Is It The Right Time To Buy Now?

Buying a property is not a small decision. It is, in fact, one of the biggest decisions we will make in life, as it involves huge financial figures.

As I have shared before, do not make a hasty decision out of emotions or moments of adrenaline rush.

Whether it is the right time to buy or not, it depends on what and where you intend to buy. There is a difference between buying a HDB flat and a private property, even though the cash outlay and monthly instalment are similar.

First of all, let's take a look at the present market condition for both HDB and non-landed residential properties.

1) HDB resale prices fell 0.8% in Q1 2018, greater decline from past three quarters

Source: HDB resale prices drop 0.8% in Q1; 3,900 BTO flats in four estates to be offered in May, The Strait Times, 2 April 2018

This is not surprising. We have already written earlier about the history of HDB prices. The prices of HDB are intentionally controlled by our government.

2) HDB resale prices fall in March 2018

Source: HDB resale prices fall in March from year ago, The Straits Times, 6 April 2018

HDB resale prices continue to decline. In fact, it has dropped 1.9% compared to a year ago. This is due to a few factors:

i) Steady supply of BTOs from the government since 2013

ii) Many HDB units have and will reach their MOP in 2018 onwards

iii) More HDB upgraders to ECs and private condos

iv) Shorter waiting time for new BTOs

As such, we believe that HDB resale prices will continue to remain stagnant or experience decline at least for the next couple of years.

Is it the right time to let go of the HDB or to hold on to it?

Let's take a look at the non-landed residential properties.

3) Collective Sales (En-bloc) in 2018 outshines 2017

The year 2017 recorded a total of 27 enbloc sales that valued at $8.13 billion. It was the best showing since 2007, which holds the record value of $11.6 billion.

This year, enbloc fever persisted. In the first quarter of 2018, we already recorded 17 enbloc sales that valued at $5.83 billion ------ more than 70% of the total value recorded for the whole of last year!

Source: En-bloc sales' total value this year expected to trump 2017's; new record high on the cards?, TODAY, 3 April 2018

Now, let's do the Mathematics:

2007 recorded a total of 111 enbloc sales -> $11.6 billion

2017 recorded a total of 27 enbloc sales -> $8.13 billion

Q1 2018 recorded a total of 17 enbloc sales -> $5.83 billion

Average value per enbloc sales in 2007 = $104.5 million

Average value per enbloc sales in 2017 = $301.11 million

Average value per enbloc sales in Q1 2018 = $342.94 million

As you can see, the average value per enbloc sales is INCREASING! This means that the land price is getting more and more expensive, and the developers are getting more and more aggressive. They are hungry for the lands, because lands are scarce in Singapore. The increasing value of the land translates to higher launch price ($$ PSF) for each development.

In other words, we will see non-landed residential properties selling at a higher price than before!

In fact, developers of existing developments are taking opportunities right NOW to maximise their profits.

a) New Futura is now selling at $34xx PSF!

Nearby developments Gramercy Park was sold at $2,800 to $3,000 PSF and OUE Twin Peaks at $2,700 to $ 2,800 PSF.

With the enbloc fever going on, the comparable development New Futura was sold at a much HIGHER price.

b) Kingsford Waterbay is now selling at $13xx PSF!

Kingsford Waterbay was launched at $11xx PSF for a 3-bedder. Now, it is selling at a higher price. Thanks to the enbloc sales (Rio Casa) and the upcoming development in the vicinity.

These are just a few examples. Many of the developers are grabbing hold of the present opportunity to make MORE money.

I mean, come on, which developer doesn't want to make more money?

4) New benchmark pricing for executive condominiums

With the news of the ec land bid by CDL (City Developments Ltd), Rivercove Residences EC has set a new benchmark price for executive condominiums.

The land bid for Punggol Sumang Walk EC has reached its record high at $583 PSF per plot ratio. This translates to a potential launching price of $11xx PSF in 2019.

The land price for this Punggol EC is in fact, 64% higher than the land bid for Rivercove Residences EC, which was valued at only $355 PSF per plot ratio.

The developer for Rivercove Residences could have made a good profit margin by simply selling at an average of $836 PSF, like Hundred Palm Residences.

However, the developer knew that they could earn EVEN MORE! As such, Rivercove Residences was launched at an average of $965 PSF!!!

This is the most expensive EC in Singapore history. And we are talking about SENGKANG! It is not even near MRT!

In spite of the high price, both 4 and 5-bedders were fully sold on the day Rivercove Residences was launched! Close to 80% of the total units were sold in one day!

WHY are people still buying???

Because they know that if they don't buy NOW, not only will they have to buy at a much higher price, they will also miss out on the opportunity cost!

Some may say, "Oh well, I'll stay in my present HDB flat then."

Certainly, you can... but you will have another set of issue to deal with, on top of the stagnant/declining HDB prices. When you finally decide to let go of the HDB, the non-landed residential prices won't be waiting for you.

Is It The Right Time To Buy Now?

It depends on what and where you intend to buy, and how you would like to capitalise on the present opportunity to grow your asset and increase your savings and wealth.

For more information and assistance on asset progression and how to take hold of present opportunity, click here to receive a free assessment now.