Appeasement in the HDB Resale Market

Sellers are happy that prices have not dipped. At the other end of the OTP,  buyers are relieved and would consider unlocking their CPF and committing to a mortgage as prices are not rocketing up beyond their reach. Median COV is lower at $20,000. but this is almost 100% higher than in late 2009 when the median COV was $12,000.  Stability is what people want, a slight appreciation of HDB flats appeases both the resale HDB flat’s new owners as their asset goes up in value, and the seller satisfied that he sold his HDB flat at a relatively good time. As it is widely believed that the resale HDB market influences the pricing and is the support of the mass market condos, it also means that the property cooling measures are slowly taking shape as the suburban condos pricing also loses steam. The PAP has managed to keep everyone happy just in time for the election.

HDB resale market to cool this year
Mar 7, 2011 –

The HDB resale market is set to cool six months after the government’s announcement of measures aimed at helping first-time buyers and controlling the resale market, said Eugene Lim, Marketing Executive of ERA.

While these measures may have helped curb runaway prices, they have also made buying and selling property more complicated for current and future home owners, said Mr. Lim.

One sign of a cooling market is the slight increase in post-August 30 resale prices of 2.5 percent across the board in the fourth quarter of 2010, following a 10.9 percent increase in the first three quarters of 2010, or an average of 3.6 percent per quarter.

Another sign of a cooling real estate market is the decline of the median cash-over-valuation (COV) for resale HDB transactions, from a high of S$30,000 in Q2 and Q3 2010, to S$20,000 in January 2011.

Resale transaction volume for Q4 2010 also slowed to only 6,454 units, from more than 8,000 units per quarter since Q2 2009. This is 45 percent less than the 11,649 units in Q3 2009 and 21 percent below the 8,205 units in Q3 2010.

With a 42 percent share of the resale HDB market, ERA saw a decline in its resale volume of about 25 percent in January this year, over the same period last year.

Going forward, ERA said the resale market will likely to continue to cool this year, with the median COV to further decline to S$10,000 to S$15,000 in the coming months.

This will cause resale prices to moderate further before stabilising. Statistically, the HDB Resale Price Index may continue to show marginal price hikes of sub-two percent in Q1 and sub-one percent in Q2, said Mr. Lim.


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