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Thread: HDB resale price growth in Q2 lowest in over four years

  1. #1
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    Default HDB resale price growth in Q2 lowest in over four years

    http://www.businesstimes.com.sg/arch...years-20130702

    Published July 02, 2013

    HDB resale price growth in Q2 lowest in over four years

    By ong chor hao


    PRICES of resale Housing & Development Board (HDB) flats grew at their slowest pace in over four years in the second quarter, preliminary data show, as both demand and supply-side factors bit.

    Flash estimates of HDB's resale price index (RPI) released yesterday showed a 0.5 per cent increase over the first quarter, the lowest quarterly growth since Q1 2009.

    "(The) HDB market continues to show signs of stabilising," said Eugene Lim, key executive officer at ERA Realty.

    Analysts cited two main factors for the deceleration: cooling measures introduced in January and an abundance of new flats.

    The Mortgage Servicing Ratio (MSR) for HDB flats was cut in January to 35 per cent of a borrower's gross monthly income for loans from HDB, from 40 per cent previously. As for loans from financial institutions, the MSR was capped at 30 per cent.

    "This reduces the purchasing power of some HDB homebuyers and led to the subsequent deflating of the price growth momentum," said Nicholas Mak, head of research and consultancy at SLP International.

    ERA's Mr Lim said the diminished buying power also pushed down the cash-over-valuation (COV), with the median for the cash premium at $28,000 in Q2 - 15 per cent lower than the $33,000 in Q1.

    He expects about 5,000 resale flats to be sold in the second quarter, up from a historical low of 4,335 units in the previous quarter. For 2013, about 20,000 resale units could be sold, down 20 per cent from last year.

    Resale price growth in Q2 was also held down by a glut of supply.

    Said Mohamed Ismail, CEO of PropNex Realty: "Demand has also been sapped by the release of new BTO (Build-to-Order) flats. As a result, the resale market is effectively serving only the upgraders and permanent residents now."

    HDB plans to launch 25,000 BTO flats this year. SLP's Mr Mak noted this is more than the 10-year average number of newly formed families of 18,300 new marriages.

    About 15,200 HDB units have already been offered under the BTO and Sale of Balance Flats (SBF) exercises in the first half of the year. This month, HDB will offer 3,800 more BTO flats.

    Analysts expect resale flat prices will grow by 2 to 6 per cent in 2013, lower than the 6.6 per cent increase last year. They felt it was unlikely that cooling measures would be lifted, but said demand could be sustained by factors such as falling COVs and that residences in good locations are still attractive.

    Ong Kah Seng, director at R'ST Research, reckons prices are "likely to stagnate" rather than fall sharply for the rest of the year.

    He expects the main sellers to be those who stretched their finances and bought a private home in recent years, who will "cash out from their HDB flat to ease the financing burden when the private property is completed".

    Yesterday also saw tighter criteria announced in January for buying HDB flats with short remaining leases kick in.

    HDB housing loans will no longer be granted for purchases of flats with less than 20 years' lease left. For flats with 20 to 59 years' lease remaining, a loan will be granted if the leftover tenure can cover the buyer until at least the age of 80.

    Buyers can also no longer use their Central Provident Fund (CPF) if they want to purchase HDB flats with under 30 years' lease left. For flats with remaining leases of between 30 and 59 years, usage of CPF will be allowed if the lease left can cover the buyer until at least 80 years of age.

    In line with the tighter terms for CPF usage for home purchases, HDB yesterday also made housing grants ineligible to those who buy a flat with less than 30 years' lease left.

    Any talk of impact on home prices is "hypothetical" for now, said SLP's Mr Mak, as there are no flats with less than 30 years' lease left currently.

    There is also the mitigating effect of Selective En bloc Redevelopment Scheme (Sers), where older estates are redeveloped and occupiers relocated to a new spot, analysts said.

    HDB said yesterday that its oldest flat has 52 years left on its lease. Flats with under 60 years' lease left make up just 4.3 per cent, or 37,800, of the 870,600 sold units managed by HDB as at last December.

    But there should be some downside on prices for flats with less than 60 years' tenure in the months to come with the latest CPF restrictions, Mr Lim from ERA said.

  2. #2
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    everybody kena tied by their hands and legs of course price wont move up
    In the final analysis.....its NOT whether you have a diploma,degree,masters OR PHD....its whether you have a HDB/PC/EC or LANDED...

  3. #3
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    Sell already cannot buy back so ppl would just keep n rent. I have lost count how long I have been renting my hdb.

  4. #4
    xebay11 is offline New Launch Project Specialist
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    Quote Originally Posted by Regulators
    Sell already cannot buy back so ppl would just keep n rent. I have lost count how long I have been renting my hdb.
    Yes and that is the reason why prices increase because everyone just rents it out.

  5. #5
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    yes, with a tightening of immigration and flood of BTOs ... 2013 will be the year where HDB resale price will only match inflation rate

    for the next few years, price will grow at about 3-4% matching inflation rate too



    just rent out
    Ride at your own risk !!!

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