Rilek1Corner

Tag: affordability

  • Singapore Homes Seriously Unaffordable

    Singapore Homes Seriously Unaffordable

    Singapore’s market cooling measures have been effective in reducing the prices of HDB flats and private homes over the past few years, but housing costs here are still seen as too high, revealed findings published by a global report last month.

    According to the 12th Annual Demographia International Housing Affordability Survey, Singapore has a “seriously unaffordable” rating of 5.0, no change from last year’s survey.

    The report used the median multiple indicator, which is the median house price divided by gross annual median household income, to rate housing affordability across 367 cities in nine countries.

    A grade of 3.0 and below is considered affordable, 3.1 to 4.0 (moderately unaffordable), 4.1 to 5.0 (seriously unaffordable) and 5.1 and over (severely unaffordable).

    Despite being seen as expensive, the report noted that “Singapore has been far more successful in controlling housing affordability than in markets that have followed the British urban containment model”.

    Specifically, the HDB was recognized for ramping up the supply of new flats and reducing new home prices.

    “One strategy has been to increase what are effectively “across the board” subsidies for all new houses (not counting special grants, such as for first home buyers).

    “Should the present policy continue, it is likely that resale house prices will rise slower or even fall in the future, improving Singapore’s housing affordability,” said Demographia.

    Eligible first-time buyers of new HDB flats currently enjoy up to $80,000 in housing grants, comprising up to $40,000 in Special CPF Housing Grants and up to $40,000 in Additional CPF Housing Grants.

    Meanwhile, Hong Kong has the least affordable housing in the world, with a median multiple of 19.0. This rating is also the highest recorded in the 12 years of the Demographia Survey.

     

    Source: www.propertyguru.com.sg

  • Khaw Boon Wan: HDB Flats Have Become More Affordable

    Khaw Boon Wan: HDB Flats Have Become More Affordable

    Public flats have become more affordable in recent years, with many Singaporeans able to buy a home within their budget, said Minister for National Development Khaw Boon Wan.

    To ensure that this remains the case for future generations, Mr Khaw said that the Government remains committed to quality housing that is within the reach of most Singaporeans.

    “Every generation will be able to afford their own HDB homes. This is our promise,” he said in the parliamentary debate on his ministry’s budget yesterday.

    Stressing the importance of home ownership, Mr Khaw said his ministry has achieved results in taming the red hot housing market. This was a hot topic in the 2011 General Election.

    Resale housing prices have risen by about 37 per cent since their low in 2009, while new flat prices rose by just 15 per cent without grants. With grants, new flat prices rose by just 6 per cent.

    — SOURCE: MND

    “Measured against the (median) household income increase of 38 per cent, we can see that public housing affordability has substantially improved since 2011,” he said.

    As for whether cooling measures will be lifted, Mr Khaw said that the property market is in transition and that the Government “should not overkill”.

    Mr Khaw also cited a recent Housing Board survey which showed that people were willing to pay up to $300,000 for a new three-room flat, and between $300,000 and $500,000 for a four- or five-roomer.

    In comparison, 90 per cent of new three-roomers last year were sold at below $250,000.

    For new four-roomers, 81 per cent were sold below $350,000, and 89 per cent of new five-roomers were sold below $450,000.

    “These are actual transactions. They paint a comforting picture of young Singaporeans being able to get their first BTO (Build- To-Order) flat, well within their expected budget,” said Mr Khaw.

    Home ownership has also been possible for the lower-income group, added Mr Khaw.

    From March 2012 to July last year, 1,491 families with household incomes below $1,000 had booked two-room or larger BTO flats.

    Yesterday, 24 MPs rose to ask about issues such as the affordability of housing. Ms Lee Bee Wah (Nee Soon GRC) was one of three MPs calling for the $10,000 income cap to be raised, while Mr Seah Kian Peng (Marine Parade GRC) and Mr Gan Thiam Poh (Pasir Ris-Punggol GRC) wanted flats with shorter leases for the needy.

    Mr Khaw outlined plans to help different segments, from singles to public rental tenants.

    Starting from May, half of all new two-room flats in non-mature estates will be set aside for singles, up from 30 per cent now.

    The Government will look for ways to help non-first-timers who want resale flats near their parents, as well as public rental tenants who aim to own a home.

    It is also prepared to raise the $10,000 income ceiling for public flats, as incomes rise, he said.

     

    Source: www.straitstimes.com

  • HSR: HDB Resale Prices Expected To Fall To 2008 Levels By 3rd Quarter Of 2015

    HSR: HDB Resale Prices Expected To Fall To 2008 Levels By 3rd Quarter Of 2015

    HDB resale prices are expected to reach 2008 affordability levels by the third quarter of next year, a HSR report released last week said.

    Prices would need to come down by 6 percent to become affordable.

    But what does affordable means? The report calculates affordability as the cost of a resale flat at 4.4x average annual household income of HDB dwellers.

    However, note that HSR’s report expects that affordability will be reached only if household incomes continue to rise.

    According to HSR, “We observe that household income has been on an upward trend from 2005 to the present.

    “Barring any macroeconomic crisis, income should continue on an upward trend in the future.

    “We have based our income projections using the historical Compound Annual Growth Rate of 5.6% for average annual household income of HDB dwellers.”

    Also, the calculations are done based on the following assumptions – that the buyer is a first-time Singapore buyer, where the impact of taxes and duties is minimal.

    Also, the calculations are based on the example of a 1,000-square-foot resale HDB flat.

    According to HSR, such a flat is now “5x the average annual household income of HDB dwellers”.

    By the Q3 2015, it expects this to be lowered to 4.4x.

    However, this is still higher than the 4x that National Development Minister Khaw Boon Wan promised for Build-to-Order (BTO) flats in March last year.

    Also, latest statistics show that three-room BTO flats are still 4.57 times that of applicants’ annual salaries.

    Four- and five-room flats are at 5.26 times and 5.36 times of applicants’ annual salaries, respectively.

    Also, when seen in the context of real incomes increasing by only 0.4 percent last year, it is uncertain if incomes will increase fast enough for housing prices to become affordable to Singaporeans again.

    HSR’s prediction might be a tad too optimistic in this instance.

    Moreover, HSR also said, “We expect demand to increase due to greater affordability if price and income continue on current trends.

    “This means that residential property will become more affordable to more people, leading to increased demand.

    “This could potentially lead to higher transaction volume and prices.”

    And so, the cycle continues. If this assumption by the HSR is factored in, housing prices might take even longer to reach affordability.

    The HSR report tries to be optimistic but where it is increases in income and price fluctuations are uncertain, unless the government takes affirmative action to reduce housing prices, such expectations have to be moderated.

    As it is, Mr Khaw had promised to the prices of new flats to four times the annual median income of its applicants but this promise is far from being fulfilled.

     

    Source: www.therealsingapore.com