There’s an article on Singapore Business Review today that states that “according to PropNex’s CEO Mr Mohd Ismail, that the HDB flat resale price “will most likely head south”.
PropNex expects the HDB resale price will drop by 5-8%.
In my view, in the short run, resale prices are still undergoing a correction phase due to the shock of Government intervention into the market. Valuation should remain flat while only some desperate sellers are going to “lelong” their flats under market valuation.
In the intermediate run, I believe that prices will rebound with a growth of 1-5%. My view is still the same as before, resale flat valuation/prices will need to take inflation rate into consideration and continue to appreciate in value.
In other countries, someone may sell his/her flat and go lives in another city or town with cheaper property prices. But in Singapore, if you sell your flat where are you going to stay after that?
That’s right, you will still need to buy another flat, apartment, house.
The new ruling in property purchase is a double edge sword. While restricting buying in the short run, it also cause a supply shock to resale flat supply. If you can’t buy a new condo, you won’t be selling your current flat.
For those upgrading from a HDB flat to another HDB resale flat, on one hand it is cheaper to buy, but on the other hand your existing flat can’t fetch good prices. So you are indifference.
This will result in a tight supply of resale HDB flat, and leads to a return in COV in the longer run.
And I like to bring up the topic again that if HDB valuation falls sharply, a lot of people (especially the middle class) will be in trouble now that their financing is much more expensive because they are paying a higher mortgage than before.
In short, COV will come close to zero in the short run. Resale valuation will remain stagnant in the short run.
In the long run, COV will return, valuation will continue to grow at the rate comparable if not higher than inflation rate.
Conclusion: NOW IS THE TIME to buy a resale flat if you do not own any. COV will not come down again until the next correction which can be as long as a decade, if not longer.