Public housing demand continues to be brisk in 2008

By Wong Siew Ying, Channel NewsAsia
11 March 2008 1742 hrs

SINGAPORE: The demand for public housing continues to be brisk. HDB's first build-to-order project this year at Punggol Spring is already four times oversubscribed.

New flats aside, property agents have also described the HDB resale market as the kingpin for the real estate sector in 2008.

The application for Punggol Spring, where 494 units of four-room flats will be built, will not close until 17 March, but the project is already oversubscribed with 2,093 applications.

Punggol Spring is part of the 4500 new flats that HDB has committed to build for the first half of this year. Prices of the Punggol Spring flats range from S$204,000 to S$259,000.

Apart from this build-to-order development, HDB's bi-monthly sale of four-room and larger flats in February also drew overwhelming response with over 10,000 flat buyers vying for just 278 units.

Eugene Lim, associate director of ERA, said: "They are usually the first timers and they do not have so much cash with them, so as the norm is cash over value for the resale market, so inevitably, they are being pushed to the new flat market where they don't have to come up with as much cash or don't need to come up with any cash at all."

Still, transaction volume in the HDB resale market is expected to remain strong.

Industry players project 30,000 units to be sold in 2008, 1,000 more than last year.

Price-wise, it is estimated to increase by about ten per cent in 2008, compared to over 17 per cent in 2007.

Property agents said the spike was partly due to the sharp rise in cash over valuation (COV). But they added this is likely to change as buyers have hit a threshold when it comes to forking out more cash.

Propnex CEO Mohamed Ismail said: "The central areas were getting as high as S$100,000 for Queenstown, Bukit Merah, Toa Payoh, but such prices are not sustainable in the long term. Therefore, I do foresee (for) the very high-end side in the central location, the COV (will) dip quite drastically."

Some property agents said the COV for flats in the central region will dip by 20 per cent within the next three months. As of the fourth quarter of last year, the average COV for the area was about S$35,000 to S$40,000.

Despite the high demand for flats, agents are confident there will be enough to go around, whether it is for families or singles.

They also welcome HDB's new incentive to offer an extra S$9,000 grant to singles who buy a resale flat and live with their parents.

The scheme, however, is unlikely to have any impact on the market given the small segment it serves. - CNA/ac