Some sellers might have been reluctant to put their unit on the market as prices are lower than the peak some three-and-a-half years ago. However, current market conditions are still favourable for sellers.
For one, HDB resale prices were on the rise from 2005 to 2013, increasing by a total of 104 per cent over 31 quarters. In comparison, the recent slide in prices was only 9.9 per cent over 14 quarters. Most sellers would still be making a healthy profit even if they were to sell today, especially if their purchase was a BTO flat. Upcoming executive condo launches include Hundred Palms Residences EC, Yio Chu Kang EC, Inz Residence EC, Anchorvale Lane EC, while existing ones include The Terrace EC, Brownstone EC, The Vales EC, Parc Life EC , Sol Acres EC, The Visionaire, Bellewoods EC, Signature at Yishun, The Criterion EC and Northwave. Hundred Palms Residences details and Hundred Palms EC show flat will be available shortly.
For sellers who are looking to upgrade to a private residence, now is an opportune time to make the switch. Private residential prices have been on a decline; and there is abundant supply in the market. Upgraders would be spoilt for choice as developers continue to keep prices attractive in order to woo more buyers.
Of course, there are concerns among sellers that prices would increase after they have sold their unit. However, this is not very likely to happen. As National Development Minister Lawrence Wong said, the government expects HDB resale prices to remain stable due to the healthy supply of resale flats.
It is worth noting that the Mortgage Servicing Ratio (MSR) compels buyers to keep their monthly mortgage repayments to 30 per cent of their household income, thereby capping the maximum loan amount available to them. Any price increase will therefore be tied to income growth. Given that Singapore’s economic growth is forecasted to be in the region of one to three per cent in 2017, any price increase would be a gradual process, instead of a sudden spike.
Also, with the increased grants, there will be more buyers looking to purchase resale flats. Selling may likely be an easier and faster process now. However, sellers should be cautioned against rashly increasing their asking prices for their flats in view of the higher grant amounts, especially if the change is not backed by transaction data. HDB flats are very similar products and buyers can easily switch to sellers who did not raise prices.
Moving forward, we are not expecting huge changes to the HDB resale market. Transactions will probably receive a boost from the higher grant amounts. We are expecting a 10 per cent increase in resale volume this year over 2016, in the region of 22,000 to 23,000 units. Price wise, we might be seeing a modest uptick this year, in the range of 0.1 per cent to 0.5 per cent for the full year.
Unlike in the private residential market, where emphasis is placed on timing for investment purposes, the HDB resale market is much less speculative. Thus, our advice to any prospective buyer or seller is to focus on need instead. There is simply no perfect or best timing to enter or exit the HDB resale market.