http://www.businesstimes.com.sg/arch...16-q1-20140426
Published April 26, 2014
HDB resale prices continue slide, down 1.6% in Q1
Downtrend expected to stretch further; but subletting deals hit record for a quarter
By Lynette Khoo
[email protected] @LynetteKhooBT
RESALE prices of public flats slipped for the third consecutive quarter, and analysts expect this downtrend to continue amid market caution and a large supply of new flats coming onstream.
Data from the Housing and Development Board (HDB) showed that resale prices in the first quarter fell 1.6 per cent from the previous quarter ago, following a 0.9 per cent dip in the third quarter and 1.5 per cent decline in the fourth quarter of last year.
Resale transactions fell 5 per cent in the quarter to 3,781.
Property consultants attributed the subdued market activity to recent government measures.
"As loan curbs continue to dampen the market, more transactions are taking place at valuation price," said ERA Realty key executive officer Eugene Lim.
He noted that the lowering of the mortgage servicing ratio from 35 per cent to 30 per cent has hampered the ability of some buyers from getting bigger and more expensive flats.
Other factors that dented resale activity include the minimum three-year waiting period for newly minted permanent residents before they can buy resale flats and the availability of two-room build-to-order (BTO) flats for eligible singles, he said.
Christine Li, head of research and consultancy at OrangeTee, noted that the festive season lull and the abolishment of cash-over-valuation (COV) added uncertainty to the resale market, "causing buyers and sellers to hold back".
Under HDB's revised resale procedure in March, sellers can no longer obtain a valuation from HDB to aid their price negotiations. Buyers now need to first obtain the OTP (option to purchase) from the seller before they can request a valuation from HDB.
For the first time since 2007, HDB ceased publication of the quarterly median COV by town and flat type, in line with its stance to shift the focus from COV to transacted prices in price negotiations.
Instead, HDB gave the breakdown on median resale prices by town and flat type. Median resale prices for four-bedroom flats in Bishan slid 6.6 per cent quarter-on-quarter to $509,000 while that for three-room flats in Queenstown fell 9.6 per cent to $369,000.
Though no official COV data is available for the first quarter, analysts noted that the median COV has fallen to zero or slightly negative in March.
The muted resale activity has benefited the sub-letting market as HDB owners who cannot get a good price for their flats may decide to rent out their units instead.
HDB data showed that subletting transactions increased 17 per cent quarter-on-quarter in the first quarter to 8,485 - a historical high number of subletting transaction in one quarter.
Subletting transactions could increase as more private residential homes are completed, said Ong Kah Seng, director of R'ST Research, adding that he expects many HDB upgraders to move into the new condos and rent out their existing flats.
Some 80,000 new BTO flats will be completed and keys handed over to buyers in the next three years. HDB is slated to release a further 3,060 BTO flats in Bukit Batok and Woodlands in May and 3,000 flats in a concurrent Sale of Balance Flats exercise.
Mr Ong said there is still potential for prices to fall by up to 2 per cent quarter-on-quarter in the next six months, before stabilising in the fourth quarter.