Property Sale - Anytime Soon?

Rationale

I had stayed in Queenstown all my life. After getting married, I found that I could not afford a HDB flat there and moved to Sengkang. In fact, during the time I'm looking for a flat, a new 4rm flat in Queenstown actually cost much more than a new EA in Sengkang. It has always been a dream for me to move back to Queenstown. It is so much more convenient there, no jams, no ERP... With the subprimed induced stock market crisis that is now spreading into the real economy, I might realised my dream of moving back sooner than I thought.


HDB supply and prices

A check with the HDB website seems to indicate that about 8000 (BTO) units are planned each year. A further look at the price index of HDB resale flats shows that HDB prices tend to be sticky. At each of the last few crisies, e.g 1997, 2000, the price takes about a quarter or two to come down. Thus it is quite understanble that the resale price index actually rose 4.2% in 3Q 2008 from the previous quarter even though Singapore already went into technical recession.

Thus the recent DBSS at Bishan where a 5rm can fetch up to $739,000 could easily mark the peak for new HDB flats. At $525 per square foot for a 99 year lease hold property, one can easily find a full (but resale) condomium in reasonable locations.


Private property supply and prices

A check with the URA website shows that there are 10,007, 6,049 and 8,450 units under construction and scheduled to be ready by 2009, 2010 and 2011 respectively. Most of these projects are located in the central regions. A further look at the residential price index shows that private property came down faster compared to HDB prices, but still slower then the stock market and technical economic downturn. The index for 3Q 2008 declined from 2.2% to 5.3% from a quarter ago.


Outlook for private (landless) property

I already had a HDB flat and the last thing I will do is to sell it and 'upgrade' to a private property. I'd rather buy another one if the price is right. (HDB flats bought with HDB loan are shielded from creditors in the worse case scenario of bankruptcy). Looking ahead, I am optimistic the prices of lower end, 99 lease hold projects in reasonable locations will come down to 'earthly' levels for the following reasons:

1. A sheer number of projects due for completion within the next 3 years
   
2. The local banks are turning cautious in granting loans for property purchase
3. The economic downturn could affect those who live beyond their means and could not substain the hefty monthly installments of the property bought during the housing bubble in 2007.
   

Conclusion

I will be monitoring the private property transacted price on URA's website closely for potential bargain hunting over the next few years. Hopefully, my dream can be realised before 2012, else I will be rooted to Sengkang ... might not be a bad thing afterall.