You get a flat, I get a flat, EVERYBODY gets a flat! At the rate HDB is going, they’ll soon be handing out door keys with every purchase above $17 at a petrol kiosk. Probably because one of them stumbled on a dusty document explaining their actual purpose. “Provide housing for the public? Oh crap. I thought this was some kind of Bingo-ballot with prize houses.”
Looks like we won’t be playing Wheel of Fortune to get an HDB flat anymore. Shucks.
How Many Flats are We Talking About?
Yesterday HDB put up 8,952 new flats for sale. That raises the total number of flats launched this year to 33,568. Of these, around 40% of the units were leftovers from last years exercise. According to property investor Charlie Sng:
“The target number they mentioned was 25,000, which they already overshot slightly. Now they launch almost 9,000 more. There is a bit of a worry now, whether they may be overcompensating.”
National Development Minister Khaw Boon Wan seems aware of the potential issue, saying that:
“We cannot be building up a glut because a glut doesn’t help problems and creates new types of problems and people may get hurt.” – Record Number of HDB Flats Launched, Today, 27 Nov 2013
He’s also added that the housing supply will slow in 2015; so don’t count on a glut forming.
The main impact of all the new flats being launched are:
- Further Depression of Resale Flat Prices
- Maintained Price Stability
- More Choices for Home Buyers
- Potential Welfare Options
1. Further Depression of Resale Flat Prices
Of late, resale flat prices have been more depressed than a high school poetry club. Chalk it up to policies preventing permanent residents (PRs) from buying until they’ve been here three years, and a cartload of loan curbs.
And now that resale prices have been knocked down, Charlie suggests, this rush of supply is meant to keep them there:
“I think HDB is sending a strong message, that they are serious about providing housing even if it means driving down resale prices. Overall it’s very good news if you are just starting a family; since now you have better chance at balloting, and if you want a resale flat it might be cheaper right now.”
Charlie adds that some flat owners might want to re-think their decision to sell for now.
2. Maintained Price Stability
Not everyone is convinced that the new flats will depress resale prices further. I spoke to Andrew (not his real name), who works as a real estate analyst for a foreign company:
“It would be a stretch to say that the new flats will impact the prices of resale flats in any immediate sense. It’s more probable that resale prices will start to rise again by 2014, and that this supply of flats will just help to moderate the rising prices.”
Whether or not it drives resale prices down further, Andrew is certain that “Former assumptions about million dollar flats will have to be revised. With this current direction, the days of super high capital appreciation are over.”
3. More Choices for Home Buyers
We note that the leftover flats from last year (part of the launch) constitute 3,974 units, spread across 11 non-mature and 13 mature estates.
The remaining units (around 4,000 BTO units) were in Bukit Batok, Jurong West, Hougang, Sembawang, and Woodlands.
That’s a pretty wide range of estates to choose from. If you have specific location needs, and you’re eligible, now may be the best time to buy.
4. Potential Welfare Options
Even if HDB has trouble selling the units (and if they do I will go and drink the longkang water outside), there’s a possible social benefit.
The leftover units might be able to serve as emergency lodging, for anyone who can’t make their mortgage, gambled the house away, etc. Perhaps if HDB feels generous, they’ll even sell the leftovers to more Singaporeans who can’t get married.
In the meantime, if you find yourself needing welfare, follow us on Facebook. We’ll give you more help on getting a financial edge.
Thant Zin Myint