Thoughts on the Singapore HDB market

The new house will only come at the end of 2016 although the date of legal possession is the end of 2017 based on advice gathered from the Internet forums on the HDB Singapore market.  So far, I have put down 5% in down payment and some stamp duty totaling about $50,000 and that is a material interest in the market.

There is of course some degree of worry on my part (more so on the co-applicant) on the cooling measures announced thus far, especially the signals given by the MND. Khaw has said that prices of flats should be at least 30% cheaper or about 4 times the annual median income of applicants, down from the current 5.5 times.

When he first said this, I received an SMS from my agitated friend who bought a BTO at the same place as I did. He asked me if he would get a 30% refund. We knew that this was almost impossible because how MND justify a cut-off for refund based on this benchmark?

Expectedly, Khaw has yet to announce the revised pricing because he is mindful how far ranging the implications are. This is a potential net vote loser no matter how it is implemented according to Bertha Henson.

Personally after a bit more analysis (or self-consolation), I do not think that MND’s signals will affect me much. Based on the assumption of a 4-room, median income of $72,000 ($3,000 each since average graduate pay is $2,500), I would get $288,000, which is by current standards affordable. As usual, the devil is in the detail. MND’s signals do not affect me much because it applies to those in the non-mature estate (for the moment). It does impact greatly those who bought a recent BTO in a non-mature estate such as Punggol and Sengkang. 

Also, I believe that when I balloted for my BTO in June 2012, it was not priced at the market peak based on the HDB’s resale price index.  There is some downside to any future price I have accounted for, although it is complicated by the issues of interest payments. Furthermore, based on current prices seen the baseline sale price remains way above my purchase price excluding interest payments. However, I have to be mindful that if I want to sell my HDB, I have to sell it within the first 5-10 years as the new loan curbs are very punitive. I would also have to consider where to move to given that the BTO I am allocated is very, very central and close to a train station.

Let us hope that there is an amicable solution to this torrid housing affair.