants may explore the questionable method of the “99-to-1” loophole. But the general intention is usually to help increase the loan capacity of the main purchaser. 

Similar to the decoupling method, the property buyers will enter into a tenancy-in-common holding but the gist of the loophole lies in the timing in which the second buyer is added into the purchase process. In a standard purchase, both buyers will be named in the Option To Purchase (OTP) and exercise the OTP together. But in this scenario if one of the buyers has an existing property count then they would need to pay ABSD on the full purchase price/market value (whichever is higher) of the unit in consideration. 

Clearly, this is not a very economical option. Assuming the second residential property is $1,000,000, that would mean an ABSD fee of $200,000 (this has to be in cold hard cash). Hence, the creative method of lowering the ABSD cost became more apparent with the “99-to-1” loophole. 

In general, the exploitation of this loophole would be adding in an additional buyer into the purchase during the Completion Period. To recap, there are 2 main timeframes in a property purchase: the Option Period and Completion Period. 

The first buyer will proceed with the purchase and exercise the OTP during the Option Period. This will allow them to avoid paying any ABSD as they do not have any property count. During the Completion Period, 1% of the ownership share will be sold to the second buyer to increase the loan capacity and help finance the property purchase. With this process, the ABSD applicable will be reduced to $20,000 instead of the aforementioned $200,000. This creates a questionable scenario where the first buyer may not be able to afford property purchase, if not for the addition of the second buyer and increased loan capacity. It would seem as if they were supposedly purchasing the property together, but in order to avoid the higher ABSD cost, they adopted the creative loophole. This action of avoiding the higher ABSD cost is seen as intentionally avoiding tax.

Repercussions to the Market

At the time of writing, it has been reported that about 0.5% of private properties transacted in the period of 2018 to 2021 involved the 99-to-1 method, or similar purchase agreements. That works out to be about 479 units amongst 95,755 transactions (excluding executive condominiums). This represented a small fraction of transactions, but the trend grew steadily, leading IRAS to conduct further investigations. At the moment, there is a reward of up to $100,000 for whistleblowers who call out private property buyers who exploited the loophole. 

There is unlikely any foreseeable impact to the broader market as there is only a smaller number of such transactions. The penalty for tax avoidance would be to recover the rightful amount of stamp duty and impose a 50% surcharge on the additional duty payable. This will possibly erase any potential gains from such property investments.

Final Thoughts 

Property investment remains as a lucrative and popular method of wealth preservation and expansion. However, controlling the high costs of owning multiple properties is a regulatory measure aimed at maintaining stability and attractiveness in the real estate market. 

Among the two methods discussed in this article, the decoupling method is a strategic real estate investment approach that requires a dedicated timeframe to achieve results. Although any immediate opportunities may be missed, it is a more secure option than adopting questionable and creative methods. PropertyLimBrothers and its consultants do not encourage or promote methods which put clients at risk of any breaches of law. 

The intricacies of real estate investment and planning can be overwhelming if you do not have the right information. Always consult a professional to avoid falling into any pitfalls or making the wrong decisions. Contact any of our consultants for a more comprehensive understanding to guide your journey. 

Disclaimer: Information provided on this website is general in nature and does not constitute financial advice.

PropertyLimBrothers will endeavour to update the website as needed. However, information may change without notice and we do not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyLimBrothers does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Except insofar as any liability under statute cannot be excluded, PropertyLimBrothers, its employees do not accept any liability for any error or omission on this web site or for any resulting loss or damage suffered by the recipient or any other person. 

The post “99-to-1” ABSD Loophole: How is it different from decoupling? appeared first on Insights by PropertyLimBrothers.

Since the Covid-19 pandemic, property prices in Singapore have soared to unprecedented heights, raising concerns about a potential housing bubble. This surge isn’t limited to property prices alone, it also encompasses rental rates, which have similarly experienced a significant increase. The pandemic-induced halt in construction has resulted in a shortage of new housing supply. Moreover, the increasing prevalence of remote work has driven demand for temporary housing solutions, both as workspaces and as interim residences while awaiting completion of new homes. As a response to the skyrocketing property prices, the government has implemented several stringent housing measures to curb speculation and ensure market stability.

After nearly four years since the pandemic began, property prices and rental rates, whether for private residences or Housing Development Board (HDB) flats, appear to be stabilising. In 2023, rental rates for private residences remained unchanged for about eight months, starting from April. Similarly, rental rates for HDB flats remained steady from August to October 2023.

This raises an important question: Will rental prices continue to decline and return to their pre-Covid levels? This article seeks to analyse the trend in rental rates over the past few years and offer a calculated prediction regarding the future trajectory of rental rates in 2024 and beyond.

Reasons For Rental Rates Stabilisation 

Private Residences

The stabilisation of the rental rates across private residences and HDB flats can be attributed to the increase in housing supply.  From 2022 to 2023, there were more than 28,000 units of private residences that were completed, excluding Executive Condominiums (ECs). The availability of more housing supply has given tenants more options to choose from, increasing their bargaining power in terms of rental negotiations, resulting in landlords having to accept lower rents than desired. 

Moreover, many local tenants who turned to renting at the start of the pandemic because of work-from-home setups or construction delays are now transitioning into their own homes as these constructions are completed. Consequently, there has been a notable decrease in local rental demand, leading to a 2.4% rise in vacancy rates for private residences from the first to the third quarter of 2023.

More new private residential properties are on the horizon, with approximately 10,000 new homes, excluding Executive Condominiums, projected to be finished in 2024. As this fresh supply of housing keeps growing, local tenant demand is anticipated to keep decreasing. With fewer tenants vying for rentals, those still in the market will find themselves with a wider selection of options, giving them more leverage in rent negotiations. Consequently, landlords might find themselves compelled to lower their rental rates due to the reduced demand from tenants.

HDB Flats

In 2022 alone, HDB rental rates surged by an astonishing 28.5%. In 2022, 31,325 units reached their MOP, followed by 15,748 units in 2023. In 2024, this figure is expected to drop to 13,093 units, indicating a 16.86% decrease compared to the previous year.

At first glance, the projected rental rates for HDB flats in 2024 might seem paradoxical. However, the decrease in the number of HDB flats reaching their Minimum Occupation Period (MOP) is linked to their prediction of rental rates stabilising. Some might question why this is the case, assuming that a decrease in available HDB flats would lead to lower supply and thus higher rents. The explanation lies in the anticipated drop in rental demand for 2024, projected to range between 33,000 to 35,000 units, down from 36,000 to 38,000 units in 2023. This decrease could potentially give tenants more leverage to negotiate lower rents.

The anticipated decrease in rental demand for HDB units may also stem from tenants shifting their attention towards renting private residences, given the stabilisation of rental rates in that sector. Additionally, the projected decline in rental demand for HDB flats could be influenced by a late announcement last year from HDB and the Urban Redevelopment Authority (URA), which raised the occupancy cap for larger HDB flats and private residences.

This increase in occupancy cap is a temporary measure aimed at easing the growing demand for rentals. It will be in effect from 22 January 2024 to 31 December 2026. Under this new regulation, eligible properties include HDB flats with four rooms or more and living spaces in similarly sized HDB commercial properties. Additionally, the policy applies to larger private residential properties, specifically those with at least 90 square metres of space.

Prediction For Rental Rates In 2024

Rental rates are anticipated to face ongoing downward pressure, though predicting the extent of the decline is challenging due to market uncertainty. While the rental market is showing signs of transitioning away from favouring tenants, significant reductions in rental rates are not expected.

The moderation in rental rates will depend largely on the unique attributes and location of each property project. For example, rental rates for private residences in the Core Central Region (CCR) may experience a milder decline compared to those in the Rest of Central Region (RCR) or Outside Central Region (OCR). This is partly due to the high Additional Buyer’s Stamp Duty rate of 60%, which compels expatriates to rent rather than buy properties, thus keeping rental rates in the CCR elevated.

Singapore’s appeal as a destination for expatriates, supported by its strong economy, safety, and labour conditions, ensures continued high demand for housing, including rentals. We’ve previously explored the effects of rising rental rates on expatriates, you can read more about it here. In summary, while rental rates are expected to stabilise this year, they are unlikely to return to pre-Covid levels. Rental rates may still experience growth in 2024, albeit at a more modest pace compared to the sharp increases seen in 2022.

Closing Thoughts

In conclusion, the rental market in Singapore is poised for changes in 2024. The surge in property prices and rental rates since the onset of the Covid-19 pandemic has raised concerns about market stability and affordability. However, there are signs of stabilisation as rental rates for both private residences and HDB flats begin to plateau.

While rental rates are expected to face downward pressure in 2024, the extent of the decline remains uncertain due to market dynamics. Factors such as property location and government policies, such as the Additional Buyer’s Stamp Duty rate, will influence rental rate trends, particularly in areas popular among expatriates.

Overall, while the rental market may stabilise in 2024, it is unlikely to return to pre-Covid levels. Rental rates may continue to grow, albeit at a more moderate pace compared to previous years. As Singapore remains an attractive destination for expatriates, demand for housing, including rentals, is expected to remain strong in the foreseeable future.

If you are looking for guidance in your real estate journey, feel free to reach out to us here. We will be glad to guide you through the process and offer a tailored consultation to help you reach an informed decision. 

Disclaimer: Information provided on this website is general in nature and does not constitute financial advice or any buy or sell recommendations. 

PropertyLimBrothers will endeavour to update the website as needed. However, information may change without notice and we do not guarantee the accuracy of information on the website, including information provided by third parties, at any particular time. Whilst every effort has been made to ensure that the information provided is accurate, individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult a financial planner or your bank to take into account your particular financial situation and individual needs. PropertyLimBrothers does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Except insofar as any liability under statute cannot be excluded, PropertyLimBrothers, its employees do not accept any liability for any error or omission on this web site or for any resulting loss or damage suffered by the recipient or any other person. 

The post Rental Realities in Singapore: Examining Trends and Expectations for 2024 appeared first on Insights by PropertyLimBrothers.

In the first quarter of 2024, we’ve observed a 1.7% rise in prices for resale Housing Development Board (HDB) flats. This increase surpasses the 1.1% growth seen in the previous quarter, extending the trend of rising HDB resale prices for the sixteenth consecutive quarter since Q2 2020.

Despite the 6.2% year-on-year increase in HDB resale prices, there are indications that the market is stabilising. In 2023, resale prices rose by 4.9%, marking a decrease from the 10.4% increase in 2022 and the 12.7% climb in 2021. This suggests a trend towards a more balanced resale market.

This article explores the trends in HDB resale flat prices and discusses key points to consider as you navigate Singapore’s real estate market.

A Closer Look at HDB Resale Price Growth

The 2.8% price growth observed from Q4 2023 to Q1 2024 mirrors the cumulative increase witnessed between Q2 and Q3 2023.

During the first quarter of 2024, a total of 6,928 HDB resale flats were transacted, marking a 5.5% uptick from the corresponding period in 2023, where 6,567 units were sold. This surge in HDB resale transactions may be attributed to a growing number of first-time buyers opting for resale flats as an alternative to Built-to-Order (BTO) flats, seeking to bypass the lengthy waiting times associated with the latter. Additionally, the shift towards resale flats could be influenced by the reduced frequency of BTO sales exercises. Previously, BTO sales exercises were conducted four times a year, but starting from 2024, they will occur only three times a year— in February, June, and October.

Unprecedented Record Sales of Million-Dollar HDB Flats

In January 2024, an unprecedented 74 resale HDB flats were sold for at least $1 million each, setting a new record. This surge in high-value transactions was primarily driven by a heightened demand for larger resale flats. Notably, prices for resale flats saw an across-the-board increase in both mature and non-mature estates, with five-room flats experiencing the most significant uptick of 2.1%. The number of transactions involving five-room flats surged by 33.3%, from 456 units in December 2023 to 608 units in January 2024, marking the highest figure since September 2022. Notably, the number of resale HDB flats (five-room or larger) sold in Q1 2024 increased by 10% compared to the previous quarter.

Four-room flats constituted the majority of resale HDB transactions in January 2024, accounting for 45.6%, while five-room units made up 23.8% of transactions. Of the 74 million-dollar transactions recorded in January 2024, 19 involved four-room flats, 31 were five-room flats, and 24 were executive apartments (EAs). These transactions were primarily concentrated in mature estates such as Bishan, Bukit Merah, Kallang/Whampoa, Toa Payoh, Queenstown, and Ang Mo Kio, with a smaller number occurring in non-mature towns like Yishun, Punggol, and Woodlands.

The surge in million-dollar flat sales in January 2024 can be attributed to previous private homeowners who completed their 15-month wait-out period after selling their private properties. January 2024 marked the earliest month for this batch of private downgraders to become eligible to purchase resale HDB flats following the implementation of the wait-out period in September 2022 as a measure to stabilise the resale HDB market. In essence, this group of homeowners, who observed the 15-month wait-out period, also significantly contributed to the increase in resale HDB transactions.

It’s crucial to acknowledge that even though there has been a rise in the number of million-dollar transactions, these occurrences remain rare within the broader context of the HDB resale market. In January 2024, the remarkable 74 resale HDB flats sold for at least $1 million constituted just 2.8% of all resale HDB transactions during that period.

Considerations for Resale HDB Buyers

Based on the trends discussed above, there are several key points worth noting that can guide you in navigating your real estate journey effectively.

Higher Demand For Larger Flats

For first-time homebuyers, the current trend favouring larger resale HDB flats suggests that opting for such properties might be a prudent choice. Doing so could potentially benefit you in the future, as it would broaden your pool of potential buyers should you decide to sell the property down the line. However, it’s important to note that the increased demand for larger flats often translates to higher prices. Therefore, it’s crucial to conduct a comprehensive analysis of the available resale options and carefully consider your financial situation. This ensures that you make an informed decision that aligns with your long-term financial and lifestyle goals, without overpaying for your chosen property.

Preference For Newer Flats

In March 2024, resale flats with a remaining lease of 90 years or more accounted for the highest proportion of overall resale transactions at 26.8%. This trend contributed to the overall price growth of resale HDB flats, as newer flats typically command higher prices. Considering the remaining lease of your chosen flat is crucial when selecting a resale HDB flat. Opting for a flat with a shorter lease could limit your potential pool of buyers if you decide to sell in the future. Conversely, the strong demand for newer flats may drive up their prices, underscoring the importance of carefully assessing your options to avoid overpaying.

New HDB Classification Framework

The new HDB classification framework will be kicking in from the next BTO sales exercise in June 2024. The additional consideration of resale restrictions for Plus and Prime flats will become crucial for asset progression given the lengthy Minimum Occupation Period (MOP) of 10 years and limited pool of exit audience (income ceiling of $14,000). For current owners, the advantage is that there will likely be a stronger demand for flats near MRT stations and town centres that do not fall under the Plus or Prime categories. As the government steps in to further clamp down on the ‘lottery effect’ of the BTO system, aspiring homeowners should weigh their options carefully and project further into the future. 

Closing Thoughts

As we navigate these resale HDB trends, it’s crucial to consider key takeaways for potential homebuyers. The preference for larger flats suggests that opting for such properties may offer advantages in terms of future resale potential, albeit at potentially higher prices. Similarly, the preference for newer flats underscores the importance of considering the remaining lease when making purchasing decisions.

In essence, the HDB resale market continues to evolve, presenting both opportunities and challenges for buyers and sellers alike. By staying informed and conducting thorough assessments, individuals can make informed decisions that align with their long-term goals and financial considerations.

Looking to get a resale HDB flat? Check out our previous guide on navigating the HDB resale process here. If you are looking for further guidance in your real estate journey, feel free to reach out to us here. We will be glad to guide you through the process and offer a tailored consultation to help you reach an informed decision. 

Thank you for reading and following PLB. Do stay tuned as we bring you more updates and insights on Singapore’s real estate market.

The post Deciphering the Dynamics: Understanding the Upsurge in HDB Resale Prices appeared first on Insights by PropertyLimBrothers.

The Housing Development Board (HDB) recently announced exciting news for Singaporeans looking for homes. In February, they revealed plans for seven new Built-To-Order (BTO) projects in various neighbourhoods. These projects, set for launch in the second BTO sales exercise of June 2024, will offer a total of approximately 6,800 units of public housing across the city.

These new homes will be spread across Jurong East, Kallang/Whampao, Queenstown, Tampines, Woodlands, and Yishun. Notably, Queenstown will see its first public housing launch in over a decade, with a project near Holland Village and Buona Vista MRT Stations. Additionally, there will be developments near future Jurong Region Line MRT stations in Teban Gardens and the newly established HDB residential area in Chencharu, Yishun.

Among the seven sites, two located in Tanjong Rhu, within the Kallang/Whampao neighbourhoods, are anticipated to be particularly sought after. Situated within close proximity to Mountbatten and Stadium MRT Stations, these sites boast the potential for views of the Singapore Sports Hub in Kallang and Geylang River. Moreover, being near exclusive private residential projects adds to their appeal.

This article will explore the upcoming BTO launches in the second sales exercise of this year, focusing on what to expect from each project. Additionally, it will take a closer look at the factors contributing to the expected high demand for the Tanjong Rhu projects, highlighting their distinctive features and the attractiveness of the surrounding neighbourhood.

A Close Look at June 2024 BTO Launches

This section offers insights into the upcoming June 2024 BTO launches, except for those in Tanjong Rhu, which will be discussed separately. Many of these launches will be situated in or near areas earmarked for significant transformations. To learn more about these anticipated changes across Singapore, check out our recent article here.

Queenstown

This location boasts convenient proximity to both Holland Village and Buona Vista MRT Stations, making it highly accessible. Situated in a prime area known for its upscale private residences, Holland Village MRT Station is merely two stops away from work nodes at One-North’s technological hub. Given its coveted location, it’s anticipated that this project will fall under the Prime Location Public Housing (PLH) model. With only 330 units available, comprising 2-Room Flexi and 4-Room flats, demand for these homes is expected to be robust, particularly since the last HDB flats in the area were completed in 2012. In the February 2024 HDB BTO launch, 1,160 applicants competed for 175 available 4-Room flats in Queenstown (Tanglin Halt Courtyard). First-time applicants had a 3.4 application rate, while second-time applicants had a much higher rate of 73.8.

Jurong East

Set to become a significant BTO development at the crossroads of Teban Gardens Road and Jurong Town Hall Road, this project will accommodate a total of 1,070 units, offering a range of options from 2-Room Flexi to 5-Room flats. The project’s substantial size reflects the pressing demand for public housing in the area. With the forthcoming Pandan Reservoir MRT Station expected to be operational by 2027, just across the road, residents will enjoy convenient access to the Jurong Region Line (JRL). This accessibility will be particularly advantageous once the Jurong Lake District Transformation is complete, establishing it as the largest business district outside the Central Business District (CBD), making commuting to work nodes a breeze. In the February 2024 BTO launch in Choa Chu Kang, in the West region, 127 applicants competed for 101 3-Room flats, resulting in application rates of 0.5 for first-timers and 5.4 for second-timers. For 4-Room flats, 459 applicants vied for 224 units, with first-timers at 1.2 and second-timers at 17.8 in application rates.

Yishun

Located in Chencharu, an area designated by the Urban Redevelopment Authority (URA) as a new housing zone, this BTO project will introduce 1,270 units, offering a variety of configurations from 2-Room Flexi to 5-Room flats. The surrounding area is slated for further development, including plans for a park, nursing home, and place of worship, enhancing the community’s amenities.

To compensate for the current lack of nearby facilities, the project will feature essential amenities like an eating house, shops, a minimart, a pre-school, and a senior care centre. While it’s not within immediate walking distance to the nearest MRT station at Khatib, additional bus services connecting to Khatib MRT Station and other nearby amenities are anticipated upon the completion of this project. As there were no recent BTO launches in Yishun, we anticipate the subscription rate for the upcoming launch. 

Tampines

This project, comprising 550 units of 2-Room Flexi, 4-Room, and 5-Room flats, is located at the intersection of Tampines Avenue 1 and Tampines Street 92. Situated within walking distance of Tampines West MRT Station on the Downtown Line, it offers residents easy access to transportation.

Positioned at the nexus of convenience, the site strikes a balance between urban accessibility and neighbourhood charm. While it’s nestled away from the bustling central Tampines area, it’s just one MRT stop away from the heart of the district, where a plethora of work nodes and malls await. Families with school-age children will find several nearby schools, including St. Hilda’s Primary and Secondary, Junyuan Primary, Springfield Secondary, and Tampines Primary and Secondary.

Moreover, with the planned transformation of the Changi region underway, demand for housing in this area is expected to surge as the transformation nears completion. This potential growth could lead to significant capital appreciation in the years to come. There were two HDB BTO launches in February 2024’s sales exercise in the East region, Bedok: one in Bedok North Springs and one in Bedok South Bloom. For 4-Room flats across both sites, first-timers had an application rate of 2.2, while second-timers had a rate of 19.7. A total of 1,494 applicants competed for 499 available units. In Bedok North Springs, for 5-Room units, first-timers had a rate of 3.3 and second-timers had a rate of 47.2, with 715 applicants vying for 135 units.

Woodlands 

This expansive development, featuring 1,590 units, offers a variety of unit configurations from 2-Room Flexi to 3Gen flats. It will include essential amenities such as an eating house, shops, a supermarket, pre-schools, and a Residents’ Network. While there are no nearby MRT stations within walking distance – the nearest being Woodlands and Woodlands North MRT stations approximately 2KM away – the project’s extensive offerings compensate for this.

The substantial number of units available would increase the likelihood of success for those interested in securing a unit through balloting. Furthermore, with the planned development of Woodlands Regional Centre and the anticipated upcoming Rapid Transit System (RTS), housing demand in this area is expected to surge in the longer term. In the February 2024 HDB BTO launch at Woodlands (Woodgrove Edge), 171 applicants competed for 88 3-Room flats, with first-timers at 1.1 and second-timers at 6.8 in application rates. For 4-Room flats, there were 713 applicants vying for 341 units, with first-timers at 1.6 and second-timers at 11.8. As for 5-Room flats, 891 applicants competed for 324 units, with first-timers at 1.8 and second-timers at 20.6 in application rates.

Tanjong Rhu BTOs Unveiled

The two upcoming projects, located adjacent to each other along Kampong Arang Road, will offer around 2,020 units of public housing. They’ll feature a mix of 2-Room Flexi, 3-Room, and 4-Room units. The larger of the two projects, expected to accommodate approximately 1,400 units, will include amenities like an eating house, restaurants, shops, supermarkets, a pre-school, and a Resident’s Network.

Positioned opposite Dunman High School, these projects will also benefit from the proximity to the future Tanjong Rhu and Katong Park stops on stage four of the Thomson-East Coast Line.

Notably, these developments mark the first new HDB units in the area in 60 years, potentially sparking high demand for homes. Due to their attractive locations and nearness to MRT stations, they are anticipated to fall under the Prime Location Public Housing (PLH) model. This designation means residents can enjoy additional subsidies, but there are conditions, including a subsidy clawback upon resale, a Minimum Occupation Period (MOP) of 10 years, and restrictions on renting out the entire unit even after fulfilling the MOP.

It’s essential to note that the BTO flats to be launched in June 2024 won’t fall under the new HDB BTO classification framework yet. Only the BTO flats in the third launch of 2024 will be categorised under the new framework.

The significance of these Tanjong Rhu projects lies in their contribution to the local housing market, offering a fresh supply of homes in an area long overdue for public housing developments.

Tanjong Rhu Living: Navigating Promise and Prudence

Tanjong Rhu epitomises the essence of an ideal family lifestyle, being in close proximity to the picturesque East Coast Park and the vibrant Katong area, which boasts an array of eateries, bars, and malls. The allure of this location is undeniable, fueling continued high demand for housing in the area for years to come. Moreover, the strategic positioning of Tanjong Rhu promises a steady stream of potential tenants, offering homeowners of the upcoming BTO projects a potential avenue to alleviate mortgage payments by renting out spare bedrooms.

Renting out these unused spaces not only provides a financial buffer but also serves as a stepping stone for homeowners to accumulate savings. These savings can then be channelled towards eventual upgrades to coveted private residences within the area, should they aspire to do so. However, it’s crucial to consider the caveats that come with the June BTO launches in Tanjong Rhu, notably the 10-year Minimum Occupation Period (MOP) and the subsidy clawback implications if categorised as Prime Location Public Housing (PLH) flats.

Therefore, prudent planning is imperative to ensure financial readiness and alignment of long-term goals. By carefully considering these factors, homeowners can navigate the path towards their desired upgrades with confidence and stability.

In Summary 

The recent announcement of seven Built-To-Order (BTO) projects across Singapore presents an exciting opportunity for prospective homeowners. With developments spanning various neighbourhoods such as Jurong East, Kallang/Whampao, Queenstown, Tampines, Woodlands, Yishun, and notably Tanjong Rhu, the Housing Development Board (HDB) is catering to diverse preferences and needs.

Each project offers unique features and advantages, from convenient access to MRT stations and amenities to the promise of future transformations in surrounding areas. However, the Tanjong Rhu projects stand out for their strategic location, offering a blend of family-friendly amenities, proximity to popular attractions like East Coast Park, and potential rental income opportunities.

While considerations such as the 10-year Minimum Occupation Period (MOP) and subsidy clawback apply to all BTO launches, prudent planning can help homeowners navigate these challenges and capitalise on the long-term benefits. Whether it’s the allure of central locations like Queenstown or the promise of future developments in areas like Woodlands, each BTO launch represents an opportunity for Singaporeans to secure their dream homes and invest in their future.

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