HDB Resale Price Index falls for first time since 1Q 2009

[reporter2]

http://www.businesstimes.com.sg/brea...-2009-20131001

Published October 01, 2013

HDB Resale Price Index falls for first time since 1Q 2009

By Angela Tan [email protected]


HDB's flash estimate of the third quarter 2013 Resale Price Index (RPI) is 205.1, a decline of 0.7 per cent over the second quarter 2013.

This is the first decline since the first quarter of 2009.

HDB said on Tuesday that it was on track to launch 25,000 Build-To-Order (BTO) flats in 2013.

To-date, HDB had offered 20,161 flats under the BTO exercises and 4,455 balance flats.

In Nov 2013, HDB will offer about 4,950 BTO flats in Bukit Batok, Hougang, Jurong West, Sembawang and Woodlands. Concurrently, an additional supply of about 3,000 flats will be offered in a Sale of Balance Flats exercise.

[thomastansb]

Good... Singaporeans should be happy that HDB prices are dropping.

[minority]

The interesting part is private still go up 0.3%. so its sideways?

anyway good for the singaporean. they can stay in HDB longer siting on something that will be sideways in value. Good.

[reporter2]

http://www.businesstimes.com.sg/prem...-seen-20131002

Published October 02, 2013

HDB resale prices slip in Q3, further declines seen

Flash data from HDB shows 0.7% fall in index, first decline in over 4 years

By ong chor hao [email protected]


[SINGAPORE] Some analysts have put further price declines for resale Housing and Development Board (HDB) flats on the table, after the resale price index (RPI) fell for the first time in more than four years in the third quarter of the year.

Flash estimates from HDB yesterday put the index at 205.1 in Q3, a 0.7 per cent drop from the previous quarter. This is the first time that the RPI has fallen since the first quarter of 2009, at the outset of the global financial crisis, when it lost 0.8 per cent.

Consultants were not surprised by the drop, as a combination of cooling measures, and new or tweaked government regulations over the year took their toll.

"The decline was to happen sooner or later," said Eugene Lim, key executive officer at ERA Realty, as the resale market continues to show signs of stabilising.

Said Nicholas Mak, executive director for research and consultancy at SLP International: "This contraction is partly contributed by the government's efforts to cool the public housing market, which resulted in the decline of ... cash-over-valuation (COV) in recent transactions, especially for larger HDB flats."

The COV cash premium took a hard dive in the third quarter, figures from estate agencies show. On a quarter-on-quarter basis, ERA said overall median COVs fell 33.3 per cent to $18,000, with the biggest absolute falls in terms of quantum coming from executive flats.

The $18,000 figure overall tallies with PropNex Realty's data, which noted this was a 40 per cent drop from the $32,000 median COV at the start of the year.

Resale volumes did not fare any better. ERA data showed that the number of transactions fell 36.7 per cent quarter-on-quarter to 3,193 units in Q3, with the largest decline of 41.9 per cent coming from the executive flat segment.

Demand in Q3 was hit by factors such as a tighter Mortgage Servicing Ratio (MSR) on HDB housing loans and a Total Debt Servicing Ratio (TDSR) framework introduced in June.

"Due to a cut off in access to large loans and hence 'easy money', there are very few buyers looking at investing in large or well-located flats," said Ong Kah Seng, director at R'ST Research.

A recently-introduced three-year wait for new Permanent Residents (PRs) before they can buy a resale flat and the loosening of regulations for singles to buy BTO flats has also diverted demand away from the secondary market.

On the supply side, the pipeline remains ample, with HDB on track to launch 25,000 Build-to-Order (BTO) flats this year. Next month, it will offer close to 8,000 units under BTO and Sale of Balance Flats exercises.

Mohd Ismail, CEO of PropNex Realty, said the abundant supply may have created a "re-balancing effect" in the resale market, gradually softening price growth to a more sustainable level.

Sellers are now also less willing to cash out without a sufficiently attractive offer, as they may not have enough to buy another flat with similar attributes due to the tighter MSR terms, said ERA's Mr Lim.

He expects resale transactions to hit a historical low at below 20,000 units this year, and that COVs will fall to around $10,000 by the end of the year.

"With lower COVs, lower resale transaction prices are expected. As we see more lower priced transactions, flat valuations will also come down."

Analysts generally did not see price trends picking up in Q4, as sales are traditionally slower over the festive period, and as new property measures introduced in late August work their way through.

For the year, resale flat price growth could be anywhere from minus 1 per cent to 2 per cent, they predicted. PropNex's Mr Ismail believes resale prices could fall as much as 3 to 5 per cent next year.

R'ST's Mr Ong feels buying interest could pick up in the second half of 2014, when an "equilibrium point" is reached where prices and COVs come down to the point of being more affordable.

"Even (if) demand stabilises or slightly recovers from H2 2014, sellers cannot easily raise prices, since the MSR cap essentially restricts buyers from borrowing excessively to finance the flat," he said.

[reporter2]

http://www.straitstimes.com/premium/...-2009-20131002

1st fall in resale flat prices since 2009

Published on Oct 02, 2013

By Daryl Chin Property Correspondent


RESALE HDB flat prices have fallen for the first time in more than four years as tighter loan rules and ownership restrictions take their toll on the market.

According to estimates by the Housing Board released yesterday, the HDB resale price index fell 0.7 per cent in the typically strong third quarter.

This is the first quarterly dip since the first quarter of 2009, which saw Singapore enter a deep recession as a result of the global financial crisis.

It also occurs as HDB resale volumes fall to a 16-year low.

Stricter controls on home loans are a key factor in the slide, said analysts, coupled with the rising attractiveness of new Build-To-Order (BTO) flats which have siphoned demand away from the HDB open market.

"This reversal of price growth is expected, given the slew of measures which impacted affordability," said PropNex chief executive Mohamed Ismail.

The proportion of a buyer's gross monthly income that can be used to service mortgages for HDB resale flats has now been capped at 30 per cent.

Maximum tenures for loans taken from HDB and private banks were also reduced to 25 and 30 years respectively. Another new rule limited the total debt obligations of buyers to 60 per cent of their gross monthly income.

All these have forced buyers to exercise prudence in their home purchases, said experts.

"Due to a cut-off in access to large loans or 'easy money', there are very few buyers looking at investing in large or well-located flats," said R'ST Research director Ong Kah Seng. "Previously, many buyers were interested in getting a larger flat where they could sublet spare rooms to defray monthly loan repayments."

The pool of buyers in the resale market is also shrinking, said analysts.

More buyers are being enticed by a ramped-up supply of new BTO flats in attractive locations, especially with the introduction of bigger grants for middle- income earners.

Singles have also been allowed to apply for two-room BTO flats since July. And permanent resident households now have to wait three years from the start of their residency before buying a resale flat.

Overall cash premiums paid above a flat's valuation have dropped from $35,000 in January to $18,000 now, with larger flats the hardest hit.

This year's resale volume is the lowest since 1997, and experts see the downward trend persisting into the fourth quarter, which normally sees less activity.

The slowdown was also reflected in the private property market, which saw a smaller 0.4 per cent rise in prices than in the previous quarter.

Suburban home prices rose 2.1 per cent but the other regions registered price declines.

[email protected]