The Singapore property market appears to be turning the corner, so should first-time buyers continue with their planned purchases, or wait longer to see if prices fall further? IREUS professor Qian Wenlan lays out the considerations.
Flash estimates from the Housing and Development Board show that HDB resale prices grew 0.9 per cent in the first quarter of 2023, the smallest increase in the last 10 quarters.. First-timers who participated in that exercise stand a good chance of being invited to book a unit.uncertain economic conditions brought on by the Ukraine war and central banks raising interest ratesOver the course of the pandemic and the disruptions it caused, demand for housing has outstripped supply.
As the supply of new developments accelerates and meets pent-up demand, the market appears to be turning the corner.
Unlike the HDB resale market and private homes, BTO flats are priced with affordability as the primary consideration and are influenced by household incomes, mortgage servicing ratios and selling prices of comparable resale units.in December last year, the HDB clarified that BTO pricing was separate and independent of the project’s development cost and that it did not “apply a profit margin on costs”.
With such an affordability-driven approach, supply-demand dynamics do not strictly apply to BTO projects. Flexible subsidy schemes - which are typically more generous for first-timers - counteract market fluctuations, and keep prices stable and within reach of the majority. This being the case, first-timers who are seeking BTO flats - especially those with urgent housing needs - ought to proceed with their purchases, but with the caveat that they should carefully work out their long-term debt obligations if they are taking out mortgage loans from commercial banks.Homebuyers taking out mortgage loans here should err on the side of caution, and proceed with the premise that interest rates will continue to rise in the near future.
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