Prices of HDB resale flats saw nearly flat growth in the first three months of the year, inching up just 0.6 percent over the fourth quarter of 2011.
The flash estimate released by the Housing and Development Board (HDB) is less than half the growth seen in the previous quarter.
Flash estimates of the resale price index, which provides information on the general price movements in the public residential market, is 191.6 for the first quarter of this year.
The previous quarter’s growth was an increase of 1.7 percent to 190.4.
Analysts said the latest figures indicate prices are stabilising.
Property firm ERA Realty reported fewer flats changed hands in the first quarter.
It said its overall transaction numbers dropped 6% compared to the fourth quarter of 2011.
PropNex said its numbers showed no change.
Property firms also said the cash premium paid upfront – also known as cash-over-valuation (COV) – has been declining.
PropNex said its median COV was S$25,000, down from S$32,000 in the fourth quarter of last year.
ERA’s median COV dropped 18 percent to hit S$27,000 in the first quarter.
ERA’s Key Executive Officer, Eugene Lim, explained: “HDB resale prices are now at an all-time high, and in many instances, they have reached resistance levels. Buyers are not willing to pay for the higher prices.
“The recent change of rules to (allocate) 15% of the BTO flats in non-mature estates for second-timers has also drawn away some buyers.”
Market watchers said the large number of new flats offered by the government – some 50,000 units within these two years – has drawn much demand away from the resale market.
And with new flats being launched in more towns, including mature estates, home buyers now have more choices to choose from.
HDB will release another 4,640 new flats for sale in May, spread across several estates such as Choa Chu Kang, Kallang/Whampoa and Punggol.
Property watchers expect the trend of slow price growth, or even zero growth, to continue for the rest of the year.
PropNex CEO Mohd Ismail said he would not be surprised to see negative growth in prices towards year-end, as buyers are reluctant to pay high prices.
He said HDB prices “will be muted with no significant growth in the coming months”.
Nicholas Mak, executive director of research and consultancy for SLP International, said prices are expected to continue to moderate and may register a 5 percent growth for the whole year.
Mr Mak pointed out that how prices move depends very much on the economy.
But short of a recession, he does not expect prices to dip significantly, as there remains a ready demand from permanent residents and singles who are restricted from buying new flats.
While the stagnating prices will be a relief to home buyers, those hoping to upgrade to private property may find it more expensive.
Mr Mak said: “We have already seen that HDB resale flat prices are growing at 0.6%, but the price of mass market condominium is growing at a faster rate, at 1.2% for the first quarter.
“If this trend were to continue, what we could see is that the dreams of upgrading to a private condominium for many HDB upgraders may be gradually going out of reach, because the prices of mass market condominiums are rising at a faster rate.”
Monday’s HDB flash estimates are based on figures from the first ten weeks of the quarter.
Full results will be released on 27 April.
Source : Channel NewsAsia – 2 Apr 2012