The HDB resale market saw prices reaching another record level in the third quarter despite measures to cool the property market announced in August.
The resale price index (RPI) rose a further 4 per cent to yet another new high of 167.8 in the third quarter, with Cash-Over-Valuation (COV) remaining at S$30,000.
Observers said measures announced to cool the property market, which kicked in on August 30, have yet to have a major impact on HDB resale prices.
One company, PropNex, said the increase in resale price could be attributed to median COV continuing to inch upwards.
On closer inspection, it said that even though overall COV remained at S$30,000, median COVs for individual flat types rose by about S$2,000 to S$3,000 across three-room, four-room, five-room and executive flats.
But one thing market watchers agree on is that COV could drop by the end of the year to around S$20,000, when the full impact of the cooling measures kick in.
PropNex CEO Mohamed Ismail said: “Although these numbers translate to individual flat types’ COVs rising by between 6-10 per cent quarter-on-quarter, the increase is clearly lower than it was in the second quarter of 2009. This shows that the cooling measures announced on August 30 are having an impact…”
Nicholas Mak, executive director at SLP International Property Consultants, predicts that COV prices will fall a further 10 to 25 per cent by the end of 2011.
“I think there is less upside potential for COV in the near future,” he said.
Associate director at ERA Real Estate, Eugene Lim, added: “The non-genuine buyers are the ones who are prepared to pay, because they are looking at it for investment. But for people who are buying for their own stay, then the transaction price does matter a lot to them…so inevitably, most buyers are negotiating aggressively on price.”
Already, resale transactions have fallen by about 10 per cent – from 9,114 cases in the second quarter of this year to 8,205 cases in the third quarter.
This is due mainly to the sharp drop in transactions after the property measures kicked in.
HDB said there was a 25 per cent decrease in monthly resale volume from August to September alone.
Mr Lim said: “If you look at our company’s transactions, between August and September, August is our highest month for the entire year in terms of volume of transactions as well as the resale prices that have been clocked in, but this was before the announcement. After the announcement, September then became our lowest month for the whole year.”
Overall, analysts predict resale prices could fall by 5 to 8 per cent over the next six months.
Correspondingly, the valuation of flats is also beginning to slide south, reflecting market conditions.
Separately, the HDB will continue to ramp up the supply of new flats to meet demand for first timers. Next year, it will release 22,000 new flats if demand persists. At this rate, the HDB would have released enough in just two years to create another Toa Payoh new town.
1,320 flats under the Build-to-Order (BTO) Scheme in Bukit Panjang and Sengkang will be launched on October 26 this year.
HDB will also launch about 2,200 flats in Yishun and Punggol in November/December 2010.
This will bring the total BTO flat supply for 2010 to about 16,100, compared to the 9,000 BTO flats in 2009.
Together with the August 2010 Sale of Balance Flats, the total new flat supply for 2010 will reach 17,700.
HDB will also release more land for the development of Design, Build and Sell Scheme (DBSS) flats and Executive Condominiums (EC) units to provide choices for the higher-income households.
Based on the land sales scheduled for this year, there will be about 3,000 units under DBSS and 4,000 units under the EC Housing Scheme.
Developers will launch the EC and DBSS units for sale later this year or next year.
Source : Channel NewsAsia – 22 Oct 2010