http://www.businesstimes.com.sg/real...back-to-market

Stabilising HDB resale flat prices may draw buyers back to market

The other factor is a tapering in the launch of BTO flats this year

By Kalpana Rashiwala

[email protected]@KalpanaBT

25 Apr


THE one per cent quarter-on-quarter drop in the Housing & Development Board's resale flat price index for the first quarter of this year was smaller than the 1.5 per cent decline posted for Q4 last year.

It was also the smallest q-on-q decline for the index since the third quarter of 2013.

A stabilisation in resale prices, together with a tapering of HDB's launch of Build-to-Order (BTO) flats this year, could send more buyers with immediate housing needs back to the resale market, said some agents.

HDB is expected to launch 16,900 flats this year under the BTO system, down from 22,455 last year, 25,139 units in 2013, 27,084 units in 2012 and 25,200 units in 2011.

The 4,135 resale applications for HDB flats in the first three months of this year was 10.8 per cent lower than in the previous quarter, but up 9.4 per cent year-on-year.

ERA Realty key executive officer Eugene Lim said that assuming the momentum continues for the coming months, between 18,000 and 20,000 resale flats could be transacted this year, an improvement from the low of 17,318 HDB resale deals last year.

PropNex Realty chief executive Ismail Gafoor is also predicting an improvement in the volume of deals this year on the back of lower asking prices; he puts the range at between 19,000 and 20,000 transactions.

ERA predicts a less than 5 per cent full-year drop in HDB resale prices for 2015; PropNex forecasts a 4 per cent to 5 per cent decline. SLP International predicts the decrease to be in the range of 3.5 per cent to 5 per cent.

Last year, the index slipped 6 per cent. In 2013, the decrease was 0.6 per cent.

Resale prices have eased amid the potent cocktail of the government's measures to stabilise the public housing market and a ramp-up in the launch of BTO flats from 2011 to 2014, noted Mr Ismail.

SLP International executive director Nicholas Mak said that while HDB's median resale prices by towns and flat types continued to decline in Q1 this year for the vast majority of cases, there were some instances of increases over the preceding quarter.

Topping the gains were four-room flats in Geylang, with a S$65,000 increase in the median price, followed by a S$26,200 rise in the median price for three-room flats in Kallang/Whampoa.

In percentage terms, the increases for these two cases worked out to 15.3 per cent and 7.9 per cent respectively.

On the rental front, HDB's data showed that the number of applications approved for subletting of HDB flats inched up 0.2 per cent q-on-q to 10,385 cases in Q1 this year.

ERA's Mr Lim noted that the HDB rental market has a strong following among tenants with a budget of S$2,500 a month or less.

"Steady demand is coming from newly minted Singapore permanent residents, who are not allowed to buy resale HDB flats due to the mandatory three-year wait-out period."

R'ST Research director Ong Kah Seng said HDB flat rents are expected to continue to dip this year, due to an escalation in the number of flats put up for subletting. This is the result of flat owners moving into completed suburban condos and subletting their HDB flats.

"This will lead to a fall in rental of up to 7 per cent this year and rents of HDB flats will better match tenants' affordabilty by the end of 2015."

ERA's Mr Lim also noted that it is "considerably easier to rent out a HDB flat today than a private residential property".

"We expect HDB subletting volume to remain robust and we may see a total volume this year of more than 40,000 units, exceeding last year's 36,228 by some 10 per cent."