HDB resale prices inch up but demand falls by 24%
http://www.straitstimes.com/Prime%2B...ry_330017.html
January 24, 2009 Saturday
HDB resale prices inch up but demand falls by 24%
PRICES of Housing Board resale flats continue to defy the gloom, although the pace of increase is easing off a little.
Data from the last three months of last year show that prices inched up 1.4 per cent, following a robust surge of 4.2 per cent in the third quarter and 4.5 per cent in the second.
Valuations are still rising but not as much as before, said C&H Realty managing director Albert Lu.
HDB resale prices are supported by a relatively strong base of potential buyers, particularly for three- to four-room flats, said ERA Asia Pacific's associate director, Mr Eugene Lim.
Experts say the impact of the gloomy economic outlook has seeped into the HDB market, reflected in the significant drop in the median cash-over-valuation portion for resale deals.
It fell from $19,000 in the third quarter to $15,000 in the fourth - a drop of 21 per cent - and back to levels last seen around the third quarter of 2007.
Demand was also down: Fourth-quarter resale deals fell 24 per cent to 6,186 transactions, while the number of resale deals for the whole year dipped 3 per cent from the figure in 2007.
Despite the relatively large fourth-quarter drop, property experts expect fairly strong demand as the continued economic slowdown will bring new buyers.
'If the economy does not improve, there will be more downgraders and increasingly cautious home buyers in the wake of retrenchments and tighter budgeting,' said PropNex chief executive Mohamed Ismail.
If the recession drags on, prices may fall, albeit marginally, said ERA's Mr Lim, although C&H Realty's Mr Lu said they could just level off.
'This is about the peak for HDB (resale) prices, but they won't fall immediately because there is demand and valuations are still holding,' he said.
Median sub-let rents remained steady and owners are still keen to rent out their homes.
The total pool of HDB flats approved for sub-letting grew from 21,400 units in the third quarter to about 22,200 units in the fourth.
But demand has been hit. While sub-letting deals for the whole of last year grew by 20 per cent, the number of such deals for the fourth quarter fell 7 per cent to 3,690.
JOYCE TEO
Public housing market slows
http://www.todayonline.com/articles/298580.asp
Weekend, January 24, 2009
Public housing market slows
Surprise drop of 24% inQ4 volume, but analysts say HDB demand intact
Cheow Xin Yi
[email protected]
IT WAS a drop that caught most analysts by surprise — raising fears of a demand downtrend amid a souring economy, even in the traditionally resilient public housing market.
After a strong showing in the first three quarters, the number of Housing and Development Board (HDB) resale flat transactions plunged 24 per cent in the last quarter of 2008 to 6,186. That brought the total transaction volume last year to 28,419 — or 3 per cent lower than in 2007.
Prices, on the other hand, have continued to climb, but at a much slower pace. he HDB resale price index rose 1.4 per cent in the fourth quarter, down from 4.2 per cent in the third quarter.
The widening gap in price expectations between buyers and sellers in a weakening market is one of the reasons for the decline in volume, said ERA’s Asia Pacific associate director Eugene Lim, who noted the longer time needed to negotiate a deal.
“Opportunistic buyers would offer below valuation ... while sellers still want to have as high a cash-over-valuation (COV) as possible. So the haggling will take time,” he said.
Already, the overall median COV values have decreased about $4,000 — or about21 per cent — to $15,000 in the fourth quarter. In fact, going by HDB statistics, a buyer of a five-room flat in Ang Mo Kio would only need to pay a median COV of $7,000 in the last three months, compared to $20,000 in the previous quarter.
But Ms Carol Loo, a 26-year-old prospective buyer, is biding her time and hoping for a good bargain. The insurance agent, who is getting married in August and plans to buy a resale flat in June, is confident that prices will drop further.
“Already, some agents are willing to drop the COV. A lot of people are affected by the economic crisis. Some owners will find that they can’t finance their mortgages and ... need to get it off their plate really soon. When it’s a fire sale, they are usually willing to go down below valuation,” said Ms Loo, who is looking for a flat in Pasir Ris.
Another reason for the low volume, said PropNex chief executive Mohamed Ismail, could be the lack of units put on the market by HDB upgraders due to the dearth of private condo launches in the fourth quarter.
While analysts say the fallout from the global financial crisis and economic downturn hurt buying sentiment in the fourth quarter, many think the HDB market will be largely resilient.
“HDB is the most affordable housing, so the base is there. It’s just a difference in expectations, that’s why sales have slowed. But support in terms of buyer interest is still there,” said ERA’s Mr Lim.
In fact, Dennis Wee Group’s vice-president, Mr Chris Koh, said the expected deterioration in economic conditions could ironically spur demand for HDB flats from private condo downgraders.
The Government’s move to increase the additional CPF housing grant for first-time HDB buyers to $40,000 from $30,000 in tandem with the raised household income ceiling to $5,000 from $4,000 will encourage low to middle-income young couples to buy their first flat through the resale market as well, said Mr Ismail.
