http://www.businesstimes.com.sg/prem...de-q1-20140402
Published April 02, 2014
Home prices continue slide in Q1
Declines expected to set tone for rest of the year, say industry players
By Lynette Khoo [email protected]
[SINGAPORE] Prices of both private homes and HDB resale flats continued their slide in the first quarter of this year based on the government's flash estimates, and this is expected to set the tone for the rest of this year.
The drop in resale flat prices - by 1.5 per cent, for the third consecutive quarter, according to HDB's Resale Price Index (RPI) - is starting to be seen as holding HDB upgraders back from taking the leap into private property.
But it is still the current cooling measures and more competitive pricing by developers that have been the main drag on private home prices.
URA said yesterday that its private residential property index fell 1.3 per cent islandwide over the first three months, after a 0.9 per cent decline in the fourth quarter. This was in tandem with the decline in sales transactions, with just 1,676 caveats lodged in the first quarter, down from 4,260 a quarter earlier.
"The subdued market in the first three months of 2014 appears to have set the tone for the rest of the year," said Chia Siew Chuin, director of research and advisory at Colliers International. "Overall, private home prices are expected to continue to soften, with the full-year decline possibly in the region of 5-8 per cent."
Alice Tan, head of consultancy and research at Knight Frank, noted that the private homes market is now at an inflexion point in terms of prices.
"The downward fall could persist towards the second half of this year as the property cooling measures and TDSR (total debt servicing ratio) ruling continue to bite market sentiment," she said, pegging an average of 3-4 per cent decline in private home prices for the full year.
Prices of non-landed homes declined across all regions, with those in the core central region (CCR) sliding further for the fourth consecutive quarter - 1.3 per cent, after the 2.1 per cent decline in Q4. In the outside central region (OCR), prices dipped 0.3 per cent, after a one per cent decline in Q4.
Private home prices in the rest of central region (RCR) fell the most in Q1, 2.8 per cent, against a 0.4 per cent rise in the previous quarter, as fewer transactions were made.
Prices of landed homes slipped 0.6 per cent in Q1, after a one per cent decline in Q4.
Loan curbs, including the TDSR, additional buyers' stamp duty and sellers' stamp duty, have hit private home buyers, particularly those who are already highly leveraged or own one or more properties, said ERA Realty key executive officer Eugene Lim.
"Moderating prices in the HDB resale market also diverted buyers' attention away from the private market. Upgraders are unable to sell their HDB flats at a high price and buy a private property."
Demand for HDB resale flats has been dampened by the huge supply of new build-to-order (BTO) flats. HDB said yesterday that it would roll out 3,060 more BTO flats in May in Bukit Batok and Woodlands. And 3,000 more flats will be offered in a concurrent Sale of Balance Flats exercise.
The HDB resale market has also been daunted by the loan cap and the recent overhaul of the resale process, property consultants say.
Since August last year, the loan limit under the mortgage servicing ratio for HDB resale flats has been lowered from 35 per cent to 30 per cent. New permanent residents are also made to wait for three years before buying a resale flat.
While the median cash-over-valuation for resale flats has touched down to zero of late, HDB overhauled its resale process in March, requiring buyers to sign the option to purchase before getting a valuation.
Ong Kah Seng, director at R'ST Research, said: "Owners who really have to sell their flat are generally keen to sell it at valuation price or even below valuation price since there would be negligible contribution to their personal liquidity with such low COV prevailing in the market."
"There is a potential for prices to continually fall after Q1 2014 because prices are still at near record-high levels and have yet to significantly contribute to improved buyers' affordability even though COV is probably negligible going forward."