In January and February this year, 447 flats were transacted in Sengkang, this is the highest for a HDB town (Photo: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - HDB resale flats in mature estates that are near top primary schools and shopping malls have been traditionally more popular. However, newer flats in non-mature estates like Sengkang and Punggol are also gaining popularity.
Sengkang and Punggol are two of the most popular estates based on the number of HDB resale flats sold in January and February this year, according to data from data.gov.sg. In the two months, 447 flats were transacted in Sengkang while 446 flats were transacted in Punggol. They are followed by Tampines and Bedok, which saw 343 and 268 flats, respectively, changing hands in the two months.
Punggol and Sengkang also saw the largest increase in resale transactions in 2020 as compared to 2011, according to research done by Huttons Asia. Punggol experienced a 181.5% increase, while Sengkang achieved a 60.5% increase. They were followed by Bukit Panjang, which saw 34.5% more flats being transacted in 2020 compared to nine years ago, and Clementi, which saw a 20.1% increase.
Mark Yip, CEO of Huttons Asia, says: “One reason for the increase in transactions in places like Punggol, Sengkang and Bukit Panjang, is that there are many BTO (Build-To-Order) projects in these towns and many of them have recently achieved the five-year minimum occupation period.” He adds: “Newer flats are popular and fetch higher prices because they are deemed to be as good as new.”
Across the board, there are more resale transactions because there are more BTO flats achieving minimum occupancy period (MOP). In 2020, there were 24,500 flats that achieved MOP. This year, there will be 25,530 flats reaching MOP. This is because the government increased the supply of BTO flats from 2011 to 2014, says Nicholas Mak, head of research at ERA Realty Network.
“Punggol and Sengkang are the two most popular towns as there are many relatively new flats under 10 years old and young families residing there,” says Mak. These areas also offer outdoor recreational options for exercise, public transportation connectivity, and retail malls at the town centre, he adds.
In 2020, the top five towns where flats between five and nine years were sold were Sengkang (777 flats), Yishun (562 flats), Punggol (550 flats), Bukit Panjang (495 flats) and Tampines (276 flats), while in the first two months of 2021, the top five towns where flats between five and nine years were sold were Punggol (338 flats), Sengkang (211 flats), Bukit Panjang (91 flats), Yishun (82 flats) and Queenstown (60 flats).
Rarer flat types also fetch higher prices, such as maisonettes and executive flats, says Christine Sun, senior vice president of research and analytics at OrangeTee & Tie.
“For the larger flats like five-room flats, the HDB has either reduced the supply or stopped building them. As such, buyers who prefer larger flats have turned to the resale market,” says Huttons’ Yip. He believes that the transactions of such flats grew around 10% y-o-y in 2020, presumably due to the need for more space as work-from-home (WFH) arrangements gathered pace and more empty-nesters moved to a smaller dwelling unit.
As for million-dollar HDB flats, Yip believes that they command such prices because of their location, size and design. “Million-dollar HDB flat transactions are a minority, making up less than 1% of total transactions in a year. Some of these are in the city like The Pinnacle at Duxton, larger flats like five-room or EM (executive maisonette) and DBSS (Design, Build and Sell Scheme) flats or terraces,” he adds.
Resale home-buyer profile
More cash-rich buyers are considering HDB resale flats. This group includes downgraders from the private market, who could be doing so due to a softer employment market, says OrangeTee & Tie’s Sun.
At the same time, there are also empty-nesters who are older and want to free up capital to help their children buy properties, says Alan Cheong, executive director at Savills Singapore. Citing statistics that the population of Singapore residents aged between 50 and 69 who stay in private properties have almost tripled in the past 20 years, Cheong believes that this is a trend that could continue for the next 10 years.
Some HDB resale buyers are also ex-en bloc owners who have collected a large sum of money and can pay for a HDB resale flat in full. They can then use the balance cash for other forms of investment or retirement, Sun says.
These cash-rich buyers have the financial means to pay more for HDB resale flats that they like, especially the bigger, well-
located units that come with good views, says Sun. “Some also don’t mind buying slightly older but cheaper HDB resale flats, as long as the balance lease can last them until the end of their life,” she adds.
Couples who are not able to wait four to five years for BTO flats to complete will also consider buying from the resale market, says Sun. Huttons’ Yip adds that construction delays caused by Covid-19 have added to the uncertainty, prompting couples to consider resale flats.
Read more: BTO or resale flat?
Future developments in a particular town also attract home buyers, says OrangeTee & Tie’s Sun. “The extensive masterplan to turn Punggol into the next Digital District played a pivotal role in propping up flat prices in Punggol and Sengkang, despite the growing supply of flats in these two estates,” says Sun. Under the URA Master Plan, the Singapore Institute of Technology campus and JTC’s Business Park spaces will be built to create Singapore’s first smart district, which will house key growth industries for the digital economy.
The Punggol Digital District will be Singapore’s first smart district, which will house key growth industries for the digital economy (Photo: Albert Chua/The Edge Singapore)
Over the next few years, Punggol will see a new university campus, market village, heritage trail, offices, logistic hub and amenities being established, which have enticed buyers to Punggol and Sengkang.
Employment hubs are expected to expand further in Changi, Tampines North and Pasir Ris, and more housing units and recreational spaces will be built there.
Prices for resale flats rose 5% in 2020, while the number of transactions increased 4.4%, according to HDB. This trend is likely to continue this year.
OrangeTee & Tie’s Sun says that as the global economic outlook remains favourable this year, the worst of the pandemic could be over and key economies may fare better than last year. “Moreover, there is still ample liquidity circulating in the system as investment funds have reallocated a massive amount of capital from financial markets to real estate properties,” she adds.
“With more flats reaching MOP, we may expect more transactions this year. Therefore, we are optimistic that the HDB resale volume may rise further by up to 5% this year, to around 24,000 to 26,000 units. Prices of resale flats may continue to rise by 2% to 5% for the whole of 2021,” she adds.
Lee Sze Teck, director of research at Huttons Asia, says: “Based on data from the authorities, an estimated 21,520 three-room and larger flats will reach their MOP in 2021. Many of these flats are in Choa Chu Kang, Punggol, Yishun, Sengkang and Kallang/Whampoa.” He predicts transaction volume to be between 23,000 and 24,000 flats in 2021.
“These newer flats have made up a larger portion of the resale transactions and contributed to the increase in prices,” says Huttons’ Yip.
As to whether the government will introduce curbs on the pricing of HDB resale flats, Sun says that tightening the mortgage servicing ratio and the loan-to-value ratio could be two ways to do so.
Huttons’ Lee also says that the government could tweak the financing portion to dampen price growth. For instance, the cash component can be increased or the amount of CPF funds utilised can be reduced. He believes that transaction volume will be between 23,000 and 24,000 flats, and projects that HDB resale prices will grow between 2% and 4%, in 2021.