HDB resale prices up 2.5% in Q4 2010

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http://www.businesstimes.com.sg/sub/news/story/0,4574,423940-1296331140,00.html?

Published January 29, 2011

HDB resale prices up 2.5% in Q4 2010

Up to 22,000 new flats may be offered under the build-to-order system

By UMA SHANKARI


HDB resale prices rose by 2.5 per cent in the fourth quarter of 2010 - a tad higher than the 2.4 per cent climb estimated earlier this month - even as the number of deals and the cash-over-valuation (COV) amounts commanded by flats fell.

Data from the Housing & Development Board (HDB) released yesterday showed that the official resale price index climbed to yet another new high in Q4 2010. For the whole of 2010, HDB resale prices rose by 14.1 per cent.

Prices rose even as the median COV amount among all resale transactions fell by $7,000 (or 23 per cent) from $30,000 in Q3 2010 to $23,000 in Q4 2010.

But prices still rose as valuations of most types of HDB flats climbed in Q4, analysts said.

The number of resale transactions fell by about 21 per cent, from 8,205 in Q3 2010 to 6,454 in Q4 2010. The total number of resale transactions in 2010 fell to 32,257, a decline of 13 per cent over 2009's volume.

Analysts said that HDB flat valuations still increased in Q4 2010, in spite of a number of cooling measures introduced in August 2010, as there is usually a lag time of about six to eight weeks before price corrections would align with the actual sentiment in the market.

But resale prices could soon plateau, PropNex chief executive Mohamed Ismail said.

HDB's Q4 2010 data shows that median resale prices of 3-room, 4-room, 5-room and executive flats stood at $300,000, $385,000, $460,000 and $548,000 respectively, he said.

But PropNex's in-house data for deals done in January shows median resale prices of $298,000, $393,000, $466,000 and $538,000 respectively - a 1.8 per cent drop to 2.1 per cent increase from Q4 2010.

'It must also be highlighted that some of our data reflects transactions that took place before the additional cooling measures announced on Jan 13, 2011,' added Mr Mohd Ismail. 'Feedback from the ground has indicated that there is less movement among the current HDB dwellers due to the (new) 60 per cent loan-to-value (LTV) cap. Therefore, it is possible to see a further dip, though not drastic one, for median COVs and sales volume in Q1 2011.'

HDB plans to offer up to 22,000 new flats under the build-to-order (BTO) system if demand is sustained.

The BTO supply will also be supplemented by the upcoming supply of flats under the design, build & sell scheme (DBSS) and the executive condominium (EC) housing scheme. Four more EC developments in Punggol, Pasir Ris, Bukit Panjang and Tampines will be launched for sale in the coming months by private developers.

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Jan 29, 2011

HDB resale market shows signs of cooling

Some median prices, transaction figures and COV prices dip

By Jessica Cheam, Housing Correspondent


THE HDB resale market enjoyed a boom period last year but numbers out yesterday also show that the heat may finally be coming out of the market.

Some median prices have started to decline, while transaction numbers and cash-over-valuation payments are falling.

Analysts say the trend is likely to be due to the August cooling measures imposed to apply the brakes to a runaway market.

But while the sector is clearly slowing, yesterday's Housing Board data also confirms that 2010 was yet another bumper year for flat owners. Prices rose 2.5 per cent in the fourth quarter over the third to hit another record and bring the total growth for the year to 14.1 per cent.

This follows an 8.2 per cent increase in 2009 when the economy was still hurting from the financial crisis, a 14.5 per cent jump in 2008 and a 17.5 per cent increase in 2007.

It's small beer maybe compared with the 90s boom when prices rocketed 34.3 per cent in 1996 alone, but still a good run for owners.

However, analysts noted yesterday that price rises were 'gentler' in the last three months of 2010, which had the lowest quarterly growth since the second quarter of 2009. Other figures point to the same trend. The HDB's numbers confirmed that cash premium paid by buyers over a flat's valuation, known as cash-over-valuation (COV), fell islandwide in the quarter.

Overall median COV for the fourth quarter fell to $23,000 from $30,000 in the third, with 96 per cent of sales transacted above valuation.

The fall was more obvious in certain areas such as Central, Sembawang and Queenstown, which all recorded declines of about 35 per cent in median COV.

In Queenstown, for example, the median COV fell from $35,000 in the third quarter to $23,000 in the fourth.

The decline in COVs seems to have continued into this month, according to agency sales figures.

The median COV range has fallen further to about $16,500 for three-roomers and $25,000 for five-room flats, said PropNex spokesman Adam Tan.

ERA Asia Pacific key executive officer Eugene Lim said that based on his firm's sales this month, median COVs has fallen to about $21,000.

While COVs are falling, resale prices were still inching up across most towns.

Analysts said this was due to the time lag in the valuations, which are based on transactions in months before the cooling measures hit. Last August, the Government tightened financing and restricted ownership of resale flats in a bid to calm the buoyant market.

While most towns registered slight price increases in the quarter, Jurong East and Choa Chu Kang had declines.

The median resale price of an executive flat in Jurong East dropped from $631,500 in the third quarter to $585,900 in the fourth. A four-roomer in the Central area also dropped, from a median $471,000 to $456,500.

Declining transaction numbers also point to a slowing market. The number of flats sold fell from 8,205 in the third quarter to 6,454 in the fourth, a decline of about 21 per cent. Sales dropped 13 per cent to 32,257 for the full year.

Industry observers said yesterday that the 14.1 per cent price rise for 2010 reflected the economy's record growth of 14.7 per cent. But they also said that HDB resale prices would moderate further this year with marginal price increases as the heightened cooling measures took hold.

Earlier this month, the Government unleashed another round of measures. It reduced the amount a buyer can borrow for a second home to 60 per cent of the purchase price and sharply increased sellers' stamp duties to curb speculation.

'This will lead to less activity in the HDB upgrader segment, as they won't be able to stump up 40 per cent down payment,' said PropNex's Mr Tan.

Mr Colin Tan, a research and consultancy director at Chesterton Suntec International, said the 'problem of runaway HDB price rises looks contained' and expects the market to stabilise further.

Meanwhile, the HDB offered 17,700 new flats under its build-to-order (BTO) scheme last year and plans to offer another 22,000 this year if there is demand.

There will be a further 8,000 executive condominium units and design, build and sell scheme (DBSS) homes as well.

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