Some private property investors are feeling anxious, a week after National Development Minister Khaw Boon Wan announced his plan to popularise public housing again, said Mr. Colin Tan, Head of Research & Consultancy at Chesterton Suntec International.
“Can their nerves hold out for a whole month? The irony is that Mr. Khaw has not even begun to reveal his thoughts on the private housing sector,” he said.
Last week, Mr. Khaw announced that the HDB will be releasing 4,000 new flats, the largest single HDB launch, and that the year’s supply will also be raised to 25,000 units, from the previous 22,000 HDB units, with the new pace of development to be sustained next year.
Two days later, Mr. Khaw said the country will need “tens of thousands” of subsidised rental flats to meet the country’s demand and the sooner, the better.
In his another blog post, Mr. Khaw said that home buyers can expect HDB to offer more new flats in mature estates, starting next year.
“The big question is: what possible negative impact will these moves have on the HDB resale and the private housing market? In reality, over the short term, not much,” said Mr. Tan.
“For one, all of the new ramped-up supply will not enter the HDB resale market for the next seven to nine years at least, assuming a construction period of two to three years and a minimum five-year occupation period. An oversupply problem can only happen then. Between now and then, anything can happen to make this discussion redundant.”
In the immediate term, Mr. Tan pointed out that it will take home buyers away from the HDB resale market. However, building statistics showed that the present problem with the resale market is supply, not demand. New supply of resale flats in the market is very limited, “most probably at its historical low”.
Meanwhile, upgraders to private housing are also staying put due to skyrocketing prices of private homes and for some reason, several private property owners are downgrading to HDB resale flats.
“Therefore, any easing in demand for resale flats actually helps alleviate the problem of a shortage of supply. Do not expect resale prices to drop,” he said.
“As for a possible drop in rental demand, those who qualify for rental flats probably cannot afford market rates anyway and were never in the market in the first place. What is not there cannot be taken away.”
More new HDB flats in mature estates will likely draw demand away from newer estates, which could result in suitably lower prices or prices to balance fewer amenities and locations. “There will always be trade-offs.”
“There will be those who will opt for cheaper or bigger flats in newer estates. Alternatively, a longer minimum occupation period, say, 10 years instead of the current five, for flats in mature estates can discourage applicants who are mainly interested in the capital appreciation potential.”
The number of upgraders could be affected if prices of resale flats are kept stable, while prices of private housing continue to skyrocket. “But really, how big is this group today?” he noted.
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