Some sellers look to raise asking prices in light of new enhanced HDB grant

SINGAPORE — A couple aged in their sixties who are trying to sell their Housing and Development Board (HDB) flat in Hougang wasted no time in responding to changes making HDB flats — including resale units — more affordable to first-time buyers.

Soon after the changes kicked in on Wednesday (Sept 11), the couple asked their property agent, ERA Realty senior marketing director Davon Chai, to jack up their asking price significantly.

Speaking to TODAY, Mr Chai said the couple now wants him to market the five-room flat for S$550,000 — compared with the last transacted price of S$480,000 for a similar unit nearby.

The couple believe the changes could lead to a better deal that would allow them to live out their retirement in a smaller flat, he added.

The new Enhanced Central Provident Fund Housing Grant offers up to S$80,000. There will also be a higher income ceiling for those buying HDB flats, as announced by National Development Minister Lawrence Wong on Tuesday.

The new grant applies to all flat types and all estates, and replaces the Additional CPF Housing Grant, as well as the Special CPF Housing Grant, which was not available for new five-room flats or new units in mature estates.

‘BUYERS WILL LOSE INTEREST’

Several property agents said that they have also received inquiries from sellers about whether they could raise prices too, though none has committed to doing so. But such “opportunistic moves” will likely not work, they said.

“When some sellers look at these new grants, they get very optimistic and excited and end up raising prices based on HDB’s ballpark figure of the grants that buyers can get,” said Mr Chai.

“It actually makes it difficult for us agents. With these new grants, it will take some effort for us to close the gap between the buyers’ expectations (of more affordable homes) and the sellers’ wish to profit (from the grants),” he said.

ERA senior marketing director Bhavina Kaur added: “There will always be some sellers who will take advantage of this opportunity to make a move, raising prices at a time when people are optimistic. But for those who understand about pricing to the market, if your price differs too much from what the market values it as, the buyer is just going to head to the seller next door.

“My sense is that for those who want to increase prices, we will have to encourage them to do the homework, as you can only raise it by that much before buyers lose interest.”

BIGGER POOL OF RESALE BUYERS

Prices of HDB resale flats have been generally declining since 2013, according to HDB’s resale price index, but some commentators have said that HDB’s moves may turn the tepid market around.

This is due to the injection of fresh buyers into the market who received an “unexpected boost” from HDB with Tuesday’s announcement, said a real estate director from PropNex, who preferred not to be named.

He said: “Since the announcement, I have been bombarded with calls from buyers who want me to help them calculate what grants they are eligible for.”

He described the reaction of one young working couple, who have been renting a flat and earn a monthly household income of about S$5,000, but have so far been reluctant to buy a home.

When they heard they could now receive up to S$130,000 to help offset the purchase price of a resale flat, “their immediate response was to look at offers”, he said. “This is going to be quite a busy weekend for agents.”

This spike in interest is not likely to last, several observers said.

Property analyst Ong Kah Seng said: “The knee-jerk reaction is that it will indeed ignite more buying interest for resale flats from around this weekend or for September itself.”

After that, most sellers are likely to adopt a wait-and-see attitude over the next few months as they “digest” the impact of the increased housing grants.

Mr Ong said that based on past moves in housing policy, the initial euphoria is usually short-lived: “The Government’s efforts are to sculpt a steadier state for the property and housing market, so any initial exuberance will eventually be moderated and the housing market will return to normalcy, stabilise and continue to chart its path towards equilibrium.”

The overall turnaround of the resale HDB market will take time and “certainly not over this weekend”, added Ms Kaur.

‘NOT WILLING’ TO PAY CASH OVER VALUATION

She said even if many buyers take the bait dangled by opportunistic sellers who raise prices to take advantage of the new grant, it will take at least a month for these transactions to be reflected in the official valuation.

This is key, as some buyers simply refuse a deal if the flat is overvalued by as little as S$5,000 since “people simply refuse to top up in cash”, she said.

Based on HDB rules for resale units, buyers who want to pay above the valuation need to fork out the difference in cash, instead of from their CPF.

ERA key executive officer Eugene Lim agreed, stating that the days of paying high cash-over-valuation sums for resale flats are over.

“Sellers need to price realistically according to what the market will pay, if not they will help their more realistic neighbour sell the flats,” he said. “It takes two hands to clap.”

Nonetheless, Mr Lim believes that HDB’s moves to increase the pool of resale buyers will make sellers, as well as real estate agents, happy overall.

Huttons Asia director of research Lee Sze Teck said the resale market will bear watching three to six months down the road as the number of resale transactions is expected to rise thanks to the increased grants.

Besides resale flats, demand for new flats could also follow suit as the Enhanced CPF Housing Grant would also apply for those with household incomes under S$9,000 who seek a new Build-to-Order flat in any estate.

The new Punggol and Tampines BTO flats, which were launched on Wednesday, are likely to be oversubscribed due to the introduction of the grant, said ERA’s head of research and consultancy Nicholas Mak.