DESPITE lingering concerns about their depreciating value and the adverse impact of the latest cooling measures, older HDB flats in Singapore are still in demand, says the latest quarterly report on HDB trends published by OrangeTee & Tie.
For the first quarter this year, 628 older flats - those more than 40 years old - were sold. They made up 13.9 % of total resale transactions - the highest percentage of older flats sold on record, the property consultancy noted. Older flats "defied prevailing headwinds", with a record 2,537 units sold last year, OrangeTee & Tie said.
Such flats are being sold across many towns, indicating their appeal island-wide, said researchers at OrangeTee & Tie. Furthermore, the market share of older flats has been rising, the report stated.
Sales of older flats as a percentage of total resale transactions jumped from 1.9 % to 13.9 % between Q1 2009 and Q1 2019. The analysts suggested that one reason behind the higher sales of older flats could be a narrowing price expectation gap between buyers and sellers, as the prices of older flats have been moderating over the years.
"In Q1 2019, the average price of older flats declined about 6 % when compared to Q1 2017, and around 7 % when compared to Q1 2018." Secondly, with more flats growing older, there are more transactions in general, the analysts said.
Older flats that are currently transacted tend to be smaller than flats that are more than 20 but under 40 years old, the report stated. For instance, older four-room standard flats sold in Q1 averaged around 90 square metres (sq m), smaller than newer flats that averaged around 99 sq m.
Similarly, older five-room standard flats were around 119 sq m, smaller than the average 124 sq m for flats more than 20 but under 40 years old. The smaller, older flats are lower priced and more affordable, and with their lower price tags, some buyers may now view these flats to be good value for money, the analysts said.
Another factor behind the higher sales of older flats is rooted in policy changes: the announcement of the Voluntary Early Redevelopment Scheme (Vers) and Home Improvement Programme II, and possibly some policy tweaks to allow buyers to use more Central Provident Funds to purchase older flats, may have started to instil some market confidence in these flats, the report highlighted.
(Under Vers, for example, owners in flats aged 70 years and older can vote for the government to buy back their homes before their leases run out, if their precinct is selected for the programme.)
Overall, researchers at OrangeTee & Tie anticipate that HDB resale volume may rise in tandem with more flats reaching their five-year minimum occupation period this year. They expect resale prices to continue stabilising as the HDB price index declined marginally by 0.3 % in the first quarter this year.
Adapted From The Business Times, May 8 2019