HDB resale prices up 1.7%, seen stabilising

The Housing and Development Board (HDB) resale market appears to be stabilising as prices climbed at a much less rapid pace in the fourth quarter from the previous three months and as prospective buyers and sellers await new policy measures.

The HDB said yesterday its Resale Price Index rose 1.7 per cent in the fourth quarter from the third to register a record high of 190.4. The rate of increase was less than half the 3.8 per cent in the previous quarter and in line with the HDB’s preliminary estimate on Jan 3.

While the number of resale transactions rose a slight 0.3 per cent to 5,921 cases in the fourth quarter, resale deals for the whole of last year was 24,633, a sharp 24 per cent decline from 2010.

Mr Eugene Lim, key executive officer at ERA Realty Network, said the extensive supply of Build-To-Order flats and executive condominiums data had hit the HDB resale market. He noted that 25,200 BTO units were released into the market last year, the largest number in 10 years.

This year the Government will release another 25,000 BTO units, he noted.

Since the BTO market had been modified to become a “built ahead of order” system, the waiting time for a BTO flat is now about 2.5 years, compared to the previous four years, he said.

With a more affordable price tag, smaller initial capital outlay, improved success rate and a shortened waiting time, more and more first-time buyers will prefer BTO flats to resale flats. The increased household income ceiling to S$10,000 has also made more first-timers eligible for BTO flats, he added.

Looking ahead, the resale market is also facing policy risks after National Development Minister Khaw Boon Wan promised to modify existing balloting rules for BTO flats to benefit second-time buyers. If the new rules – likely to be announced in March – increase the number of BTO flats made available to second-time buyers substantially, the resale market will be greatly affected since second-timers form the bulk of resale buyers, Mr Lim said.

Still, resale prices are not expected to dip sharply. The longer minimum occupation period of five years, the low average completion rates between 2002 and 2010, and the requirement that private property owners who purchase resale flats sell their existing homes within six months have aggravated the shortage of resale units, Mr Lim said.

Mr Mohamed Ismail, CEO of PropNex Realty, said: “Price stabilisation will set in and possibly even a price correction of not more than 3 per cent in the HDB resale market.”

Source : Today – 28 Jan 2012

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