Friday, October 3, 2008

More growth ahead, but slower

Tan Hui Leng

[email protected]

THE slightly smaller increase of 4.2 per cent in resale prices between July and last month, when compared to the second quarter’s 4.5 per cent, may be a sign that HDB resale prices have begun to moderate.

But overall, analysts expect the market to continue to post growth next year, if at a slower pace. A sign that demand for flats could be easing up somewhat. The housing board has deferred the launch of a Design, Building and Sell Scheme (DBSS) site in Bedok. It had, last November, announced plans to release three such sites in the first half — so far, tenders for the Simei and Toa Payoh sites have been awarded.

“Taking into account changes in market conditions since November 2007, and to allow interested developers more time to evaluate the sites offered for sale, the tender for the Bedok site is now being scheduled for launch in the last quarter of 2008,” said HDB yesterday.

For the resale flat market, PropNex CEO Mohamed Ismail predicted that overall this year, market prices would see 15 per cent growth.

And he expects to see strong demand continue into next year, “mainly because of the time lag to develop the Build-to-Order (BTO) and DBSS flats, coupled with stronger demands from Permanent Residents (PR) due to higher rental cost”.

Even so, he puts next year’s HDB price increase at 6 to 8 per cent — almost half that of this year’s — citing economic uncertainties and a reduction in the Cash-Over-Valuation that HDB buyers are willing to fork out.

For now, demand should continue to be fuelled not just by the existing domestic market, but also new PRs and citizens: For the first half of this year, there were a record 34,800 new PRs and 9,600 new citizens, compared to 28,500 and 7,300 for the same period last year.

With two integrated resorts up in the next two years, foreign middle-management employees are also expected to put themselves up in HDB flats.

Singaporeans, meanwhile, will continue to need a place to live in, economic downturn or not. “Market uncertainty will not stop me from buying if I really need a flat,” said Mr Mark Chong, 29, an international assignment consultant, who thinks resale flats offer a better choice of location than new flats.

Still, new HDB flats coming on stream should take some demand away from the resale market, noted ERA Asia Pacific’s assistant vice-president, Mr Eugene Lim.

HDB has, to date, launched about 5,000 of the planned supply of 8,400 BTO flats for this year. Subject to demand, HDB plans to offer another 3,400 new flats under the BTO system in the remaining months, in towns such as Punggol, Sengkang and Yishun.

Additional reporting by Esther Ng