HDB's Decline - Too Big To Fail

[555]

Lately, HDB(1) began to deviate from private property prices(2) since the clarification that most HDB will eventually not be enbloc-ed (3).

HDB Resale prices down 1.5% in Q2 y-o-y 2018
(1) https://www.businesstimes.com.sg/re...2018-bto-supply-to-be-cut-to-16000-from-17000

Private Home Property Prices up 3.4% in Q2
(2) https://www.channelnewsasia.com/news/business/private-home-property-prices-q2-ura-singapore-10490090

No Easy Answers - HDB Decay Issue
(3) https://www.todayonline.com/singapo...y-issue-public-expectations-have-change-first

 

[555]

Truly, we had been sold a false hope, all Singaporeans were educated that HDB is a form of investment, to at least retain value of the funds of our CPF OA account but it creates a huge time-bomb for future policymakers of Singapore.

HDB ownership is not a straight-fore-type of property ownership like the private leasehold condos:
- Owning a private condo for a 99-years lease gives you a strata-deed to the real estate.
- Owning a HDB for 99 years is like a 99-years rental agreement with a landlord. Technically, it is not even a strata-title.

For years, a false market is created by the ever-rising BTO prices, which gives support to the prices of resale-HDB units. It is like Rolex pricing each new batches higher than the old, to sustain the resale market; giving investors an impression that there is continued appreciation. Eg. during the lehman crisis, the BTO prices of HDB hardly dropped while the resale market of HDB and private properties corrected.

However, with a declining lease remaining, the annual depreciation is a greater % of the resale price (given a long-term HDB resale price uptrend and estate-maturity). It is like playing musical chairs but in this aspect; those who bought the resale with shorter remaining lease bears a high risk in capital loss. This resale market was also sustained with the false notion that all flats will eventually be enbloc-ed.

Seriously, future policymakers have no mean to repurchase or SERS all older units. Worse of all, most Singaporeans believe that real estate ownership through HDB is perpetual because the older units will be SERSed and in return, they get preferential pricing on another brand new 99-years unit. It reminds us of the similarity with the recent Hyflux perpetual bonds default, which gave Hyflux the right not to pay back, while almost 50000 investors though they will do so.

https://www.straitstimes.com/singap...ng-what-happens-at-the-end-of-a-99-year-lease

 

[555]

Next problem for policymakers - HDBs can't last for 99 years. You may visit a landed property of age 50 years and you will agree that the maintenance of the second 50-years of a house is likely beyond economic repair/costings, eg floorings, pipings, stairways, electrical cables & sewage.

Here's the tricky part. Owning a HDB for 99 years is like a 99-years rental agreement with a landlord. In rental agreements, your landlord owes you a duty to that the property can structurally last and function at least 99-years. Although we pay Service and Conservancy Charges, I wouldn't consider town councils as a private MCST. Our government explained clearly that Town Councils also depend on state-fundings.

So, if you are a tenant, and the unit is no longer liveable towards the later stage of a 99-years rental agreement, wouldn't the landlord be obliged to give you a replacement?

 

[bobby]

Pay property tax for a rental flat...
Pay renovation fees for "upgrading" your landlord's property...
Pay parking for your already overly paid up car...

Pay & Pay & Pay....for nothing.

 

[555]

Lastly Bankers will certainly hesitate slightly for giving the same loan quantum to a BTO or 40 years old HDB. If there is less financing for the oldest HDB, their values will drop faster than expected.

As such, there are speculations that HDB will eventually launch 60-years leasehold units. We last heard analyst talking about it on TV in June.

• With 60-years lease, there is no need to drop BTO prices. BTO prices can continue to be priced higher to sustain the resale market.
• Citizens who cannot afford 99 years lease and opt for 60 years lease. Eg. 60 years lease in Tengah will be more affordable.
• Policymakers will assume that prime land parcels such as PSA area in Tanjong Pagar and Paya Lebar Airbase are too prime to be sold at 99 years lease
• 60-years lease will be the new standard and banks will gauge the 40 years old units in Queenstown, Bedok, Marine Parade, Clementi and Toa Payoh as-good-as-new in terms of remaining lease, giving the seniors a chance to offload for a comfy retirement
• It will further reduce the need to SERS and to create space for a larger 10 million population, new BTOs just need to double average height to 25-30 level high.

(If this is true, property developers who laid their lands on the recent enbloc private properties will laugh their way to bank because 99 years is 2/3 longer than 60 years. 60 years may become the new norm and 99 years will be the new gold.)

In the short term, policymakers can recreate value in the oldest HDB units by launching these 60-years leasehold units and leave the job of defusing the time bomb to the leadership 20 years later.

Reference: There is still value in older HDB Flats
https://www.straitstimes.com/singapore/housing/lawrence-wong-there-is-still-value-in-older-hdb-flats

 

[555]

Perpetual ownership is technically possible for 99-years leasehold private property owners who have the direct ownership to the land title (or strata-titled). This gives them the opportunity to enbloc and use the money to get a new place elsewhere. This reflects the underlying spirit of CPF OA's asset enhancement policy.

However without SERS, we have to recognize that the HDB owner is more like 99-years tenancy agreement (instead of ownership). CPF OA's investment value in HDB will be spiraling downwards when depreciation in older HDB outpaces inflation. Worse of all, this is a leveraged tenancy program involving exposure to interest rates and mortgages, yet without the benefits of 99-years leasehold private properties, stated above.

Leong Sze Hian - HDB become 0, land value and CPF used also become 0?
https://www.theonlinecitizen.com/2018/06/05/hdb-become-0-land-value-and-cpf-used-also-become-0

 

[AhMeng]

Perpetual ownership is technically possible for 99-years leasehold private property owners who have the direct ownership to the land title (or strata-titled). This gives them the opportunity to enbloc and use the money to get a new place elsewhere. This reflects the underlying spirit of CPF OA's asset enhancement policy.

However without SERS, we have to recognize that the HDB owner is more like 99-years tenancy agreement (instead of ownership). CPF OA's investment value in HDB will be spiraling downwards when depreciation in older HDB outpaces inflation. Worse of all, this is a leveraged tenancy program involving exposure to interest rates and mortgages, yet without the benefits of 99-years leasehold private properties, stated above.

Leong Sze Hian - HDB become 0, land value and CPF used also become 0?
https://www.theonlinecitizen.com/2018/06/05/hdb-become-0-land-value-and-cpf-used-also-become-0

69.9% kena con. Lol
Songbo? Can sleep better tonight. Haha

 

[tanwahtiu]

Similar to opium trade, smoke more no value, no smoke no savings.

 

[555]

69.9% kena con. Lol
Songbo? Can sleep better tonight. Haha

HDB resale prices down 0.3% in June
https://sbr.com.sg/residential-property/news/hdb-resale-prices-down-03-in-june

 

[555]

Housing Curbs Expected But Heavy-Handed
https://www.channelnewsasia.com/new...v-expected-but-heavy-handed-analysts-10503276

Last night's cooling measures are a win-win for government:- Significantly higher tax revenues from property sector & support HDB resale price (less need to lower BTO prices).

 

[Seee3]

Housing Curbs Expected But Heavy-Handed
https://www.channelnewsasia.com/new...v-expected-but-heavy-handed-analysts-10503276

Last night's cooling measures are a win-win for government:- Significantly higher tax revenues from property sector & support HDB resale price (less need to lower BTO prices).

I see the govt's action is to stop upgraders who barely make it for loan from making any purchase and second grade speculators from thinking of making a quick buck with 2nd purchase.

 

[555]

I see the govt's action is to stop upgraders who barely make it for loan from making any purchase and second grade speculators from thinking of making a quick buck with 2nd purchase.

Those HDB owners who think of buying a second properties will have less purchasing power now (shoe box units??)

 

[555]

HDB rents fell 0.8 per cent in June from the previous month
https://www.straitstimes.com/busine...in-june-from-may-as-volumes-drop-srx-property

The Government’s new property cooling measures are not bad news for all segments of the market. The HDB resale market is expected to get a boost from this measure .
http://finance.theindependent.sg/wh...he-new-property-cooling-measures-announcement

 

[bobby]

Property supplier = landlord = bank = gahmen = screwed.

 

[555]

In the past, citizens and PRs were speculating in older HDB flats hoping to get SERS benefits.

Now, the new gameplan recognizes that appreciation is more likely in newer HDB units, and depreciation in units of shorter remaining lease will outpace inflation, creating a tsunami to offload units that are 40 years old.

 

[JustLikeThis]

HDB resale prices fell 1.6% in July https://sbr.com.sg/residential-property/news/hdb-resale-prices-fell-16-in-july

 

[syed putra]

Why do you think PAP try their level best to make it difficult for sinkies to buy properties in JB. Especially for those who work in sinkiland.

 

[Valium]

Why do you think PAP try their level best to make it difficult for sinkies to buy properties in JB. Especially for those who work in sinkiland.

Got difficulty?? Even a random old whore can buy a house in JB and convert into brothel.

 

[syed putra]

Got difficulty?? Even a random old whore can buy a house in JB and convert into brothel.

Yes, but crossing the straits of johore is difficult. Compare hong kong to shenzhen with their commuter trains etc. We don't even have that to jb. Instead a high speed rail proposed to KL,

 

[mojito]

No housing price correction you say the PAP misleading. Housing price correction you say they misled. What you want?