Published April 29, 2006

HDB resale market seen stabilising

THE Housing & Development Board's (HDB) resale flat price index, which rose 0.2 per cent in the first quarter from the preceding three months, is likely to remain flat this year, says ERA Real Estate.

'There is an absence of factors that can significantly cause the market to move either way,' says ERA assistant vice-president Eugene Lim.

'Any upward movement of prices may be negated by supply from HDB's clearance of its unsold stock of flats. For the subsequent quarters of this year, we expect HDB's Resale Index to rise only marginally, turning in a full-year increase of no more than 1.5 per cent.'

Average valuations for three and four-room flats edged up 0.3 and 0.2 per cent respectively in Q1, while the larger five-room and executive flats registered respective declines of 0.1 per cent and 0.8 per cent, according to the latest data released by HDB yesterday.

Market watchers reckon the HDB resale market has stabilised after the board implemented anti-cashback measures on April 1 last year and the final one percentage point hike in cash downpayment to 5 per cent kicked in from Jan 1 this year for buyers who take bank loans.

Cashback deals previously led to over-declaration of sale prices of HDB flats, particularly for the smaller three and four-room flats. ERA's Mr Lim says: 'The prices we're seeing now in the resale market are truly reflective of the actual demand and supply situation.

'With the implementation of the 5 per cent cash payment for buyers taking bank loans completed now, and with no further hikes looming, there's no longer a push factor for buyers to beat the clock, as seen in the last two years.

'They now have more time and face less pressure to commit to the flat that they want. This has contributed to the stabilisation of HDB resale prices so far this year.'

The number of HDB resale flat applications in Q1 was 7,039, down 17.1 per cent from the previous quarter and up by just 10 applications from Q1 last year.

On a brighter note, five-room and executive flats enjoyed bigger shares of the resale application pie in Q1 this year compared with Q1 last year, ERA's analysis shows.

'Buyers are now more confident of the market and many are taking the chance to upgrade now that prices have stabilised,' says Mr Lim.