HDB resale flat prices surge to record high

Resale prices of HDB homes up 1.4% in Q2

Posted: 24 July 2009 1440 hrs

SINGAPORE: The resale prices of HDB flats rose by 1.4 per cent in the second quarter of 2009, higher than an initial estimate of a 1.2 per cent increase made earlier this month.

This comes after a slight drop of 0.8 per cent in the three months ending March.

Resale transactions also increased, jumping from 6,400 cases in the first quarter to 10,000 cases in the second quarter.

The median cash-over-valuation (COV) amount among all resale transactions continued its declining trend.

COV fell to S$3,000 in the second quarter, down S$1,000 from the first quarter.

HDB flats which sold above valuation accounted for 57 per cent of all resale transactions in the second quarter, down from 62 per cent in the previous quarter.

HDB also announced plans to launch 6,000 new Build-to-Order flats over the next six months, of which some 2,400 units will be 3-room or smaller apartments.

The bulk of the new flats will be in Punggol.

In the HDB rental market, rents for 3-room, 4-room and executive flats fell by S$100, but remained the same for 2-room and 5-room units.

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Published July 25, 2009

HDB resale flat prices surge to record high

Some industry watchers are predicting further upside for the year

By EMILYN YAP


THE HDB resale market seems to be chugging along nicely despite the recession. Soaring demand for resale flats sent prices to a record high in the second quarter, and some industry watchers are predicting further upside for the year.

Data from the Housing and Development Board yesterday showed the resale price index rising 1.4 per cent from the previous quarter to 140.2 in Q2. This is the highest level seen since 1990.

The increase surpassed HDB's flash estimate of a 1.2 per cent rise. It also reversed a 0.8 per cent fall in Q1 - the first slide after nine straight quarters of growth. The price dip in Q1 now seems like a 'statistical blip', said property consultant Nicholas Mak.

Executive flats saw the biggest percentage rise in median resale prices, up 2.2 per cent from a quarter ago to $455,000.

Strong interest in resale flats helped sustain the market. Buyers and sellers filed 10,184 resale applications in Q2 - swelling 58 per cent from Q1 and 31 per cent from a year ago. According to HDB, the quarterly resale registration volume last crossed the 10,000-mark more than four years ago - it was 11,562 in Q4, 2004.

Most of the 10,184 applications in Q2 were for four-room flats, followed by three-roomers and then five-roomers.

However, applications for executive flats showed the greatest increase, doubling from a quarter ago to 753 in Q2. Those for five-room flats also jumped 80 per cent to 2,713. The sharp surge in resale activity involving larger flats suggests that there were more owners who sold their flats to buy private homes, said Mr Mak.

Market analysts have flagged HDB upgraders as a significant group of buyers who revived the private property market. Many went for units in mass-market projects such as Mi Casa and Double Bay Residences.

C&H Realty managing director Albert Lu pointed out that owners of smaller flats are also moving to larger flats. Prices of five-room and executive flats have languished in the last few quarters, making the move more attractive, he said.

Upgrading activity aside, the inflow of permanent residents (PRs) also contributed to demand for resale flats. HSR Property Group chief operating officer Dennis Yong observed that his firm has up to 10 per cent more resale transactions involving PRs in the last few months, and many of them are from China and India.

Buyers remained unwilling to pay high premiums for HDB flats. The median cash-over-valuation (COV) was $3,000 across all flat types in Q2, down slightly from $4,000 in Q1. Notably, most five-room and executive flats were still unable to command any COV.

In a way, the low COV sustained demand for HDB resale flats, said PropNex CEO Mohamed Ismail. 'As the demand is strengthening quickly, sellers are expected to demand a higher COV.' Mr Ismail expects the resale price index to gain around 3 per cent to 145 points by the end of the year. C&H Realty's Mr Lu also projects a 2-3 per cent increase in resale prices.

Just a few months ago, property consultants had feared that HDB resale prices would drop as much as 10 per cent for the whole year. Signs of a stabilising economy and improved sentiment in the property market seem to have soothed nerves.

Statistics from the Urban Redevelopment Authority yesterday also painted a more calming picture. While prices in the residential, commercial and industrial sectors still fell in Q2, the declines were smaller than a quarter ago.

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July 25, 2009 Saturday

HDB prices up 1.4 per cent

Decline in upfront cash required makes resale flats more affordable

By Jessica Cheam


PRICES of Housing Board flats rose 1.4 per cent in the second quarter to a record high, reversing a first-quarter dip of 0.8 per cent.

The number of transactions also soared - up 58 per cent in the three months to June 30 - as confidence grew and buyers rushed back into the market.

One reason for the HDB market's resilience amid testing economic times is the decline in the amount of cash required upfront to buy a resale flat. This amount is called cash-over-valuation (COV) and is falling or at least stable across all flat types.

Fresh figures released by HDB yesterday showed that the median COV for all flat types fell to just $3,000 in the second quarter compared with $4,000 in the first quarter. The median COV is at a relatively low $5,000 for three- and four-roomers and stayed at zero for five-room and executive flats, for both the first and second quarter.

Median COV for two-roomers declined from $7,000 in the first quarter to $6,000 in the second.

This is a marked change from the 2007 property boom, when median COV hit $22,000 in the fourth quarter, pricing many first-time buyers out of the resale market.

COV has come down due to valuations of resale flats catching up, said ERA Asia Pacific associate director Eugene Lim.

So even though values of HDB resale flats are high, they have become more affordable as buyers can get bank loans for the purchase and do not have to fork out high amounts of cash.

Sales activity was robust in the quarter with transactions up to 10,184 compared with 6,446 in the first quarter. They were also up 31 per cent from the 7,763 units sold in the same period last year.

Sales of five-roomers rose 80 per cent - 2,713 were moved - over the first quarter while executive flat transactions surged 100 per cent to 753. Four-room flat sales climbed from 2,488 to 3,787.

PropNex chief executive Mohamed Ismail noted that sales of the bigger flat types had suffered in the three quarters up to the end of March amid growing concerns about Singapore's worst recession.

'These numbers are a clear sign that people's market confidence is growing,' he said, adding that feedback on the ground indicated that demand in mature estates far exceeds supply.

The sales of larger flat types also explain the strong demand from HDB upgraders who sold their flats to buy private homes, said property veteran Nicholas Mak.

Private home sales, especially in mass-market suburban condos, have enjoyed brisk sales since February.

Meanwhile, HDB rents were stable. Median rents for two-room and five-room flats for the second quarter were unchanged but fell by $100 for three-room, four-room and executive flats.

HDB plans to launch a further 6,000 units under its build-to-order scheme over the next six months. About 2,400 will be three-room and smaller flats. The bulk of new flat supply will be in Punggol. So far, HDB has launched about 2,000 new flats in Punggol, Sengkang and Woodlands this year.

Analysts predict that HDB flat prices will enjoy modest increases as confidence continues to grow.

But the falling COV for large flats could indicate limited upside for prices of these flat types, said Mr Mak. 'This could also limit the HDB upgraders' demand for private property in the short term,' he said.

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