http://www.straitstimes.com/PrimeNew...ry_760266.html

Resale flat deals lowest in a decade

Published on Jan 28, 2012

By Jessica Cheam, Housing Correspondent


FEWER people sold their flats last year than at any time over the past decade, Housing Board figures revealed yesterday.

Tighter ownership rules and an uncertain economic outlook could be limiting the number of owners willing to put their homes on the market, analysts say.

Meanwhile, the bumper supply of new flats launched by HDB may be reducing the demand for resale units. Around 24,600 changed hands last year, 24 per cent fewer than in 2010.

The HDB told The Straits Times it was the lowest figure for the past decade. About 30,000 are sold in an average year.

HDB said reasons for the drop could include rising resale flat prices, a greater supply of new units, and measures to cool the market, such as tightened ownership rules.

Mr Eugene Lim, key executive officer at ERA Realty, said that demand for resale flats has eased since the HDB started increasing the supply of build-to-order units.

He added that it could fall further if HDB changes balloting rules to make it easier for second-time buyers to own new flats, something that National Development Minister Khaw Boon Wan hinted at recently. 'When that happens, demand for resale flats will come only from families that have immediate housing needs,' said Mr Lim.

These could include people downgrading from private properties, singles, and permanent residents who do not qualify to buy new flats.

Even though fewer properties are changing hands, resale flat prices continued to rise.

However, yesterday's data showed that the climb appears to be slowing. It was 1.7 per cent between October and December, down from 3.8 per cent in the previous quarter, bringing the total price gain for last year to 10.7 per cent.

Analysts say the cost of buying a resale flat could actually fall this year, for the first time since 2009.

'Price stabilisation will set in and possibly even a price correction of not more than 3 per cent in the HDB resale market,' said PropNex Realty chief executive Mohamed Ismail.

There are also signs that the amount of cash that buyers are forking out over and above the value of the flat is beginning to stabilise.

The HDB has stopped providing overall cash-over-valuation (COV) figures for resale flats. But PropNex's Mr Ismail said that based on the firm's January resale deals, median COV across the flat types dipped by between $3,000 and $6,000.

DTZ's head of Asia-Pacific research Chua Chor Hoon said that in general, median COVs fell across the island in the fourth quarter, except for five-room and executive units in a handful of towns.

'This is a harbinger of a weaker HDB resale market in 2012 as it shows buyers have become less aggressive in offering high COVs,' she said.

Lower COVs will also make it harder for people upgrading from HDB flats to move into the private market, she added. This is because they will not have as much cash to spend on upgrading or buying pricier condominium apartments.

Yesterday's data also showed that about 40,000 HDB flats were approved for subletting between October and December, up from 39,100 in the three months before. HDB will offer 4,110 new flats across mature and non-mature estates in March.