Saturday, July 26, 2008

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HDB Resale Flats Price Index 1990 - 2008: Graph & Chart

RPI (Resale Price Index) Graph for HDB resale flats from 1990-2008


Note that the highest RPI achieved to date is 136.9 in 1996, 4th quarter; due largely to the spillover speculation from the private property market. Demand was largely for bigger HDB flats like executive flats then. This in turn caused many Singaporeans to apply for upgrading to larger HDB flats with the belief that they'd make more money. This resulted in over-supply of new HDB flats in the subsequent years.
With the outbreak of the Asian Financial Crisis in 1997, coupled by the gross over-supply; HDB resale flats plunged in 1997-1998 for the first time.

Table of RPI for HDB resale flats from 1990-2008



HDB RPI (Resale Price Index) 1990-2008
1Q2Q3Q4Q
199033.6

33.8

(0.6% )

34.6

(2.4% )

34.1

(-1.4%)

1991

34.5

(1.2% )

35.2

(2.0% )

34.9

(-0.9% )

34.7

(-0.6%)

1992

35.7

(2.9%)

37.9

(6.2% )

38.7

(2.1%)

39.6

(2.3% )

1993

41.8

(5.6% )

54.8

(31.1% )

65.9

(20.3%)

67.8

(2.9% )

1994

69.7

(2.8% )

71.5

(2.6% )

75.5

(5.6% )

75.8

(0.4% )

1995

79.2

(4.5% )

88.4

(11.6%)

93.6

(5.9% )

101.9

(8.9%)

1996

111.4

(9.3% )

125.7

(12.8% )

133.3

(6.0%)

136.9

(2.7% )

1997

136.3

(-0.4%)

134.9

(-1.0%)

129.4

(-4.1%)

121.7

(-6.0%)

1998

113.0

(-7.1%)

108.3

(-4.2%)

103.6

(-4.3% )

100.0

(-3.5%)

1999

98.5

(-1.5%)

99.9

(1.4%)

108.0

(8.1%)

110.4

(2.2%)

2000

111.1

(0.6%)

109.7

(-1.3% )

107.3

(-2.2%)

104.9

(-2.2%)

2001

101.3

(-3.4% )

99.7

(-1.6%)

97.7

(-2.0%)

96.3

(-1.4%)

2002

95.5

(-0.8%)

95.7

(0.2%)

96.7

(1.0%)

96.7

(0.0%)

2003

98.2

(1.6%)

100.3

(2.1%)

38.7

(2.1%)

39.6

(2.3% )

2004

104.1

(0.2%)

105.4

(1.2% )

105.5

(0.1% )

106.6

(1.0% )

2005

106.7

(0.1%)

101.6

(-4.8% )

101.2

(-0.4%)

101.6

(0.4%)

2006

101.8

(0.2%)

102.8

(1.0%)

102.6

(-0.2% )

103.6

(1.0%)

2007

104.9

(1.3% )

108.0

(3.0% )

108.0

(3.0% )

121.7

(5.7% )

2008

126.2

(3.7% )

(-0.4%)

131.7

(4.4% )

?

?


In comparison, the HDB resale boom in the 2008 is better supported by fundamental factors. Policies such as sublet of whole HDB flats, singles ownership scheme and more generous government subsidies all go towards supporting higher prices for HDB resale flats. At the same time, genuine demand for HDB flats has also been increased by the recent influx of foreign workers and the bulk of new citizens. On top of this, Minister for National Development Mah Bow Tan has repeatedly said that HDB would build only on "orders" (BTO = Build to Order), so the oversupply condition that happened in the 90s is quite unlikely to repeat this time round. While HDB flat owners may welcome this assurance, HDB home-buyers are getting increasingly stressed up by the soaring resale prices. One wonders how the government will ultimately balance the interests of the two parties. Meanwhile, it seems HDB resale price is set to rise further and possibly surpassing its 1996's peak.

May also want to read:
HDB Resales: West Sees Highest Price Increase
HDB contributes to Singapore record high inflation
HDB Income Ceiling for buying HDB flats not pro-family
Your investment in a home may be the sole-determinant of your financial success in your life

24 comments:

Anonymous said...

Straits Times on 24 August 2008 published an article titled, "HDB resale market going strong". What is your opinion regarding that? :)

Thanks!

Elaine

Anonymous said...

PS I am a house seeker now.. the resale prices are driving me nuts.. :( I have read several posts that seem to sugg that resale market is going down soon (since private prop is going down). Should I wait therefore?

Thanks
Elaine

Smart Buyer said...

Dear Elaine,
I wish I could bring you some comfort :( but my best guess is HDB resale price is still on its upward climb as reported in the article you referred to published by Straits Times. Judging from the last HDB resale data report, the HDB resale market still looks very strong in terms of price increase, transaction volume and rental rate. Based on my observation, any sign of softness in a property segment will first be reflected in a substantial drop in sale volume and rental rate. For HDB resale flats, sales have increased some 22% and rents continue to climb by 10% or more.

Though there's no such thing as property price increasing forever, I'm afraid that the peak has yet to be arrived at for HDB resale market.

The current peak for HDB resale flats is still lower than it's 1996's peak but the "real" value of HDB flats have in fact been enhanced by several HDB policies implemented after 1996. (Policies include sublet of whole HDB flats, singles ownership scheme, more generious govt subsidies which all go towards supporting higher prices for HDB resale flats.) At the same time, genuine demand for HDB resale flats has also been increased by PRs and new citizens. On top of this, Minister Mah has said that HDB would build only on "orders" (BTO = Build to Order), so the oversupply condition that happened in the 90s is quite unlikely to repeat this time round.

Personally, I think prices for HDB resale flats are likely to rise further, possibly superseding its 1996's peak, before stabilising.

A substantial fall in prices for HDB resale flats over the next few years is likely only if Singapore goes into a deep recession.

If buying directly from HDB is an option open to you, do consider that first and foremost.

Best wishes.

Anonymous said...

Hi Smart Buyer,

Thanks for your advice!! Hope you don't mind I discuss this with you in your blog. Please correct me if any of my thoughts below are misconceptions:

My husband to be and myself belong to the category where we can't qualify for a CPF housing grant or a new flat. So the only options avail to us are either a condo or resale.

Being first time house owners, we didn't think it was very prudent to buy a condo (and be bogged down with a huge loan). So its a resale flat for us.

However, we are not cash-rich either. And being risk-adverse, we didn't think it was wise to take up more loans than what we can afford, not with the bearish economic outlook for Singapore. The private housing market has also confirmed to have gone soft (this may lead to more buyers wanting to buy a condo instead?). Coupled with the softening of the global economy, I am hoping this will take some of the steam off the resale market. At least, take some steam off the COV component! :D

The article did point that HDB resale market is going strong, but it does not show any new statistics. In fact, it seems to suggest that the market is losing some steam even with that headline. Perhaps I was just trying too hard to read between the lines!

Thanks,
Elaine

Smart Buyer said...

Dear Elaine,
The financial prudence you and your husband-to-be are exercising is commendable. Many young and successful couples I know of aren't this prudent. It's only when their debts start piling that they realise that they are in a mess.

Back to your question. The private property market has gone soft only in terms of sale volume but prices are still steep. I believe the steep pricing has driven more first time home buyers, who otherwise would have have private property, to the HDB resale market. Until and unless private property price falls substantially; this trend, in my opinion, is likely to continue.

A logical outcome I see would be for the price gap between HDB resale flats and private property to narrow to a more reasonable level (~20%), say by next year, as I've explained in this post:
http://smartpropertybuyer.blogspot.com/2008/05/making-forecast-for-singapore-property.html

Going forward, I'd expect the price increase in the HDB resale market to moderate somewhat for the rest of this year. It's just my best guess.

I wish you happiness.

Red said...

Dear Smart buyer,

I am interested in the graph and statistics given. Being curious, in 1996, the RPI went up to 136, what was the pricing range peak was like for HDBs? Was it as high as the current resale price?

-Red

Smart Buyer said...

Dear Red,
According to HDB latest flash statistics, RPI is 137.4, which is above the 96-peak of 136.9. Based on the statistics, we can conclude quite objectively that current HDB resale price is higher than in 1996.

I guess you're asking me on the ground level, do I feel that current HDB resale price is higher than 96-peak? The answer is YES.

Frankly, I don't remember HDB resale flats getting this hot ever.

The 96-peak was driven by a lot of HDB upgraders who then believed that you'd make more money with bigger HDB flats. It was "speculation" of some sort. The current peak is driven largely by new citizens and permanent residents. I also see a continuous "demand downgrading" (from private property to HDB, from prime HDB to outskirt HDB, from 5-rm HDB to 4-rm to 3-rm...) in the current market driven by real housing needs and high prices, quite unlike that in the 96 peak which saw "demand upgrading" driven by feverish speculation of ever rising property price.

In short, I think the current HDB resale price is more sustainable than that in 96. The supply crunch will ease only as more new HDB flats come on stream in 2-3 years time, or a severe recession which simply kills demand.

Just some of my thoughts.

Cheers.

Red said...

Smart Buyer,

Thanks. I think your reply give a rational explanation on my question. You are indeed a smart buyer and very knowledgeable.

With the start of this week, the financial market is getting a lot of potential buyers and not forgetting the sellers all worked up. Everyone is scream for the mirrorball. This is well understood as it is just not easy when it involve huge sums of money.

Sigh, this is never easy.... Nevertheless, only time will tell.

Anonymous said...

Currently i am waiting to sign OTP for 3R resale flate.

According to this current economic crisis situation Is it safe to go ahead further process?

pl advice me.

thanks

Smart Buyer said...

I wish I could give you a "yes" or "no", but I can't. It's really anybody's guess how bad this recession is going to be. Personally, I do not see HDB price falling significantly but then again if retrenchment becomes really bad, who can imagine what's going to happen. Just make sure you do not over-commit at an uncertain like that.

Best wishes.

JK said...

Dear Smart Buyer,

I feel that since last 1 month time, the asking COV for resale HDB flats has came down to a moderate level - say around 10K-15K for most of the 5 room flats. Few months back it was above 25-30K. So i feel a deal with lover COV (though valuation price has not reduced) will be a less risky deal. Do you agree with this? I'm currently paying a high rental and the more i wait to buy a resalt flat is costing me more (by considering the rental amount). So if I got a deal with a valuation of 350K and a COV of 10K for an 5I room flat (low floor, corner unit and decently renovated) near a MRT (NE line) and other amenities, will it be a good deal to proceed with? Please let me know your thoughts. Thanks in advance for your help.

Regards!

JK

Smart Buyer said...

Dear JK,
My answer to you is the same I've given to the others in similar shoes:

I wish I could give you a "yes" or "no", but I can't. It's really anybody's guess how bad this recession is going to be. Personally, I do not see HDB price falling significantly because people still need a roof over their heads in bad time and HDB is as far as one can downgrade. Then again if retrenchment becomes really bad, who can imagine what's going to happen. Just make sure you do not over-commit at an uncertain time like that. Ps buy withing your means..

Best wishes for your home search.

Anonymous said...

Dear Smart buyer,

Indeed you are the HDB resale guru and would like to seek your take on 3or4 room vs 5or larger room HDB only.

In recession times, we see alot of downgraders from bigger HDB flat to smaller HDB flat. In this economy gloom, it will continue to go south for this probably 2+years. Making the 3 or 4 room much more in demand vs the larger room.

Right now, we are facing similar situation in recession time like this and retrenchment likely to go up. Will you see that the 3/4 room price will rise while larger room price will flat or south? (esp in the west region)

From your personal view, how long will HDB price continue to go south once it's reach it's peak?

From the graph, it takes longer time to appreciates vs the price to dive. esp in the last decade.

At what RPI do you expect it to peak at?

Thank you for your valuable insight

Best regards,
confused seller and buyer

Smart Buyer said...

Dear confused seller and buyer,

I love to be called a guru but really, I'm no guru because I cannot answer many of your questions:

(1) How long will HDB price head south? I don't know. If this recession is really long like more than 1 year and retrenchment gets really bad, it may stay low for several years. If not, HDB price may not even fall. But from what I gathered, this recession is going to be long, maybe, very long.

(2) How much will the price dip? I don't know, but if there is massive retrenchment, then it can be worse than the last 97's financial crisis when price fell more than 10% per year

(3)What is going to be the peak RPI? I don't know. Definitely more than the last peak.

(4)3 and 4 room HDB resale flats have definitely been appreciating faster than bigger HDB flats. Smaller HDB flats also give better rental yields. At least, I can answer that.

Your Guru :(

Anonymous said...

Dear Smart Buyer,

I can choose between purchasing a leasehold condo or a resale HDB. The objective is to live in it for a decent period of time i.e. 6 yrs etc.
However, i am trying to "time" the market and would like to buy at the ideal "lowest point".
I know the market for condos and hdbs differ quite a bit and i'd like to know your thoughts on a few thing:
1) which will drop (%age drop) more first over the next few months? (hdb/condo)
2) which will hit bottom first? hdb / condo?

and if you have any statistical /historical evidence that would help too!

Thanks!

TB

Smart Buyer said...

Dear TB,
My guess:
1)99 LH condos will drop first but actually that has already happened.
2)HDB

My guess is as good as yours :)

Anonymous said...

Dear Smart Buyer,

Ure blog is God-sent to a first time buyers like my fiance and me.

At the moment we am renting a 5I HDb @ 2300pm. Considering the foll factors
1. Condo prices are gg down
2. HDB Resale is gg up.
3. Cash flow(Repayment) for any debt will be maintained as atleast one of us will have a job (hopefully :) )
4. Rates of Larger resale HDBs(5x, mansionette) almost converging to prices of resale condos. i.e.HDB gg up and Condos gg down.

Would it be prudent to invest in a Condo rather an HDB?
I know this is not the stock market, but applying the mantra of buy low sell high ..

We plan on staying in the condo for atleast 4+ years and then possibly renting it out thereafter. We were more interested in the east side (close to the EW MRT line)

Cheers,
DND

Anonymous said...

PS: Can u suggest a site where I can get a notion of how the rates are falling. Also what indicators suggest that a price has bottomed out

Thanks a lot for the wonderful site and we are all grateful for the effort you put in,

Cheers,
DND

Smart Buyer said...

Dear DND,
Whether a large HDB massionate or a much smaller condo is more desirable is really a personal preference. If you're an avid user of condo facilities like pool, tennis, etc; then condo would be great for you. However, I know of people who pay all that maintenance fee for condo facilities but would never use them, or worse still, have to moonlight to pay off the mortgage that they have no time at all to enjoy the facilities. Personally, I'd take a very pragmatic approach, pay for what really suits your needs.

I'd not make my choice based on the fact that HDB resale's price is going up and older condo's is going down. Actually, this fact merely shows which market segment stands up better against the current crisis. Besides you may also want to conside their prices on a $ per sq ft basis. To some people, space and more stable long-term appreciation is more important than lifestyle in which case they'd likely choose HDB for the same money. The difficult part is our priorities shift with age.

Your point (3) ended with a "hopefully" which gets me a little worry. This is no time to be overly-optimistic. Do be prudent with any huge financial commitment.

If you're buying an old 99 LH condo, you must understand that such property tends to be more difficult to sell esp during a downturn. You see, they are cheap not for nothing.

Best wishes.

Smart Buyer said...

Dear DND,
HDB & URA sites are good official data centres to get a notion of how the rates are falling.

Broad indicators that markets have bottomed out would be the economic growth, job market condition, tourists number and the likes.

Good luck

Anonymous said...

Hi guru,

I have some questions, clueless:-

1. My husband and i are looking at some 5rooms houses. I still think the resale price value RPI is quite high. Should we wait a little longer? Will the RPI drop next year? early next year or at least gotta wait till mid year?

2. Currently my husband has a hbd with his parents, 3 names. we are planning to sell it so that we can get buy our own hdb nest. If we sell now, what are the best options to get for his parents as they are both retired. They can't support their own home with their cpf. We have thought of getting the retired studio but was advised by hdb that his parents can't get until 2 and half years after the sale of their hdb. Clueless how to handle the problem here. Pls advise. We want to give them their own nest as well but can't afford a condo. My husband is the only son.

3. Will houses in punggol appreciate more with the waterway coming in place? Currently the RPI in punggol is abt 420k for 5 rooms? Is it a good buy?

Pls advise :)

Smart Buyer said...

Very kind of you to call me "guru" but guru I'm not. Just a property market observer making my best guess about the future trends. So don't take everything I say as gospel truth. For that matter, don't believe the analysts, experts and whoever; trust your own judgement after you've heard from all sectors.

My guess:
1. RPI will drop if there's massive unemployment but even then, I expect the drop not to be as large as the Asian financial crisis because of the genuine demand for HDB flats from new citizens and PRs.

2. If waiting for 2 and half year for a retiree's studio is not an option, then a small resale HDB would seem to be the choice.

3. I'd think so provided Spore becomes more prosperious but it's going to take time.

Anonymous said...

Hi smart buyer,

Really love your blog. It is an excellent and interesting platform for property-related discussion.

I just sold my 3rm flat and have put down a 1K deposit down for a EM in the East at $470K. I need to upgrade as I need more space for my growing family. After reading your comments, I am seriously reconsidering if I shld proceed or not. Don't want to be trapped with an overpriced unit in the upcoming years.

Any thoughts?

Smart Buyer said...

Dear Anonymous,
Many 4-5 room HDB resale flats are already going at that sort of price. Honestly, $470 for a EM seems attractive to me. Just my thoughts. Ps exercise your own judgement. I can be wrong.

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Dear visitors:
Your comments are most welcome!

The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.

Smart Buyer :)