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PLH Model Kicks in for Newer Flats; Tapered Resale Market in Oct | Ohmyhome Insights


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Every month, the Housing Development Board (HDB) releases a comprehensive database of resale transaction information on Data.gov.sg. Ohmyhome analyses this huge chunk of data and picks out the most relevant points and trends for readers.  

The government announced the highly anticipated Prime Location Public Housing (PLH) model on 27 October. It is the first of its kind for Singapore’s public housing model, altering the Minimum Occupation Period (MOP) alongside resale restrictions. 

This is something that the government had been pondering over for a while now, stemming from concerns of the lottery nature of balloting and rising prices. Feedback was received from the public as well as real estate professionals over 10 months. 

HDB has developed these measures with a long-term goal in mind – keeping an HDB flat affordable, accessible and inclusive for Singaporeans.

Key Facts on the PLH model

Key highlights of the PLH model in Singapore
Source: Ohmyhome Research, HDB

The PLH model will be introduced for selected public housing projects in the prime and central locations, such as the city centre and surrounding areas, including the Greater Southern Waterfront. 

These new measures focus on the new housing model for public flats in prime areas. Future owners of these Build-to-Order (BTO) flats will be subjected to a 10-year minimum occupation period (MOP) as compared to the usual 5-year period for new flats. 

Tougher rental conditions have also been put in place for PLH flat owners and they will not be allowed to rent out their entire flat. These conditions will be applicable to both first-time home buyers and all subsequent buyers on the resale market. Resale buyers of these prime HDB flats will also be limited to households who earn not more than $14,000 a month, and at least one applicant must be a Singapore citizen.

Additionally, limited flats will be set aside under HDB’s Married Child Priority Scheme, which gives priority to applicants whose parents or children live in the same area. Currently, up to 30% of new flats are set aside under this scheme for families buying a flat for the first time.

The first BTO project that will be subjected to the new PLH rules will be located in Rochor and will be launched this month. 

Ohmyhome Note: These PLH measures only apply to future housing projects and not retrospectively to existing public housing.

Marginal dip of 0.8% in HDB resale transactions in October

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov //*Updated figures for month of September

Based on the preliminary numbers released on data.gov, HDB resale transactions declined on a monthly basis but increased year on year. The number of monthly HDB resale transactions dropped in October by 0.8%, from 2,522 HDB resale flats in September to 2,506 HDB resale flats in October. On a yearly basis it increased 3.26% from 2,427 in October 2020, to 2,506 in October 2021. 

However, the drop in resale transactions cannot be attributed to the fresh PLH model rules that were released, as it is too early to see any immediate impact on the HDB resale market. 

One possible reason for the drop may have been due to the extension of the Stabilisation Phase. With the recent rise in community cases, the government stepped in to announce the extension to November 21, when it was originally scheduled to last until October 24. Hence, viewings of properties are still limited to 2 distinct visitors per household per day.  

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov

Further breakdown by flats types of 4 Room flats to Executive flats shows a drop in sales across the segments. Albeit, these are still marginal drops in transactions. Although these are still considered minimal drops, overall transactions in October are still lively  in the 2,000 mark. 

Punggol & Sengkang continue to be best-selling towns

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov

The top 2 performing towns in October for 4 room HDB flats are still  Punggol and Sengkang. In fact, these 2 towns have been popular with buyers throughout the first 10 months of the year. Suburban areas have gained popularity due to the availability of newer flats. 

Why are prices rising in certain estates? 

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov

The highest percentage change for a 4-room flat was in Ang Mo Kio, with a price increase of 16.4%. 

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov

Primarily, prices in Ang Mo Kio rose due to 5 transactions that went above the $600k mark in October. And 2 out of the 5 transactions were at Park Central @ AMK – a DBSS flat, with resale prices at $825k and $778k. In comparison, there was only 1 transaction at the same project in September, at a resale price of $753k. 

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov

The second highest price change between September and October was in the Central area with a price change of 14.9%. This is primarily due to more million-dollar transactions in the central area for 4-room flats in October, with the bulk coming from The Pinnacle@Duxton. A total of 6 million-dollar deals occurred for 4-room flats in October at The Pinnacle@Duxton as compared to the single million-dollar deal in September.

It is key to note that the reason prices surge in certain estates is due to the principle of outliers. Extreme values can cause a deviation in the overall price points of the data. In the case of Ang Mo Kio, a higher priced DBSS flat pushed the prices to a greater extent. Similarly in the central area, the million-dollar deals at Pinnacle@Duxton contributed to the rise in prices for the estate. 

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov

With the PLH model placing emphasis on central locations, prices for 4 room flats in the central area appear to be hovering above the $800k mark for the majority of the year. 

However, this is due to a combination of a lower number of transactions and the mixture of million dollar deals for these flats that leads to a form of outlier in the Central Area. A total of 89 four-room flats were transacted for the first 10 months of 2021, with 29 of them being million dollar deals. This pushes the overall price points of the transactions.  

194 million dollar transactions so far in 2021

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov

One of the reasons for the introduction of the PLH model was due to the spotlight on million-dollar HDB deals popping up in Singapore. The number of million-dollar deals has been growing in recent years. Based on the data retrieved from data.gov, with the first 9 months of this year registering a total of 174 deals and the month of October registered 20 deals. 

Even though this sounds like an extraordinary number of million-dollar deals, upon further analysis these deals make up only a small portion of the overall HDB resale transactions. For instance, the 20 million dollar deals out of the 2,506 HDB resale transactions in October is a mere 0.8% of the entire HDB resale transactions for the month. 

Source: Ohmyhome Research, Data.gov.sg as of 2 Nov

Current data highlighted a 5-room flat at Natura Loft was sold at a price of $1.26 million. However, there has been an additional sale  of another 5-room flat at Natura Loft, transacted for $1.36 million, that has not been reflected in the database for the month of October yet. 

This is because after exercising the Option to Purchase (OTP), both the buyers and the sellers are required to submit their respective portions of the resale application via the HDB Resale Portal. According to the HDB website – it will take an estimated 8 weeks from the date of HDB’s acceptance of the resale application to complete the process.

Hence, this particular transaction is not reflected in the data released for the month of October. It will most likely be reflected for the month of December, barring any cancellation of the resale application. (Thus, it is not officially added in our total count of million dollar properties for the year as of yet)

In addition, a 5 room flat at Havelock View topped the price of $1.245 million ($1,015 psf) and is the highest recorded price for the estate. The Pinnacle@Duxton showed no signs of slowing down with a total of 7 units sold over S$1million in October. Notably, the oldest flat in the list is from Sin Ming Court – an executive maisonette with a size of 2,045 square feet. 

Outlook: will the PLH model lead to a domino effect?

With the implementation of the PLH model only applicable for future HDB projects and not retrospectively to existing public housing flats, it remains to be seen if these new measures will have any direct impact on the resale market. 

But as more HDB flats are built in the prime areas in the future, we could see prices acclimatize for existing and newer flats in the long run. With an estimated 25,583 HDB resale transactions so far in 2021, we estimate that the overall HDB resale volume for the year could reach up to 28,000. 

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