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Falling HDB resale flat prices draw in buyers

Published on Oct 10, 2014 12:53 AM

By Janice Heng


HOUSING Board (HDB) resale prices fell for the eighth straight month in September, in line with experts' expectations.

But the number of flats changing hands rose to its highest level since April, as buyers moved in to take advantage of the weak market.

Prices dipped 0.5 per cent last month compared to August, reaching the lowest level since January 2012, according to SRX Property preliminary figures yesterday.

The lacklustre showing was no surprise to experts, who expect this trend to persist as strict loan rules continue to bite. Prices are down 7.5 per cent from a year ago. Five-room flats saw the biggest price fall last month, of 1.6 per cent.

Prices of three- and four-roomers dipped 0.2 per cent. Executive flat prices edged up 0.1 per cent.

But resale volume improved with 1,469 flats sold last month, the most since April. This was up 10.7 per cent from August and 19.9 per cent from a year ago.

"The surge in volume comes after the end of the Hungry Ghost Festival in August, when many Chinese buyers stayed away from the market," said OrangeTee manager for research and consultancy Wong Xian Yang.

Softer prices may also have drawn buyers in. Said ERA Realty key executive officer Eugene Lim: "As prices continue to stabilise, buyers are more willing... to buy resale flats."

HDB buyers are continuing to pay less than SRX's estimated market value, but to a lesser degree. Last month, buyers paid a median of $2,000 below SRX's X-Value measure of a flat's market value. This was a price improvement from August, when they were paying $3,000 less than X-Value.

"It could be a sign that buyers are finding prices are more affordable and are less aggressive in further lowering prices," said R'ST Research director Ong Kah Seng.

But he is not expecting resale prices to bottom out unless cooling measures "are at least partially lifted".

Demand will still be curbed by stricter loan limits, restrictions on permanent resident buyers, and increased supply and grants for new flats, added Mr Wong.

Also remaining weak is the rental market. An estimated 1,483 HDB flats were rented last month, down 6.7 per cent from August and 0.7 per cent from a year ago.

Rental prices slipped 0.3 per cent last month, ending up 2.5 per cent lower than a year ago.

With cool buyer interest, more upgraders are putting their flats up for subletting instead, meaning greater competition, said Mr Ong.

There is also competition from falling private property rentals, said Mr Wong.

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