PRIVATE homes costing under $1 million may now draw keener interest among Singapore permanent residents (PRs) who have held their residency status for less than three years, and who are now blocked from buying HDB resale flats, property consultants say.
They added, however, that the shift to the private property segment by this group of buyers is unlikely to raise the number of private-home transactions significantly.
Mohamed Ismail, chief executive of PropNex Realty, said: "The increase in number of transactions in the private property market will not be huge, but it will also not be totally insignificant."
The HDB resale market recorded 25,094 transactions last year. The HDB said a fifth of resale flats are bought by PRs.
The government had announced this week that Singapore PR households with no Singapore-citizen owner will have to wait three years from the date of obtaining their PR status before they become eligible to buy a resale HDB flat.
Yesterday, the HDB clarified that if PR applicants want to buy such a flat together, both must meet the three-year wait-out period before a sale can be inked. The sale cannot go through if just one of two potential buyers of a flat meets the condition. In cases where there is only one buyer, at least one other PR essential occupier who forms a family unit with the buyer will have to have fulfilled the wait-out period.
Mr Ismail said: "So let's say about 5,000 HDB resale flats are bought by PRs every year. Since some PR buyers will actually meet the three-year requirement, and some may choose to rent, the number of PRs who choose to buy private property could add 2,000 or so transactions a year."
Steven Tan, the managing director of OrangeTee, said private homes costing less than $1 million will see the keenest interest from this group of buyers, because they are likely to be middle-income families and unlikely to shell out large sums of money for a home.
"Many may not be prepared to rent because there are no returns to that investment. So they may end up buying a private home," he said.
Homes below $1 million will also make for a more manageable amount in additional buyers' stamp duty, so such properties will be in "high demand", noted Eugene Lim of ERA Realty.
Aside from the three-year wait-out period, the government also announced that resale flat buyers who take HDB loans will henceforth be able to use only up to 30 per cent of their gross monthly income to repay their loans, down from 35 per cent.
And they can take only up to 25 years to repay HDB housing loans, down from 30 years previously; bank loans taken to buy HDB flats must be paid up in 30 years, down from 35.
The government also announced an enhanced Special CPF Housing Grant (SHG), which will be extended to middle-income families earning up to $6,500 and buying four-room flats. Previously, the SHG was pitched only at families earning up to $2,250 and seeking to buy two-room and three-room flats.
In a Facebook posting yesterday, National Development Minister Khaw Boon Wan said the enhancement will cost the government at least $150 million more a year.
"This will raise our current housing grants for new flats (the Additional CPF Housing Grant and SHG) from about $290 million to over $440 million a year.
"The enhancement is not a trivial policy shift, but a significant one made after careful consideration."
The Overall SRPI on the whole may post either weak increases or even declines as the TDSR starts to have an impact on the resale market.
- SLP International executive director Nicholas Mak
PRICES of small completed private apartments and condos in Singapore recovered in July after slipping for two consecutive months, latest flash estimates from the National University of Singapore (NUS) show.
Market watchers suggest the Total Debt Servicing Ratio (TDSR) framework, which took effect from June 29, could be driving buyers to the small-unit segment.
The Singapore Residential Price Index (SRPI) for small units (up to 506 sq ft) islandwide rose 2 per cent in July over June to its highest level since December 2001, the start date of the SRPI series.
The revised June SRPI for small units reflects a 0.5 per cent month-on-month dip. In May, the index slipped 1.3 per cent.
Month-on-month, year-to-date as well as year-on-year, the SPRI for small units has outperformed the other three indices in the series.
In July, SPRI for Central Region (excluding small units) was unchanged from the previous month after slipping 1.5 per cent month on month in June. Central Region is defined as districts 1-4 (including the financial district and Sentosa Cove) and the traditional prime districts 9, 10 and 11.
The SRPI for Non-Central Region (again excluding small units) increased 0.3 per cent month on month in July following a one per cent gain in June.
The Overall SRPI was up 0.2 per cent in July, against a 0.1 per cent drop in June.
Minted by NUS' Institute of Real Estate Studies (IRES), the SRPI series tracks prices of completed non-landed private homes, excluding executive condominiums.
Year-to-date, SRPI for small units has climbed 6.1 per cent, outperforming increases of 1.9 per cent for the Central Region, 2.8 per cent for the Non-Central Region and 2.4 per cent for the Overall indices.
The latest July flash estimates also reflect a 10.2 per cent year-on-year hike in the index for small apartments, surpassing the increases of 4.2 per cent in Central Region, 9.9 per cent for Non-Central Region and 7.3 per cent for the Overall indices.
Commenting on the hike in the small-unit index for July after two consecutive months of decline, associate professor Lum Sau Kim of IRES suggests that this could be due to the "impact of the TDSR measures, which may have creamed affordability and driven some buyers towards small units".
Lee Lay Keng, head of Singapore research at DTZ, observed that based on caveats data downloaded yesterday, the number of resale transactions for non-landed private homes declined around 11 per cent in July compared with June.
"With the new TDSR framework, transactions now take a longer time to close as the loan application process will be more onerous, involving more compliance checks to adhere to the TDSR limit," she said.
Moreover, the TDSR framework could lead to some buyers choosing smaller or more affordable units entailing a lower absolute price quantum, as the maximum loan that they now qualify for may be reduced.
"Notwithstanding the decline in overall resale transactions in July, the number of deals involving small units rose in July compared with June, which could have supported the 2 per cent m-on-m increase in resale prices for small units - the highest pace of growth across all segments in July," said Ms Lee.
SLP International executive director Nicholas Mak predicts that in the coming months, the Overall SRPI on the whole may post either weak increases or even declines as the TDSR starts to have an impact on the resale market.