Analysts have said a lower supply of Housing & Development Board (HDB) resale flats has driven up the prices of such units.
Prices of HDB resale flats in the third quarter jumped 3.8 per cent from a quarter ago.
The squeeze on supply drove the steepest quarterly increase since the third quarter of 2010, which saw a rise of four per cent.
Chesterton Suntec International research & consultancy head Colin Tan said: “The price increase is due to lower supply (of HDB resale flats).
“We have very few maturing five-year flats. Because of the nature of HDB rules, they can only come onto the market after they have satisfied the minimum occupation period of five years.
“So this is a historical case, in the sense that we built very few flats five, six years ago.”
Analysts said resale prices will keep growing for the next three quarters, forcing more buyers to consider Build-to-Order (BTO) flats.
The government sets the prices for BTO flats, thereby keeping their price increases in check.
But such flats have been relatively unattractive to some buyers as they have an average waiting time of three years, and are situated in new estates with fewer amenities.
“The (prices of) the resale flats are going up,” Mr Tan said.
“For the entry-level household (there are) only two choices — resale or BTO. And if the BTO market remains flat and the resale market goes up four per cent every quarter, after a point in time, more people will migrate to the BTO launches.”
Private home prices continued to climb as well, despite the government’s measures to accelerate the building of new BTO flats.
They grew 1.3 per cent last quarter, slowing from the previous quarter’s two per cent rise.
Non-landed residential properties in the prime city area, or core central region, increased by 0.8 per cent.
The city fringe areas, or the rest of central region, posted a 1.1 per cent increase, while the suburban areas, or outside central region, showed an increase of 2.1 per cent.
Some analysts said the increases will be short-lived.
Jones Lang LaSalle research & consultancy head Chua Yang Liang said: “This increase that we’ve seen in the HDB market and the private market – the rebound is probably an initial spurt as a result of the market over-correcting in the previous quarters and coming back again.
“So I think in the next quarter, you can expect that number to be more moderate.”
Analysts said further tightening in housing policy is unlikely, due to the uncertain economic conditions.
The government is more likely to resort to supply side measures instead.
HDB has offered about 23,800 new flats under the BTO and Sale of Balance Flat exercises so far, and is on track to deliver 25,000 BTO flats for the whole of the year.
Next month, it will be launching 4,200 flats for sale.
For the full year, prices are expected to grow between nine and 14 per cent for HDB resale flats, and one to 1.8 per cent for private homes.
Source : Channel NewsAsia – 3 Oct 2011