Over Third Hdb Owners Feel Priced Out Private Housing Propnex Poll
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PropNex Realty recently conducted a survey of 1,250 existing HDB homeowners and published the results on July 22. The survey covered these homeowners’ attitudes towards upgrading from public housing, sentiments on housing prices, and their views towards upgrading into the private residential market. One of the key findings was that more than a third of the survey participants feel that they are priced out of the private housing market and believe that they will never be able to afford private housing in Singapore.
Out of the 1,250 respondents, close to 450 (36%) indicated that they will never be able to afford a private home, while 225 (18%) of them believe it would take them 5–10 years to be able to afford a private home. Another 125 (10%) said that it would take them more than 10 years to upgrade to a private home. Only a small percentage of 75 (6%) said that they could upgrade to a private home in the next 12 months.
Despite the challenges of affordability, close to half of the respondents still aspire to upgrade from their existing public housing to either a larger HDB flat or a larger private residential property. According to the survey, 263 (21%) hope to move into a larger HDB flat, while 338 (27%) hope to move into a larger private home in the future. Meanwhile, 38% said they have no immediate plans to move and 8% said they plan to “right-size” to a smaller home.
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“It is fair to say that HDB flats are a staple of housing in Singapore and will continue to be home to the majority of the population. That said, we know that one of the aspirations of many Singaporean households is to own and live in a private home,” says Ismail Gafoor, CEO of PropNex Realty.
The survey highlights that high home prices and the current additional buyer’s stamp duty (ABSD) regime are the main obstacles preventing HDB homeowners from upgrading into the private housing market. Under the ABSD system, HDB upgraders need to pay a 20% ABSD upfront (as their second residential property) before they can apply for a remission, subject to meeting certain conditions. Gafoor suggests that the government could align the ABSD treatment for flat owners who wish to upgrade to a private home with those looking to purchase new executive condos (ECs) from developers. At present, HDB owners upgrading to an EC are not required to pay the ABSD upfront but are required to sell their HDB flat six months after their new EC receives its temporary occupation permit (TOP).
The survey also reveals that more than two-thirds of respondents feel that high private home prices have discouraged them from upgrading. According to the latest URA data, private residential prices have risen for seven consecutive years since 2017 by about 51% cumulatively from 1Q2017 to 2Q2021.
More than a quarter (26%) of the respondents also feel that the prices of new private residential launches are extremely unaffordable, while 42% consider them unaffordable. The remainder are split between neutral (25%), affordable (7%) and extremely affordable (0.4%). “Given their views that private homes are much pricier, a larger proportion of the respondents said that their next preferred housing type — should they relocate — will be public housing,” says Wong Siew Ying, head of research and content at PropNex.
The survey also reveals that most homeowners have set aside a projected housing budget of less than $1 million, which would seem to suggest that many of them may be priced out of the private housing market. On average, the price of a new non-landed private residential unit in the suburbs (OCR) was about $1.9 million, while that of a resale non-landed private unit in the OCR was about $1.5 million. In comparison, the average price of a five-room HDB flat in 1H2021 was about $714,000, while the average resale price of a four-room flat was about $609,000 and executive flats fetched around $861,000.
The survey also reveals that more than half of the respondents are not open to selling their flat at a discount to the market price in their area due to concerns over high replacement costs to upgrade to a new home. Meanwhile, 87% said that they expect to sell their property at a price premium over the market rate in their area.
The results of the survey imply that most HDB homeowners view their flat as a home and are generally in no hurry to sell. “Close to three quarters (74% of survey respondents) either agree or strongly agree that their present HDB flat meets their housing needs adequately,” says Wong. Most respondents view their HDB flat as a roof over their head, a retirement nest egg asset, and an investment tool to help build wealth. Far fewer view it as a legacy asset or a store of wealth, which is largely attributed to the negative price impact of the lease decay on property value over the long term.
Wong says that the preference to pick a larger HDB flat to upgrade also influences the housing budget that the polled homeowners have set aside. “Home buyers generally remain cautious and price-conscious amid elevated interest rates and peaking home prices,” says Wong, but she adds that the private residential market could see overall private home prices rise by 4%–5% this year. The survey also reveals that most HDB homeowners are turning to more affordable homes in the secondary public housing market, which could cause HDB resale prices to climb by 6%–7% this year.
