HDB resale flat prices climb to historical high in 2012

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http://www.businesstimes.com.sg/arch...-2012-20130103

Published January 03, 2013

HDB resale flat prices climb to historical high in 2012

By ong chor hao


[SINGAPORE] Resale flat prices grew at their strongest pace in five quarters to reach a historical high, as the Government plans even more Built-to-Order (BTO) flats this year.

The latest flash estimate of the Resale Price Index (RPI) from the Housing and Development Board (HDB) yesterday showed that prices rose 2.5 per cent to 202.9 in the fourth quarter of 2012 from the previous quarter.

This was the fastest rate since a 3.8 per cent increase in Q3 of 2011.

For 2012 on a whole, prices for resale homes were 6.6 per cent higher than the year before. This was down from 10.7 per cent in 2011 and 14.1 per cent in 2010.

Also on Wednesday, the HDB said it will increase its offering of BTO flats this year to at least 23,000, up from at least 20,000 announced earlier.

The first batch of 3,346 homes will be put up for sale this month and will be in Choa Chu Kang, Yishun, Hougang, Tampines, Kallang Whampoa and Ang Mo Kio.

Lee Sze Teck, senior manager for training, research and consultancy at DWG, believes the revision in supply by HDB could foreshadow policy changes.

Analysts said both demand and supply factors continued to be at work in the resale market last year.

Eugene Lim, key executive officer at ERA Realty, noted that resale prices rose despite a record 34,237 new flats being offered last year, comprising 27,084 BTO units and 7,153 flats under the Sales of Balance Flats exercise.

"This is because the HDB's new flat programme is heavily skewed in favour of first-time home buyers," he said.

This means first-timers with immediate housing needs, singles, permanent residents and second-timers continued to drive demand for resale flats. Under current rules, between 85 and 95 per cent of BTO flats are set aside for first-timers.

DWG's Mr Lee highlighted a "gradual depletion" of available resale flats after several measures introduced in the last few years.

He cited the extension of the Minimum Occupancy Period, the increase in allocation of BTO flats and Executive Condominiums to second-timers and the requirement for private home owners to sell their private residences if they want to stay in their HDB flats.

Another reason, said Nicholas Mak, executive director of research and consultancy at SLP International, was buyers bringing forward purchases for fear of higher prices in the future.

He also pointed to a "stubbornly high" cash- over-valuation (COV). This cash premium stood at a median of $34,000 in Q4 of 2012, figures from the Singapore Real Estate Exchange showed, $2,000 shy of the record set in 2011.

To address this, ERA's Mr Lim suggested that transaction procedures for resale flats fall in line with private practices.

Currently, the practice for resale flats is for buyers to first get a valuation for the unit and then negotiate the COV to get the final price.

Mr Lim feels this puts the focus on the COV and not the market value of the flat, and thinks transactions should look at just one single price which incorporates the COV.

"The practice of negotiating prices for HDB flats should not differ from that of private properties," he said, noting that "COVs" from private sales are not made public.

That said, market watchers acknowledged the moderation in resale prices last year and predicted prices to go up between 4 and 8 per cent for 2013.

Mohamed Ismail, CEO of PropNex Realty, expects resale price growth to stay strong in the first half of 2013 as construction takes time, even as the HDB is ramping up supply.

"The impact of this increased supply will only be felt in the second half of this year," he said.

Still, it will take a rude shock before prices drop.

Said ERA's Mr Lim: "In the absence of a recession, property prices are unlikely to dip."

[reporter2]

http://www.straitstimes.com/archive/...arter-20130103

HDB resale prices spike in last quarter

But overall rise for 2012 is lowest in 5 years due to supply of new flats

Published on Jan 03, 2013

By Rachel Chang


PRICES of HDB resale flats unexpectedly accelerated in the last three months of 2012, rising at their fastest pace for the year.

Estimates from the Housing Board yesterday showed prices climbing 2.5per cent in the three months to Dec31, despite the festive period being a traditionally quieter one for property transactions.

This outstripped third-quarter growth of 2per cent, which itself was considerably higher than the second quarter's 1.3per cent.

But the board's numbers also showed that its resale price index rose an overall 6.6 per cent last year, its slowest pace in five years. In 2011, the index went up 10.7per cent, while in 2010, it surged 14 per cent.

This moderation, said analysts, is due to HDB's aggressive injection of new-flat supply. Last year, it rolled out a record-high 27,000 new Build-To-Order (BTO) flats, easing the pent-up demand that has helped resale prices soar 67 per cent in five years.

However, the acceleration of resale prices in the last quarter of 2012 showed that this effect is tapering off for now, said analysts.

The bulk of new flats are reserved for eligible first-time home buyers, and there is a wait of two to three years before they get their keys. With this group largely satisfied by HDB's ramp-up of BTO supply, demand for resale flats is now being sustained by first-time buyers who need to move in immediately, as well as second-timers, permanent residents and singles, said ERA Realty key executive officer Eugene Lim.

The latter three groups have limited or no access to new flats from HDB at present, though National Development Minister Khaw Boon Wan has said that more new flats for second-timers will be made available this year.

He also said that new flats for singles would be made available in some form this year.

A lack of resale flats being put up for sale is also behind the price-rise momentum, said Mr Lee Sze Teck, senior manager for training, research and consultancy at Dennis Wee Group.

Since 2010, when the minimum occupation period was raised to five years to discourage speculation, "there has been a gradual depletion of available resale flats for sale", he noted.

At the same time, another cooling measure forbids private-property owners from buying an HDB flat without selling their private home, while still allowing HDB owners to buy a private property and keep both.

This, coupled with rising rentals commanded by HDB units, made many hold onto their HDB flats to sub-let, said Mr Lee, rather than sell them when they buy another property.

The number of HDB units approved for sub-letting has surged 80 per cent from 24,000 in 2009 to 43,000 as of the third quarter of last year.

This shrinkage in resale-flat supply - sales transactions fell by a quarter to 25,000 in 2011 from 32,000 in 2010 - will likely ease only in two or three years when those waiting for new flats get their keys and release their current units to the resale market, said PropNex Realty chief executive Mohamed Ismail.

"Whatever can be done with the launch of new flats has been done," he added. "Price growth will stay strong for resale flats at least into the first half of 2013."

Last year, a Queenstown executive flat crossed $1 million for the first time, while seven other flats commanded more than $200,000 in cash-over-valuation.

Meanwhile, HDB said it would launch at least 3,000 more new flats this year than originally planned. In total, it will roll out at least 23,000 new flats in the coming 12 months, it added.

A first batch of 3,346 flats in Choa Chu Kang, Yishun, Hougang, Tampines, Kallang Whampoa and Ang Mo Kio will be offered for sale later this month.

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