MAKING IT EASIER FOR FIRST-TIMERS, YOUNG COUPLES
But the 15-month wait-out period is likely to be the most significant measure introduced, as this will “tame demand and prices for the upper tier of the HDB resale market” and make it easier for first-timers to purchase homes, said Christine Sun, senior vice president of research and analytics at OrangeTee & Tie.
Ms Sun pointed to HDB data which showed that prices of larger resale flats like five-room flats and executive flats have been “rising much faster” than smaller flats over the past year.
For instance, about one to two flats have been sold for a million-dollars every other day over the past month, she said.
“Demand for these larger flats and million-dollar flats could be largely bought by private homeowners or downgraders who can afford to pay high prices for these flats, thus driving up their prices which will affect the overall price index for all resale flats,” she explained.
As such, “this (15-month wait-out period) may cool the market for a while and slow down the pace of price increase for these bigger flats to a certain extent and allow younger couples a better chance of securing these units with lesser competition,” she added.
“Overall price growth may moderate which will also help first-timers to have a better chance of buying resale flats if they cannot wait for the long completion period for some BTO flats.”
Despite the intention to keep resale flats affordable, Mr Sandrasegeran noted that “genuine” downgraders from private properties might face a dilemma.
“Some homeowners might be in need of immediate finances because of a family emergency, a change in their job status, or other reasons like a change in their personal financial conditions,” he said.
“It was mentioned that the authorities would assess their situation on a case-by-case basis. It would be ideal if special circumstances like these are given proper considerations.”
RENTAL MARKET IMPACTED
Analysts also noted the 15-month wait-out period’s result on the rental market.
Private property owners who still wish to purchase a unit may “need to rent a unit in the interim”, which may increase rental demand and push current rental prices even higher, said Ms Sun.
CBRE’s Ms Song added that the 15-month wait-out period might actually “help support the rental market for both private and public housing market”, especially as more completions are slated for next year.
“As of Q2 2022, 17,394 private homes are due to be completed in 2023, the highest number of completions in a single year since 2016. Residential rents are at a record high now and with this announcement, (rent) may continue to move up and remain elevated into 2023,” she said.