What about HDB?

[Vulcanl]

Anyone care to share their thoughts on potential appreciation/depreciation of HDB flats?  It appears that they are popular with PRs who expect to be here longer than expected and don't want to keep paying rent (myself included)?

I purchased last year and have seen an increase of almost 25% based on the latest transacted prices.

[don't know but:]

*factor driving up price: all that new immigration being talked about

*factor driving down price: with the en-bloc wave in the past few years, lots of expats have moved down the food chain, driving up demand for mass-market condos and HDBs.  Some locals who used to live in low-end condos then downgraded to HDBs.  So the supply shock of en-bloc has filtered down to low-end / mass market condos and HDBs, but I think that will be temporary.  Once the temporary supply shock of en-bloc gets sorted out, I think expats will trickle back into more central areas and out of mass-market condos (not entirely, but there will be that tendency), eventually leading to lower demand for HDBs.

In the short run, i would expect the second factor to dominate, but only time will tell.

[Upgrader]

Fully agree with PP. It is not the HDB market that is supporting the private property prices, but the run away private property prices that lift the HDB market. Same goes for rents

[Super strong HDB market]

Very obvious the super strong HDB market is going to hold up the mass to mid-end condo market.
Aug 24, 2008

property

HDB resale market going strong

Deals of more than $700K are still being done, with demand fuelled by PRs and new families

By Joyce Teo, Property Correspondent


While sentiment in the private homes market remains gloomy, the market for Housing Board resale flats offers another story.

Deals of $700,000 and above are still being done this year, after 'record deals' of more than $700,000 first surfaced during last year's boom, though these are few and far between.

The good news for sellers is that prices continue to rise, pushing up valuations.

Volume is seen remaining healthy as home seekers continue to check out resale flats, largely oblivious to the credit crisis consuming the world, market watchers said.

Demand for HDB resale flats comes mostly from newly formed families and new permanent residents (PRs), they said.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, thinks that HDB prices are still rising because there is not enough supply to meet demand.

'For example, last year, there were about 78,000 new citizens and PRs. So they may be buying HDB flats which they may not have been eligible to buy previously,' he said.

HDB flat seekers also include those who are priced out of the private market given that mass market prices there remain relatively strong.

But there is a limit to the gains for an HDB seller. Already, HDB prices are considered high, said Mr Leong.

Also, agents say that buyers are showing more resistance to sizeable cash-over-valuation (COV) amounts. The COV is the cash sum that is paid over and above the valuation of a flat.

It cannot be paid from a home loan or with Central Provident Fund monies.

Generally, once you cross the barrier of $600,000, there will be strong resistance, said the assistant vice-president of ERA Asia Pacific, Mr Eugene Lim.

High-priced transactions have been registered in a few estates such as Marine Parade, Queenstown and Bukit Merah. For instance, a $750,000 deal for a 10-year-old, high-floor 124 sq m unit in Holland Close in Oueenstown was recorded in June.

Once a high-priced deal is done, sellers in the area will raise their asking prices. But these may not be realistic, said Mr Lim.

Increasingly, potential buyers are feeling the pinch of rising costs and negotiating harder for a smaller COV amount, particularly for non-prime flats, he said.

'People are more cost-conscious now.'

For suburban locations, asking levels for COV amounts have come down, said HSR Property Group's executive director, Mr Eric Cheng.

'I would say that $15,000 to $25,000 is common for non-prime districts. Previously, people were asking for $30,000 to $40,000,' he said.

'The resale index rose because of higher valuations.'

Valuations are made based on historical data.

Going forward, HDB resale prices look set to rise, but likely by a smaller margin.

In its second-quarter data release in end-July, HDB said that it planned to offer about 3,900 new flats under the Build-to-Order (BTO) system over the next six months. These will be in towns such as Punggol, Sengkang and Bukit Panjang.

For the whole of this year, HDB has a planned supply of 8,400 new BTO flats, up from the 6,000 flats offered last year and just 2,400 BTO flats in 2006. These BTO flats are the main supply of new flats.

With more new flats coming on the market, some demand will be taken away from the resale market, said Mr Lim.

He expects an overall price rise of 10 to 15 per cent, including an 8.2 per cent rise in resale prices in the first half of this year.

Mr Cheng believes the rise in the next 12 months will not be more than 5 per cent.

Last year, HDB resale prices rose by 17.5 per cent.

HDB prices will support the private mass market sector, but selectively. A lot still depends on the general economic outlook, said Knight Frank's director of research and consultancy, Mr Nicholas Mak.

When the economic outlook is less buoyant, HDB upgraders are likely to stay put rather than move to another estate to upgrade, he said.

Typically, demand for a private suburban launch comes primarily from the same housing estate. Unless the market is generally buoyant, sales will start to slow once this pool of buyers runs out, he added

[not buying it]

I'm not buying the argument that the HDB market will underpin the private home market.  The reverse is true: people who were being priced out of private homes have traded down to HDBs, driving up prices there.  But once the artificial supply crunch in the private market is solved, HDB and condo prices in less desirable areas will drop from the current spike. 

Longer term, the government may not give a damn about expats, but it would be political dynamite to have HDB prices escalate beyond the common man's grasp.  Don't bet against the government.

Lastly, I'd like to know the volumes on these record deals.  These transactions over 700k are very eye catching and everyone talks about them, but how many of those are there?

[--------------]

I'm not buying the argument that the HDB market will underpin the private home market.  The reverse is true: people who were being priced out of private homes have traded down to HDBs, driving up prices there.  But once the artificial supply crunch in the private market is solved, HDB and condo prices in less desirable areas will drop from the current spike. 

Longer term, the government may not give a damn about expats, but it would be political dynamite to have HDB prices escalate beyond the common man's grasp.  Don't bet against the government.

Lastly, I'd like to know the volumes on these record deals.  These transactions over 700k are very eye catching and everyone talks about them, but how many of those are there?

Nobody cares if you buy into an argument. The market will speak for itself. If you bother to monitor the transactions for mass market condos, you will get an idea of what is happening.

[not buying it]

Month to month transactions are of minor interest also: too much noise to discern a trend.  My bearish (I would prefer to call it "realist") views are based on where the overall economy is headed, and I follow that very, very closely to manage my other investments (stocks and commodities).  The thing is, you need to see where the market is going to be in 6 months to a year, not where it was last month, and you can't just extrapolate past trends. 

[it has slowed]

hope it does no lead to job losses. The evidence is there. It has slowed. Housing and real estate will not be spared.=DJ PREVIEW: Singapore Manufacturing Likely Contracted in July

SINGAPORE (Dow Jones)--Singapore's manufacturing output is likely to have shrank in July on continued weakness in the electronics and pharmaceutical sectors.

Manufacturing in July likely fell 15.8% on year after rising 2.5% the previous month, according to the median forecast of nine economists polled by Dow Jones Newswires.

The expected contraction was compounded by a high-base effect, following strong output growth of 25% in July 2007.

"Basically the base is extremely unfavorable, with a slight downfall in pharmaceuticals," said Prakriti Sofat, an economist at HSBC.

Forecasts for the data, due 0500 GMT Tuesday from the Economic Development Board, ranged between contraction of 21.8% and 5.0%.

"The outlook for industrial production over the near term remains bleak, with producers likely to increase cutbacks in production following weakening external demand arising from the slowdown of the global economy," Hiew Leon of Citi said.

Leon expects electronics and pharmaceutical output to have fallen in July after both posted gains the previous month.

On a seasonally adjusted basis, manufacturing output is expected to have rise 1.1% in July following a 4.5% increase in June........

(END) Dow Jones Newswires

[Still very strong]

hope it does no lead to job losses. The evidence is there. It has slowed. Housing and real estate will not be spared.=DJ PREVIEW: Singapore Manufacturing Likely Contracted in July

SINGAPORE (Dow Jones)--Singapore's manufacturing output is likely to have shrank in July on continued weakness in the electronics and pharmaceutical sectors.

Manufacturing in July likely fell 15.8% on year after rising 2.5% the previous month, according to the median forecast of nine economists polled by Dow Jones Newswires.

The expected contraction was compounded by a high-base effect, following strong output growth of 25% in July 2007.

"Basically the base is extremely unfavorable, with a slight downfall in pharmaceuticals," said Prakriti Sofat, an economist at HSBC.

Forecasts for the data, due 0500 GMT Tuesday from the Economic Development Board, ranged between contraction of 21.8% and 5.0%.

"The outlook for industrial production over the near term remains bleak, with producers likely to increase cutbacks in production following weakening external demand arising from the slowdown of the global economy," Hiew Leon of Citi said.

Leon expects electronics and pharmaceutical output to have fallen in July after both posted gains the previous month.

On a seasonally adjusted basis, manufacturing output is expected to have rise 1.1% in July following a 4.5% increase in June........

(END) Dow Jones Newswires

My method of assessing the halth of the job market is by looking at the number of pages for job ads in Daturday's paper. Anything above 50 pages is very positive and jobs are still being created at record levels. For the past 2 Saturdays, it has been 54 pages.

[My method is]

counting the number of peeoples picking their noses in the MRT train  

[Lag]

These are all lagging indicators. Look for leading indicators.

[The stock mkt]

is aleading indicator... 6 to 12 months ahead, it looks.

[------------]

is aleading indicator... 6 to 12 months ahead, it looks.

Not always.

[Defaults]

Another US bank tumbles, ninth this year. People who talk about recovery next year are being naive.

Defaults are a leading indicator. We have not seen it yet in singapore but I wont be surprised 

[The stock mkt is]

telling you that property prices will come off. The stock mkt is a forward indicator except to those who bought property at 2007 prices. The truth is hard to accept when you are in negative equity.