Navigating the HDB cooling measures

Navigating the HDB cooling measures (AsiaOne)

Navigating the HDB cooling measures (AsiaOne)

Sam Baker
The New Paper
Monday, Dec 08, 2014

Singapore — HDB resale prices last month decreased 9.8 per cent since their peak in April 2013.

This decline is almost double the 5 per cent mark mentioned by National Development Minister Khaw Boon Wan in May 2013, one month before announcing changes to the Total Debt Servicing Ratio.

Does this mean the Government will end the cooling measures?

Until the Government signals its intentions with new targets and timelines, we do not know. As a result, in some sense, we are navigating the Singapore property market with incomplete information and this can cause uncertainty.

But here is the paradox about real estate: There will always be uncertainty.


Whether there are cooling measures or not, there are always unpredictable variables that introduce an element of risk for buyers and sellers and make it impossible to time the market.

For example, uncertainty about movements in interest rates makes the real estate market unpredictable.

What will happen if interest rates go up? Will this weaken demand or will it take many interest rate hikes before it reduces demand?

Macroeconomic issues such as gross domestic product, a financial crisis, and inflation make it difficult for you to forecast the future value of your home with a high degree of confidence.

My advice therefore is to look at the cooling measures as just another set of variables and navigate around them.

Here’s how.

First, identify the current rules of the game so that you know how to play. If you are an HDB buyer, today’s rules are in your favour. HDB homes are more affordable thanks to the cooling measures and an increase in supply.

A larger percentage of Build-to-Order units this year has caused more resale flats to go on the market and a higher supply means downward pressure on pricing.

Furthermore, very low interest rates mean it is historically inexpensive for you to finance your home.

Second, take advantage of the rules of the game to buy the right home at the right price.

The cooling measures and increase in HDB supply are dampening sellers’ expectations. The go-go years of sky-high Cash Over Valuations and seller expectations no longer dictate the rules of the game.

Instead, as reported by SRX Property, the median Transaction-Over-X Value for last month was negative $3,000. That means buyers have more negotiating power and are buying below the computer-generated market value.

Third, take a measured view about the future value of your home. We do not know when the cooling measures will come off, but they will come off.

New home buyers want to preserve the value of their purchases and baby-boomers must be able to unlock the value of their homes for retirement.

Therefore, the rules of today’s market are quite clear for buyers: Take advantage of the cooling measures to negotiate a discount, recognising that, in the long run, it is in everyone’s interest for your home to appreciate and give you a good return.

Next week, I will explain how sellers can navigate the unpredictability of the cooling measures.

Sam Baker is co-founder of SRX, an information exchange formed by leading real estate agencies in Singapore to disseminate market pricing information and facilitate property listings and transactions. For more information on buying, selling or renting Singapore property, visit



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