Fewer HDB dwellers buy private properties as cooling measures bite

Crowds thronging the showroom on the first weekend of the launch of CapitaLand’s Moshe Safdie-designed Sky Habitat condominium in Bishan. Recent property measures have put a squeeze on the number of Housing Board dwellers buying private proper
Crowds thronging the showroom on the first weekend of the launch of CapitaLand’s Moshe Safdie-designed Sky Habitat condominium in Bishan. Recent property measures have put a squeeze on the number of Housing Board dwellers buying private properties. -- vT FILE PHOTO: SEAH KWANG PENG

Recent property measures have put a squeeze on the number of Housing Board dwellers buying private properties.

According to the latest early figures, buyers with HDB addresses picked up 3,700 new private homes in the first six months of the year. This seems to mark a slowdown from last year, which saw 9,985 such transactions across 12 months.

A similar trend has been seen in the private resale market. HDB upgraders bought just 1,550 homes in the first half of this year, compared to 5,261 for the whole of last year.

R'ST Research director Ong Kah Seng said that the market is feeling the effects of the cooling measures introduced in January to prevent home buyers from biting off more than they can afford.

Not only must buyers borrow less on their second housing loan, they also need to stump up 25 per cent of the property's value, up from 10 per cent. Stamp duty for second property purchases also rose to 7 per cent, from none in the case of citizens.

"Besides, many HDB dwellers may have also bought their private properties last year due to a strong supply in attractive locations such as Punggol," said Mr Ong. There were 21,000 private property units launched last year, compared to 10,000 so far in the first half of this year.

The latest figures on HDB upgraders were culled from caveats lodged voluntarily with the Urban Redevelopment Authority. They do not take into account whether buyers own or rent their HDB flats, or if they were buying their first or second private property.

Analysts, including Mr Ong, predict that the number of HDB upgraders will continue to shrink over the next two years.

This is partly because of new rules issued by the Monetary Authority of Singapore last month, which cap a person's total monthly debt repayments at 60 per cent of his gross monthly income. That means that even car loans will be factored in when calculating how much a person can borrow to finance a property purchase.

DTZ's head of Singapore research Lee Lay Keng believes the introduction of the total debt servicing ratio could lead to HDB upgraders scaling back their private property plans. For instance, a buyer earning $8,000 a month who already pays $1,500 towards a car loan instalment will be restricted to buying a second property worth $1.1 million, down from $1.6 million previously.

"The biggest hurdle for this group lies in the cash outlay that includes stamp duties, downpayment and other costs. This can amount to three times the annual income," she added.

Finance executive Leong Yi Xing is waiting for the dust to settle in the wake of the new measures before deciding on upgrading from his five-room Bedok flat.

"HDB prices are still holding up very well compared to private property prices, which may have more room to drop. I'll wait for the price between the two to narrow," said the 31-year-old.

darylc@sph.com.sg