http://www.straitstimes.com/premium/...ecord-20121002
HDB resale prices up 2 per cent to new record
Flash estimates for third quarter also show private property prices up 0.5%
Published on Oct 02, 2012
By Daryl Chin
PRICES of resale Housing Board (HDB) flats are estimated to have risen 2 per cent in the third quarter to hit another record, even as the Government ramped up the supply of new units to rein in prices.
The increases seem to be accelerating, according to preliminary data released yesterday by HDB. Resale prices grew 0.6 per cent in the first quarter and 1.3 per cent in the second.
Meanwhile, private property prices also climbed to a new record, though at a more muted pace. Flash data from the Urban Redevelopment Authority put the expected increase at 0.5 per cent in the third quarter, a shade higher than the 0.4 per cent in the preceding quarter.
This was driven mostly by increases in the prices of city fringe and suburban apartments.
Commenting on the acceleration in price rises for both resale flats and private homes, PropNex chief executive Mohamed Ismail said: "This shows real demand. Buyers are confident about the property market, given low interest rates and the relatively positive outlook of the economy."
Analysts reckoned that the HDB resale market will be the busier of the two, and transactions will top the 7,011 logged in the second quarter of this year.
Mr Nicholas Mak of property consultancy SLP International said the faster price increase in resale HDB flats is linked to pricier transactions of larger HDB flats in mature estates.
These include Bukit Merah, Clementi and Queenstown, where a $1 million five-room flat recently changed hands. Based on his data, prices for five-room flats in these estates have grown about 5 per cent within three months.
Mr Mak attributes this partly to the paucity of launches of private mass-market developments in these areas, which have made buyers turn to the HDB resale market instead.
Mr Eugene Lim, key executive officer at ERA Realty, said buyers were also lured into the HDB resale market by a dip in cash premiums paid above a flat's valuation at the start of the year.
According to agency estimates, overall median cash-over-valuation (COV) was $26,000 in the first half of this year, down from about $34,000 in the fourth quarter last year, making resale flats more affordable. The median figure hovers at $30,000 now.
As for who has been showing strong interest in resale HDB flats, Dennis Wee Group spokesman Lee Sze Teck said that permanent residents and second-time HDB flat buyers constitute the bulk of buyers. They are followed by singles and private property downgraders. "First-timers such as newly married couples are still going for new BTO (Build-to-Order) projects," he noted.
The Government has acted to meet the demand for HDB flats by building more flats and providing more location options in regular sales launches.
HDB recently upped its supply of BTO flats this year to a record 27,000 units, spread out in both mature and non-mature estates.
"The increased supply is important in calming the market but the full effects will be seen only when the units are built in a few years' time," said Mr Ismail.
In the meantime, Mr Lim said price acceleration in the HDB resale market, if unabated, might prompt the Government to introduce more cooling measures.
"There is a cause for concern as HDB resale prices have still increased by 3.9 per cent in the first nine months of this year, rising faster than the expected economic growth of about 3 per cent."
In comparison, the private property market has gone up only 0.8 per cent in the same period.
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