In the 2010 National Day Rally speech earlier, the Singaporean Government has promised to build 22,000 new HDB flats in 2011, up from 16,000 in 2010, to cope with the rising demand for public housing. And to complement this effort, the HDB also aims to complete newly launched projects within a shorter timeframe.
“This promise is a huge move on the Government’s part to check the constantly rising prices in the secondary public housing market,” says PropNex CEO Mr Mohamed Ismail, “and is to be commended.” He refers to the rising HDB Resale Price Index which rose to a new record level for 2Q10, accompanied by a 20% increase in overall COV (cash over valuation) levels islandwide to $30,000.
Mr Ismail states that the HDB is taking such actions to ensure that public housing remains affordable for the mass population in the long term. He feels that such a move was necessary in order to combat the increasingly higher COV levels that made it difficult for buyers who were looking at public housing for immediate occupation.
“The impact of this news is not expected to be immediate,” cautions Mr Ismail. “COV prices are still expected to rise, albeit at a slower pace of about 10% for the rest of 2010. We can expect to see a dip of about 20% in 2011 as new homeowners take up the geneous supply of new flats, and a further 30% drop thereafter in 2013, when the flats reach completion.”
Mr Ismail does not expect COV levels to completely reach zero level, as there would always be a premium payable for choice resale flats.
Another change announced in the Rally was that buyers who earned between $8k and 10k would now be eligible to buy DBSS flats; they were only allowed to buy Executive Condominiums previously. Many couples these days are putting off marriage till their careers are more settled, and this “sandwich class” will warmly welcome this, says Mr Ismail.
“Now, if their combined household income slightly exceeds the $8k threshold, at least they are not forced into the resale market where high COVs are usually a deterrent force.”
Mr Ismail also lauds the Government for not increasing the income ceiling to $10k across the board to include BTO (Build To Order) flats. “By confining it to DBSS flats only, there are more choices for the higher earners which should translate to less competition for the BTO flat buyers.”
-press release from Propnex