The prices of HDB resale flats have reach a record high[Link] defying analysts prediction that it will fall during this recession as unemployment climbs to 4.9%. What is going on here?
A number of colleagues of mine have been 'looking' for HDB flats in matured estates at locations that are close to work or their parents. They have been 'looking' since 2007 and they thought that the recession would give them a chance to buy at a lower price but they told me that prices held up and there is no shortage of buyers when it comes to resale flat in good locations. If you look at the resale flat index, which is now at the all time high of 140, the recession only slowed the rate at which the index was rising. It fell only slightly once in Q1 2009 by 0.6% since the last recession.
A friend of mine bought a 30 yr old 5-room HDB flat at Marine Parade for $600K recently. He told me he has been looking for 2 years. He gave up waiting for 'better' prices.
This recession is the most severe in the past 10 years yet the impact on HDB resale prices is minimal. One possible explanation is the expansion of our population. In 2008, our population grew by 5.5% to 4.84M[Link] that is an addition of roughly 250,000 people. There were 100,000 newly minted PRs and citizens in 2008 and these people become eligible to buy resale HDB flats. Even in this severe recession demand is up possibly because of new immigrants.
High HDB prices may be good for home owners who bought their property earlier but it burdens young couples who have to shoulder high mortgage debts to buy them. Some may argue that young couples can buy cheaper flats if they are willing to stay further from where they work and where their parents stay - places like Woodlands and Ponggol are cheap but this is a trade off between convenience + quality of life and affordability.....so life cannot be good and affordable for everyone in Singapore. As for the new immigrants, I know many of them and befriended many over the years. I've worked with many of them and most of them are honest hardworking individuals. However, we as citizens have to understand the impact of the govt's immigration policy on the life of Singaporeans. There is no question that some level of immigration is desirable however adding 250,000 people into the population in 1 year may be highly excessive relative to rate of growth of our population if our birthrate is normal. The large number strains our housing, public transport and hospitals.