HDB resale flat deals dip below 30,000: ERA

Singapore
Published January 27, 2007

HDB resale flat deals dip below 30,000: ERA

By UMA SHANKARI

THE number of Housing Board resale flats transacted fell below 30,000 for the first time in a decade in 2006, a move which could indicate homeowners' refusal to part with their assets while the valuations are still under water, industry players said.

Resale transactions totalled 29,723, some 1,333 units or 4.3 per cent less than 2005's 31,056 units - and 40.1 per cent lower than the transaction volume of 49,618 seen in 1998 - according to data provided by property firm ERA. ERA said it compiled the data provided by HDB over the years. While those in the industry attributed the drop in transaction volume to a few reasons, one chief cause has to be the small increases in prices of HDB resale flats over the past few years.

This means that owners are sitting on flats which they can't sell for a profit.

The HDB resale price index released yesterday shows that prices climbed one per cent in the fourth quarter of 2006, and some 2 per cent over the whole year. But the index is still lower than it was throughout 1996, 1997, 2000 and 2004, as well as during certain quarters in 1998, 1999, 2003 and 2005.

'They (HDB flat owners) purchased the flats at higher than today's prices,' said Mohamed Ismail, chief executive of property firm PropNex.

Another reason, said ERA assistant vice-president Eugene Lim, could be the condominium launches targeting the mass market seen in the second half of 2006. 'According to the Urban Redevelopment Authority's statistics, there were 2,936 new sale transactions in the 'Outside Central Region' in 2006, compared with 2,363 units in 2005 and 2,179 in 2004,' said Mr Lim. Upgraders could be buying these entry-level condominium apartments rather than bigger HDB flats.

Also contributing to the low resale flat volume are HDB's continued efforts to clear its unsold stock via the Walk-in-Selection programme, its Build-To-Order programme, and the successful launch of the Design, Build & Sell Scheme by private developers. More such launches are expected in the near future. Some HDB homeowners are doing better than others, however. Chris Koh, director of Dennis Wee Properties, said that some flats in the premium estates and those located near amenities are selling for $5,000-$10,000 above their valuations.

However, at less popular locations, sellers are having trouble moving their units at valuation prices, and at times are selling their homes for $5,000-$10,000 below the valuation price.

Property firms expect the low volume of resale transactions to continue in 2007 as prices continue its slow climb. PropNex's Mr Ismail predicts that resale volume will fall to 28,000 while ERA's Mr Lim is slightly more bullish, expecting it to hit between 29,000-30,000.

For the HDB resale price index, market watchers say it could increase by about one per cent each quarter in 2007, ending the year about 4 per cent up.