All eyes on CPF loan rule tweaks, new private launches

Changes likely to rules for buyers of older resale flats; and big crop of new private homes set to hit market

After this year’s smorgasbord of housing policy surprises, observers are looking out for how developers will pace new private launches next year and adjust their land tender pricing in the wake of the cooling measures and the revised guidelines for minimum average unit size.

Apart from possible redevelopment plans, many will be looking at how the Government will make adjustments to Central Provident Fund (CPF) loan rules on the purchase of older Housing Board resale flats.

National Development Minister Lawrence Wong had said in August that his ministry is looking into how to let buyers of shorter-lease flats dip deeper into CPF funds for their purchase, without compromising their retirement savings.

The move aims to address growing concerns among flat owners over their older flats’ depreciating leases and the difficulty in selling these – partly because of the limitations placed on prospective buyers over the use of their CPF funds. If there is more flexibility in the use of CPF funds to buy shorter-lease flats, it would help those who want to purchase flats in more mature HDB estates.

The private property market is moderating and land sales activity may be subdued, with many developers having bought freely in the past two years. “But if the take-up of new homes can reach 10,000 units or more in 2019, land sales activity may pick up in 2020,” said Mr Leong Boon Hoe, chief operating officer of List Sotheby’s International Realty, Singapore.

Next year will see a large supply of new private homes hitting the market. As many as 55 to 60 projects yielding 17,000 units could be launched next year, but developers may push some to 2020, said Ms Tricia Song, head of research for Singapore at Colliers International. At least 40 new launches will yield 14,000 units this year. “The new launches in 2019 could see larger projects in prime locations such as Holland Road, Bukit Timah Road and the East Coast, which have seen a dearth of such projects for a while. Hence, we may see some benchmark prices being set,” she added.

Developers will be careful to price their units reasonably as competition is stiff, analysts say.


To address oversupply, the Government has cut private housing supply for its first-half 2019 Government Land Sales (GLS) programme by 20 per cent from that of the current half.

But GLS sites on the confirmed list, including the Tan Quee Lan Street site located next to Bugis MRT station and the Bernam Street and one-north Gateway sites, are still expected to draw healthy interest due to their bite-size plot sizes. The one-north Gateway site is in an area that has been starved of new residential supply for about 10 years, noted JLL senior director of research and consultancy Ong Teck Hui.

Analysts hope the cuts will ease things for developers when the revised development control guidelines on maximum allowable dwelling units take effect on Jan 17. To keep absolute prices affordable, developers may offer bigger units at lower per sq ft (psf) prices.

Against this backdrop, several factors are expected to support new home prices next year.

The supply of completed units for the next few years is expected to be below historical average. Most of the estimated 7,898 units this year have already been sold prior to completion. Further, this number and next year’s estimated 10,119 units are way below last year’s 16,449 units and 2016’s high of 20,803 units. The next big jump is expected in 2022 from bumper collective-sale transactions.

The relatively high land rates developers paid for the sites mean that they aren’t likely to cut prices much, Savills Singapore research head Alan Cheong said. Plus, they have a few years to clear their inventory before the additional buyer’s stamp duty kicks in.

Home prices are expected to rise no more than 3 per cent, with annual transaction volumes at around 20,000 units, down from 25,000 units sold last year, said Cushman & Wakefield head of research Christine Li. “Smaller units could be in favour as their supply will be cut after the URA(Urban Redevelopment Authority) development control guidelines take effect,” she added.

For 2019, prices in the suburbs could be in the range of $1,350 to $1,650 psf, while those in the city fringes may range from $1,850 to $2,600 psf, Mr Cheong said.

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