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Thread: HDB resale prices show steady growth, up 2.85% in second quarter

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    Default HDB resale prices show steady growth, up 2.85% in second quarter

    July 3, 2007

    HDB resale prices show steady growth, up 2.85% in second quarter

    Demand is picking up due largely to better economy and upbeat sentiment: Analysts

    By Joyce Teo, Property Correspondent


    THERE has barely been a pulse in the public housing scene for the past couple of years but the beast is stirring and showing distinct signs of life.

    It is certainly attracting more attention, thanks to some cashed-up collective-sale sellers picking up Housing Board (HDB) flats at mind-boggling prices.

    Fortunately, the action is not just limited to those infrequent deals. Demand has largely picked up with a better economy and greater market confidence, said property experts.

    It is all a far cry from the grim days of about three years ago when HDB prices were artificially inflated by rampant cash-back arrangements.

    These illegal deals involved the seller declaring a higher price in order to secure a bigger loan for the buyer and so facilitating the sale. Rules were introduced in April 2005 to curb these deals.

    Preliminary government estimates yesterday showed a 2.85 per cent rise in HDB resale flat prices in the second quarter, up from 1.25 per cent in the first.

    Experts are forecasting continued price growth in line with Singapore's positive economic outlook.

    The HDB resale market is experiencing a 'filter-down effect' from the strong private property market, said ERA Singapore's assistant vice-president, Mr Eugene Lim. 'Homebuyers who are priced out of the private property market will be looking at the larger flat types such as the five-room and executive flats.'

    The asking prices of these larger flats have already risen to as much as $50,000 to $150,000 above valuation, he said.

    In the past, weak demand meant that many flats, particularly the larger ones, were selling at levels below valuation.

    Things have perked up since with units now largely selling above valuation, and some flats in the outlying areas going for about $10,000 to $30,000 above valuation, consultants said.

    Some sellers are asking for very high prices, hoping to land a windfall similar to those two owners who hit the headlines last month after reaping prices of $675,000 and $720,000 for their conveniently-located flats.

    But these deals are not everyday occurrences, said Mr Lim, and sellers must be realistic as the typical flat buyer depends a lot on bank financing.

    If the resale flat is not a standout - that includes having unblocked panoramic views and a snazzy decor - rational buyers would not pay a high premium for a 99-year property, he said.

    And only flats in certain areas such as Tiong Bahru and Redhill, which are near collective-sale sites, appear to be attracting higher prices, said PropNex chief executive Mohamed Ismail.

    He noted that not all sellers in collective sales are taking the HDB route; some are buying into ageing suburban condominiums which offer facilities like a pool.

    He described the price rise in the HDB resale market as 'fair' as prices had been lagging behind those of private properties.

    For the full year, HDB resale prices may rise by about 10 per cent, said property experts.

    A HDB market with steady growth would help support the private property market, added Savills Singapore's director of marketing and business development, Mr Ku Swee Yong.

    The official figures for the second quarter will be released at the end of the month.

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    Default Re: HDB resale prices show steady growth, up 2.85% in second quarter

    Hoist for the lower-end market

    By Joseph Yadao, TODAY | Posted: 03 July 2007 1016 hrs


    Further evidence that the rally in the property market is broadening into the lower-end mass market came yesterday with the resale price index of HDB flats reaching 107.9 points in the second quarter, up 2.9 per cent from three months before.

    The preliminary data sparked optimism that prices will continue to rise, with some forecasting a 10-per-cent gain this year for this sector, against the Government's earlier 5-per-cent forecast. "The overall price increase is largely expected, as the resale HDB market is experiencing a filter-down effect caused in part by the private property market," ERA Singapore said in a statement.

    Mr Eugene Lim, ERA Singapore's assistant vice-president, said price increases have been seen in "Bukit Merah, Queenstown and other mature estates near MRTs. The rest of the market is rising, but not as fast as these areas."

    HDB flats in mature estates closer to the city area have been going for prices $50,000 to $80,000 above market valuations, said Dennis Wee Group vice-president Chris Koh. The resale price index's 2.9 per cent quarter-on-quarter increase compares with a 1.3-per-cent rise in the January-to-March period, and the almost-1-per-cent gain in the fourth quarter last year. From a year earlier, resale HDB prices were nearly 5 per cent higher.

    "HDB prices were expected to increase 5 per cent for 2007. Because of the strong demand and positive economy, we've reached a 4-per-cent increase in the first half of this year," said PropNex chief executive officer Mohamed Ismail. He expects the HDB resale market to rise by 10 per cent this year, pushing it above the previous peak of 1999.

    According to him, two groups of buyers are driving the HDB resale market. Those who profited last year from en bloc sales "have cash on hand, (but) can't afford a similar unit in the same area, so they move away from the city or downgrade. They can pay in cash because they have at least $800,000 to play with," Mr Koh said. Then, there are older buyers, he said "planning for retirement" who are selling off their private properties to boost retirement funds. TODAY/rose

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