Tuesday, November 24, 2015

HDB "Bumper Crop" has arrived

Wa, I finally sat down to read the news of the 12,411 HDB flats up for sale in this "bumper crop" launch! Impressive haul!

I see already, I feel damn sian. Why can't singles buy a private property younger? 35, really? Pffft. Female readers who are looking for a suitable potential husband, please drop me a mail and we can discuss marriage, haha.

Who says HDBs aren't affordable? A first-time young couple eligible for all the grants can EASILY get a 3-room flat without blowing a hole in their pocket. 10% downpayment in a non-mature estate is only $10,000. Making too much money, can't get all the grants? $17k downpayment! With the average Singaporean couple blowing through tens of thousands for their extravagant wedding, this is nothing. As someone famous might say, this is peanuts. A 3 room flat can accommodate a kid, or even 2 if you stick them in the same room. You can probably manage to stick 3 in a room if you are a horrible parent that doesn't know what is contraception and family planning.

For a HDB BTO, you can get a 3-rm for $150psf or a 5-rm for $300psf. This makes sense because the grant is flat, so you definitely get a lower psf price for a small unit.

If you go about looking at resale flats in a non-mature estate, you'd be set back about $370-500psf depending on factors like unit size, location and of course, age.

If you look for a nice resale flat in a mature estate, you're looking at minimum $500-700psf, which brings the high-end of mature estates almost on-par with the newer Executive Condos, which pretty much sell within the $700-800 psf range.

The older ECs sell in the $600-750psf range because of their shorter tenures, with the notable exception of Bishan Loft, which has pretty much become a private property now since the 10-year mark has passed and it markets at $1150psf. This is also because Bishan Loft is pretty much the only non-ulu EC in Singapore. That is why even post-privatization, most of the older ECs are still selling... like an EC.

(Yes, Bishan Loft is Q. Congrats, you know where Bishan is.)

So basically here are the rough ranges of what residences are going for these days.

Now, before y'all jump out of your seats and say, "FH $800 sure or not?",  you need to know what location I'm talking about. Surprise surprise, it's Geylang! However, just to reassure you, I have visited a development in that area.... the entire development was just filled with expat rentors, mostly younger professionals without families. I was told that pretty much 80% of the development is being rented out. I can attest to that because.... the carpark was entirely empty!

Many of the developments in Geylang are being marketed as investment units because of the low quantum and psf, and also because of the prevalence of the somewhat nonchalant expat community that don't care about living at Geylang who generate rental demand. The developments here "benefit" from this Geylang-proximity discount. Many of these properties are similar to those along Sophia Hill. Short, small cozy developments on freehold land. Yet those on Sophia Hill get the city premium ($1400 ~ 2000 psf), while Geylang gets a discount.

Honestly though, with HDBs being priced under $600psf, I find it crazy how some condominium developments are selling for such high psf. Sure, it is no longer as high as it was just recently at the 2013 year end peak, but by golly, it still is high. With real, net rental yields hovering around 2-3%, I don't see how this makes any sense at all. Isn't it a wonder why the high-end property market is basically in an outright bear market? They can barely be rented for 3% gross, who knows what is their final returns.

I see that recent LH condos are being sold at $1400-1600 psf, yet there are resale FH condos on the market for less than $1200 ready to move in. If I get a private resale flat for $800psf, I have more than enough to buy a car and travel from whichever ulu place I happen to end up living at. It is becoming more and more apparent to me that Singaporeans shun buying second-hand goods. Discount off first-hand goods are enough to entice them. This is making me even more stubborn headed about prospecting and finding the ideal private resale flat. It seems like getting a decently priced home from the developers is not likely. I guess the only way is to help suckers who bought property at nosebleed prices to relieve them of their burden. Of course, for much less than what they paid for.

As long as HDBs remain priced like this, I don't see how the property market can take off. As it is, a couple earning median income can buy a 3-rm BTO flat with 1 year's of their combined annual wages. If that isn't ridiculously cheap, I don't know what is.

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