Why is it that private property prices are going up, whilst HDB prices are still going down?

I refer to the articles “Private home prices up 3.9% in first quarter” and “HDB resale prices down 0.8% in Q1; 3,900 new flats to be launched next month” (Channel NewsAsia, Apr 27).

The former states that “Private home prices rose 3.9 per cent in the first quarter of this year, according to the latest figures from the Urban Redevelopment Authority (URA) on Friday (Apr 27).

This continues an upward trend after the 0.8 per cent increase seen in the previous quarter.”

The latter states that “Resale prices for flats continued falling in the first quarter, with the resale price index declining 0.8 per cent from the previous quarter, according to public housing data released on Friday (Apr 27).”

Both HDB resale and residential private property prices have been going south from around the second quarter of 2013.

However, whilst private property resale prices have rebounded by about 10 per cent from around September last year – HDB resale prices continue to fall.

Historically, the two are very closely correlated.

So, why the apparent deviation now?

Has it got anything to do with Singaporeans realisation that older HDB flats may be declining in value rapidly to zero at the end of the typical 99-year lease?

 

Leong Sze Hian

 

 

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15 Responses to “Why is it that private property prices are going up, whilst HDB prices are still going down?”

  • PAP has the mandate:

    Is the 99 years leasehold for HDB likewise for those private condo with 99 leasehold…..LOL..of cos people will say you will not live for 99 years but your children and grandchildren need to start their lives from zero. Unlike HK, they are freehold….LOL…Stinkies are bunch of losers and daft…LOL..they deserved what they voted for, the rest of Asia has moved ahead….LOL

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  • RATIONAL CHATTER:

    This is because private houses especially freehold landed have been underpriced while HDBs have been over-priced due to lax policies for PRs to buy HDBs to profiteer from the purchase.

    Dont believe,check with PRs who rent their HDBs to other FTs n even homeless sgs.
    Stupid govt policies.

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  • oxygen:

    ME BELIEVE PRIVATE PROPERTY PRICE SPIRAL IS TEMPORARY and unsustainable. Too fast – 3.9% per qtr works out 15.6% annualised. The economy growing at 2% to 2.5% of wealth creation, affordability will slip in no time. IT IS A BUBBLE run-up on INFLATED LAND valuation paid for by developers who bought into en bloc frenzy. They have to build more units but much more smaller of living space to justify the economic risks of development. That is to say, SIZE IS SEVERELY COMPROMISED, thus the asking price per sq ft of floor space naturally escalated.

    Stupid minds infer and translated that private property valuation has gone up – it is a MIRAGE of aset bubble in essence. Try selling your condo at the same valuation per square ft nearby – NO BUYERS. They may buy a NEW unit nearby looking for gains in the future that – in my opinion – won’t come. Look at inflated price bubble in Sydney and Melbourne – they have burst. Valuation is a mirage UNTIL YOU REALIZED A REAL SALE. What goes up can come down too.

    I am not excited one bit – just ask those who bought Sentosa Cove and waterfront property early in their launch – every subsequent buyers pay higher after but look at it now, HOW MANY HAVE NOT LOST THEIR UNDERWEAR selling out in distress.

    Asset values depends on sustainable economy and can’t run too fast relative to economy too. This is reality. Brick N Mortar and a bigger mortgage is NOT WEALTH but simply BIGGER RISKS.

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  • Singapore Fooled Again n Again:

    The main reason is the policies that favour private property owners vs the restrictive policies and falling leasehold value.

    Private properties anyone in this world with money can buy as many as they one to, except for landed property where foreigners can still but provided they fulfill certain conditions.

    There’s no estate duties where foreigners can park money here for generations without getting taxed.

    The enbloc policy also benefited not only Freehold private property owners but even those on 99 years leasehold as they can sell off the land and developers can top up to a fresh 99 years leasehold.

    The injection of 40,000 to 50,000 new citizens also pushed up property prices especially private properties

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  • opposition dude:

    I’m no property expert so correct me if I’m wrong on this one.

    Private property prices are going up because of the frenzied successful bids we have seen in the last few months of developers paying hundreds of millions for prime spots in Bt Timah and Mandarin Gardens.

    Nice big numbers naturally leads to all owners of private property thinking that theirs can’t be lagging too far behind. As a result this causes potential buyers to have to fork out more. Perhaps some potential buyers even think that the property they are eyeing now could be en bloc in a few years time.

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  • Haigen-diaz:

    But there are too many people caught up in colorful fiction to focus on facts. It seems as crony capitalism generally thrives in the vicinity of criminality, the closer to theft and fraud a bargain is made, the less likely it really produces a jackpot. Anyone with a brain could identify that we had entered a housing bubble – and that extreme caution, rather than financial chicanery, would be required to prevent this bubble from imploding before our eyes. Subprime is a creature of the private label not the public market. There are some fairly simple means to test potential bubbles. When people hear about a great way to make a killing, when that word becomes popularized and spreads like wildfire, a crash is on the way. This happens because most people know next to nothing about business and, two, the herd mentality of “getting in on a good thing” takes over. It seems that the narrative here is formed as a “success story,” showing asset enhancement ingenuity, boldness and luck, a sort of Horatio Alger story that makes the clever and bold, rich and successful. It is told from the vantage point of those who know what shorting the market even means, or that it is even possible to make millions on the economic woes of an entire population. The whole problem was that the inflated home values were not the real value of the asset, so when the bubble burst, people could not refinance. Whoa meets woe . . . just look at China’s economy and we can see a wave of economic woes coming our way.

    oxygen:
    ME BELIEVE PRIVATE PROPERTY PRICE SPIRAL IS TEMPORARY and unsustainable. Too fast – 3.9% per qtr works out 15.6% annualised. The economy growing at 2% to 2.5% of wealth creation, affordability will slip in no time. IT IS A BUBBLE run-up on INFLATED LAND valuation paid for by developers who bought into en bloc frenzy.
    Stupid minds infer and translated that private property valuation has gone up – it is a MIRAGE of aset bubble in essence. Try selling your condo at the same valuation per square ft nearby – NO BUYERS. They may buy a NEW unit nearby looking for gains in the future that – in my opinion – won’t come.

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  • Greedy Evil Dishonest:

    There aren’t many affordable open market housing choices in sillypore anyway. Lampar Wong said he will steal the HDB after lease ends, so many have to turn to private, which is similar fate since many dafts do not realise that. Given the two, many forced themselves to pay for the much more expensive private ones.So the market was warped by the LJ talk of CB Wong.
    PAP sold 99 lease private land at highly inflated prices, developers have to collute to increase the bids to keep businesses going. The high cost is passed on to dafts. Without projects means no businesses, as good as closing shop.The greedy addiction has to continue.
    Both ways evil PAP government will win, one land sold at high prices, the other steal for free.

    Only some smart ones who took the risk to get the bargain HDB will get the returns in time to come as game rule change with PAP given the boot.

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  • Money money money:

    RATIONAL CHATTER:
    This is because private houses especially freehold landed have been underpriced while HDBs have been over-priced due to lax policies for PRs to buy HDBs to profiteer from the purchase.

    Dont believe,check with PRs who rent their HDBs to other FTs n even homeless sgs.
    Stupid govt policies.

    Nothing is undert priced in sillypore.

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  • Go for better quality of life:

    Nothing beats the good feeling like earning an honest living with the sweat of one’s brow.
    When you make huge sums of monies indulging and hoarding in the property market casino as it is, that’s a form of gambling.
    Gambling is disturbing, emotionally draining, and not right, and it is sinful.
    Whoever manages a country must control and ensure to roll out measures that are predictable and sensible and fair, and not stressful or disruptive to the lives of the people especially on the costs of health, education, housing and transportation.
    Defense and security are important given that there must exist some few crazy people near and around us.
    The managers must not allow the emergence of a hedonistic, crass and crude, egoistic, self-indulgent lifestyle to grow.
    Wealth cannot buy happiness.
    Ego and greed destroy.
    The development of the mind and spirit must be given more attention.
    Intelligent clear thinking leaders with a heart, to lay the grounds for truly good quality living, are what we need.

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  • oxygen:

    @ Haigen-Diaz

    EXACTLY RIGHT, LOOKING AT THE RISING STATISTICAL MIRAGE of escalating price index to buy property is as vainglory of self-admiration making up looking at the mirror. At best it is confirmation bias and at worst, it is stupidity gambling.

    Haigen-diaz: The whole problem was that the inflated home values were not the real value of the asset, so when the bubble burst, people could not refinance. Whoa meets woe . . . just look at China’s economy and we can see a wave of economic woes coming our way.

    Not even a seasoned billionaire property developer can “read” the real estate market nor its valuation. Here is a classic example of Katsumi Tada who lost $15.8 mln selling off an apt at St Regis

    https://www.propertyguru.com.sg/property-management-news/2015/3/87946/st-regis-penthouse-sold-at-record-15-8-million-loss

    and then in 2018, he made another (small) loss selling of his apt in Trump Tower.

    https://www.wsj.com/articles/japanese-billionaire-sells-trump-tower-apartment-for-25-million-1521577173

    These are capital losses, not counting interest financing costs holding these assets (read “liabilities”) over the years.

    If the astute property developer who made billions developing real estate projects to sell to consumers, has blind spots where do the rest stands a chance of astute read of real estate changing fortune or misfortune?

    All I know is that if the price index is up 3.9% per qtr translates to 15.6% annualised has to be bubble when the economy is struggling with 2.5% growth. Just imagine this simple extrapolation – income, using GDP measure as a proxy, rose by 2.5% FOR ONLY ONE YEAR AND UNCERTAIN FORWARD of further growth or recession – cannot reasonably approximate a 15.6% increase (on annual basis) IN DIFFERENTIAL for a mortgage extending 30 YEARS maybe of real committed future liability needing to be satisfied.

    Of course, optimists says income will grow faster and the price increase is only for one qtr. Who can be certain that economy will grow for 30 yrs and income growing behind that? K.Tada got screwed too, right?

    Property-mad buyers are betting 30 yrs risks (120 qtrs in all) for 1 qtr of price optimism based on inflated land valuation in en bloc deals. It is like one swallow makes a summer.

    But the converse is true, falling index suggest pessimism but it is CURRENT OF REALITY. Optimism in property chase of such a steep rise one qtr is IRRATIONAL EXUBERANCE. A lot will get caught on the wrong end, if developers makes profits – THE BUYERS ARE SUCKERS.

    ARE ALL EN BLOC DEVELOPERS DUMBED. I don’t think so.

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  • Beoz You Don't Own HDB:

    You only rent it for 99 years … NOT up to you to enbloc or SERS!!

    More & more people realise this … that’s why resale HDB prices keep on going down!!!

    OTOH, how come BTO prices stay the same or even go up??!?!
    Didn’t PAPies say that BTO prices are pegged to resale HDB?!?!?!

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  • Homeless sinkie:

    Hdb must be strictly for Singapore CITIZENS only.
    If PRs cannot afford private,they can just RENT from sgs.
    WHY SHUD PRs be RENTING OUT THEIR HDBs to other PRs/FT and even HOMELESS sgs.

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  • Property goondoo.:

    @Rational chatter

    You are very right.
    Just imagine many HDBs bought close to $1 million but freehold landed just sold at same price range as 99 years condo.

    Agree landed under-priced especially freehold while Hdb over priced.

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  • Art 12:

    Allowing private properties to top up whilst denying hdb this right to top up is simply unfair under Article 12 of the constitutional.

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  • oxygen:

    HERE IS THE DISCOVERY REASON why private property prices going up whilst HDB price are still going down. It is VERY VERY VERY SIMPLE – THE MAJORITY of well-labelled DAFT of “buy-property-vote-PAPpys” Sinkies are now proven to be TOO STUPID TO EVEN BEGIN TO DISCOVER THEY ARE STUPID TO IMPOSSIBILITY.

    And, believe it or not, it is an AUSTRALIAN FT – not bornt here and corrupt by this sheepish stupidity – who unveiled this is exactly so. He was one of those beneficiary of the recent en bloc craze. And guess what he said and illuminated brilliantly in the Indpendent Singapore website? Here you go.

    Singaporeans are wrong when they say “oh you’ll be rich” with the en bloc sale. The “reality is that the premium paid (~25 to 35 percent) is not worth the issues it will cause.”

    http://finance.theindependent.sg/en-bloc-condominium-foreign-owner-says-collective-sale-not-worth-it-and-wont-make-him-rich/

    Among the worst impact of this disruption is this – “I have a large 1500 sqft place (and such large apartments) barely exist now.”

    In other words, he is paid a premium to get raped of a smaller uncomfortable place by developer who is betting (gambling) that there are still suckers coming forward to take his (developer’s) bidding of the next launch of more expensive smaller place.

    THE SUM TOTALITY IS THAT THIS AUSSIE IS COMPENSATED FOR LOSS OF SPACE AND A NIGHTMARE OF DISRUPTED LIVING and that compensatory pleading from developer is READ AS ‘RISING PROPERTY VALUES’ who then chased up private property prices elsewhere as if this COMPENSATORY PLEADING makes not only the AUSSIE rich but he/she who bought the next private property AT HIGHER PRICES (when the reality is that the 25% to 30% premium paid to this FT) has NOTHING to do with his/her new property purchase.

    It is SHEEP CROWD MENTALITY of too stupid to even begin to discover he or she is stupid to impossibility. The new buyer is BETTING A BIGGER MORTGAGE OF LIABILITY thinking he/she is “RICHER AND SMARTER” by PAYING MORE for his/her new mortgage.

    This is exactly the SICK STUPID MINDET inhabiting too many Sinkies – especially the “buy-property-vote-PAPpys” mob who sucked into PAPpys asset enhancement politics scam.

    And why HDB is still falling? IT IS A SCAM – benchmarking BTO to HDB resale market. The HDB resale market depends on the fake illusion and scam of PAPpys asset enhancement politics which has now UNRAVELED of PAPpys con of two generations (retirees can’t monetise their old flat as the stampede for exit gains momentum and their children trapped in over-inflated BTOs bubble) beautifully.

    SERVE THOSE DUMBFARKED BUY-PROP-VOTE-PAPPy daft Sinkies right. They got what they voted for.

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