HDB Market Slowing Down

HDB resale prices are still going up, albeit at a slower pace. That is mixed news. Good for sellers still, and buyers might be appeased and confident enough to jump in. Median COVs have dropped between $3,000 and $7,000, but median COV is still in the $25,000 range. Using 2010 monthly median household income figures of about $3,400 for HDB 3 bedroom and about $5,800 for HDB 4 bedrooms, COV is still 4-6 times the household income of 3 and 4 bedroom dwellers. Quite a lot of cash for the heartlander to fork out.

S’pore home prices cool further
By Kenny Chee
my paper Tuesday, Apr 03, 2012

Housing Board (HDB) resale-flat prices have registered the smallest increase in close to six years, based on flash estimates released by the HDB yesterday.

They are predicted to have inched up slightly – 0.6 per cent – in the first quarter of the year, over the previous quarter.

The rise is the lowest since the third quarter of 2006. It is also lower than the 1.7 per cent increase in the fourth quarter last year over the quarter before.

Resale-flat prices had risen 3.8 per cent in the third quarter of last year, over the quarter before.

Meanwhile, private-home prices have declined from the quarter before, said the Urban Redevelopment Authority (URA) yesterday in a separate statement.

Flash estimates for private residential-property prices in the first quarter of the year fell by 0.1 per cent over the previous quarter.

It is the first fall in private- home prices since the second quarter of 2009, and URA said this follows the trend of “stabilising prices over the past nine consecutive quarters”.

In the fourth quarter last year, private-home prices rose 0.2 per cent over the preceding quarter. URA added that, in the first quarter, the prices of non-landed private residential properties fell by 0.9 per cent in the Core Central Region and 0.7 per cent in the Rest of Central Region.

But prices in Outside Central Region rose by 1.2 per cent. This compares with a 0.6 per cent increase in prices in the previous quarter.

PropNex chief executive Mohamed Ismail said that HDB resale-market prices have reached their peak and are not expected to rise further in the coming quarters.

He said this is because “buyers are becoming reluctant” to pay high cash-over-valuations (COVs), the cash premium paid above a flat’s valuation.

Mr Ismail noted that the first-quarter estimates for resale- flat prices reflect the impact of an increased income ceiling for applicants of Build-To-Order (BTO) flats and a bumper release of 25,000 units under the BTO and Sale of Balance Flats exercises this year.

He added that HDB’s commitment to speed up the “queue process” for first-timers in getting a flat also had an impact on resale prices.

HDB said that in the first quarter, it offered 8,076 flats under BTO exercises and 3,825 flats under a Sale of Balance Flats exercise.

Next month, HDB will offer another 4,640 BTO flats in Choa Chu Kang, Kallang/ Whampoa, Punggol and Sengkang.

PropNex data showed that median COVs are on a declining trend. Overall, median COVs hit $25,000 last month, a $5,000 fall from December last year.

Mr Ismail estimated that the growth in resale prices would be less than 1 per cent, and did not rule out a fall in prices towards the end of the year.

So, with stabilising resale prices and falling COVs, now would be a good time for homebuyers to look for a resale flat, said Mr Ismail.

This is especially so for those who cannot wait for BTO flats or do not meet requirements to purchase such homes.

But he warned that the supply of resale flats may still be limited because resale-flat owners have to observe a Minimum Occupation Period.

Mr Ismail also observed that the first-quarter estimates for changes in private-home prices reflected the impact of an Additional Buyer’s Stamp Duty announced in December.

Mr Nicholas Mak, an executive director at SLP International Property Consultants, told Bloomberg that the drop in private-home prices in the last quarter “has been marginal but it will have a psychological impact on people”.

“The rate of decline can increase this quarter but I don’t think it will exceed 1 per cent.”


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