Prices of resale HDB flats continued to rise in the fourth quarter of last year, bringing the full-year increase to 8.2 per cent.
Statistics from HDB also showed that the median cash premium paid by home buyers doubled quarter-on-quarter. But analysts said the market may be approaching a limit.
93 per cent of resale transactions in the 4th quarter of last year were above valuation and the cash premium paid by home buyers jumped by a 100 per cent from S$12,000 in Q3 to S$24,000 in Q4.
Nicholas Mak, real estate lecturer, Ngee Ann Polytechnic, said: “There seems to be more families that are going in to buy larger flats – your 4-room and 5-room flats – and as a result, these larger flats also come with higher cash-over-valuation amount, which in a way pulls up that median cash-over-valuation.”
But this increase is unlikely to continue indefinitely.
HDB said the median cash-over-valuation amount has stabilised in recent months.
The cash premium for January has gone down to S$22,000. Analysts said this may indicate that the market is approaching a limit to how much home buyers are willing to pay.
Mr Mak added: “Our salary is still not catching up at such a high rate. There will be a certain time when the affordability issue will come into play. As the sellers start to demand higher and higher COV, they may see that there may come a stage when there will be some buyer resistance.”
Efforts by the government to raise the supply of new homes by launching more Build To Order projects and Design Build and Sell Schemes will also gradually help to cool the market, once the flats are completed.
Colin Tan, head of Research and Consultancy, Chesterton Suntec International, said: “The government efforts at pushing out the BTOs and DBSS and all the executive condos, that may have helped to allay some of the panic buying. And this probably resulted in some people actually shifting the demand from the resale market to the new flats.”
To meet demand, HDB said it will be offering 6,900 new flats in the first half of this year.
Source : Channel NewsAsia – 22 Jan 2010