http://www.straitstimes.com/archive/...wn-06-20150306

HDB resale prices slide back down by 0.6%

Analysts point to slow CNY sales period, ongoing cooling measures

Published on Mar 6, 2015 2:25 AM

By Yeo Sam Jo


AFTER a tepid spike in January, resale prices for Housing Board flats quickly headed back south last month.

The fall is likely to be a result of continued cooling measures, as well as the Chinese New Year period, which traditionally sees fewer transactions, said analysts.

Prices fell 0.6 per cent last month from January, and 5.7 per cent from a year ago, according to SRX Property flash figures released yesterday.

"Typically, people put their home buying and selling plans on hold during the festive season," said Mr Nicholas Mak, SLP International Property Consultants' research head. "Some property agents also take a break during this time."

Last month's dip came after a slight rise in January, when prices edged up by a marginal 0.2 per cent, which SRX Property revised from the 0.6 per cent increase reported previously.

But Mr Mak said any price increase amid the current cool market is not sustainable: "It's almost like snowing in the desert - it's rare and short-lived."

Last month's drop was driven by resale prices of three-room, four-room and executive flats, which decreased by 1.2 per cent, 0.6 per cent and 0.4 per cent respectively. Resale prices for five-room flats remained stable.

Ongoing cooling measures are another reason for the sustained downward trend in resale prices, said experts.

R'ST Research director Ong Kah Seng pointed to the mortgage servicing ratio, which is now capped at 30 per cent of the borrower's gross monthly income.

"Even if buyers' interest improves, sellers cannot easily raise prices, since the mortgage servicing ratio cap essentially restricts buyers from borrowing excessively to finance the flat purchase," he said.

He added that as resale prices continue heading south, buyers are in no hurry to buy flats: "They are expecting prices to go down even further."

Indeed, last month's resale volume was the second lowest in a year at 1,148 units, down from the 1,255 units in January.

But ERA Realty key executive officer Eugene Lim expects transactions to pick up after the festive season.

"With the Government slowing down the Build-to-Order programme this year, we are optimistic that more buyers may buy from the resale market as prices continue to stabilise."

This is good news for Sembawang resident Jimmy Tan, 51, who put his four-room flat on the market last September.

"Hopefully, prices will go up again, but I don't really have a choice," said Mr Tan, who is unemployed.

"I live alone and I just want to downgrade to a one- or two-room flat."

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