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    Feb 12, 2014

    Upgrading dream goes downhill

    SINGAPORE'S property-upgrading dream has hit a roadblock for now.

    The number of Housing Board flat dwellers lapping up condominiums or private apartments has fallen sharply, according to figures compiled by the Singapore Real Estate Exchange (SRX) for MyPaper.

    Last year, the number of non-landed private residential units bought by those who owned a flat is 9,192. This is a sharp drop from 14,955 in the previous year, and 11,750 in 2011.

    In terms of flat owners who bought resale condo or apartment units, the number was just 1,846 last year, around half of 3,622 in the previous year, and 3,675 in 2011.

    Those seeking to upgrade have been hit by a perfect storm. At its root is the weaker HDB resale market, where cash premiums have hit their lowest point in eight years.

    Property firm GPS Alliance chief executive Jeffrey Hong told MyPaper: "It's a chain effect. HDB prices are going down, so the owners are not so willing to sell and that makes it harder for them to upgrade to a condo because they will not have enough money to pay for the downpayment. Loans are also tougher to get now."

    Property-services company DTZ's head of Singapore research, Ms Lee Lay Keng, said: "Flat owners can now sell only for less money and this reduces their purchasing ability."

    But she noted that not all HDB owners who bought condo units are upgraders. Some could simply be investing.

    Cooling measures, such as the total debt servicing ratio (TDSR), are also "obstacles" in upgrading. The TDSR prohibits borrowers from taking home loans that bring their total monthly debt repayments to over 60 per cent of their gross monthly income.

    Mr Jeremy Lee, co-founder of SRX, said: "Any HDB owner who is still servicing his HDB mortgage may not have the room to enter the private market and purchase a second home."

    Nor are things likely to get better. Mr Hong said: "The resale condo prices in the next few months are unlikely to change much."

    National University of Singapore sociologist Tan Ern Ser explained that, apart from being a mere property transaction, upgrading was a Singaporean measure of success.

    Associate Professor Tan said: "Social mobility has been very much a part of our culture, particularly since the late 1970s...The idea of success is best encapsulated in the so-called 5Cs (Cash, Car, Credit card, Condominium and Country-club membership), and ingrained in most Singaporeans."

    He added: "Crossing the line between public housing and private housing is an indicator of success."