HDB resale prices inch up but demand falls by 24%

[mr funny]

http://www.straitstimes.com/Prime%2B...ry_330017.html

January 24, 2009 Saturday

HDB resale prices inch up but demand falls by 24%


PRICES of Housing Board resale flats continue to defy the gloom, although the pace of increase is easing off a little.

Data from the last three months of last year show that prices inched up 1.4 per cent, following a robust surge of 4.2 per cent in the third quarter and 4.5 per cent in the second.

Valuations are still rising but not as much as before, said C&H Realty managing director Albert Lu.

HDB resale prices are supported by a relatively strong base of potential buyers, particularly for three- to four-room flats, said ERA Asia Pacific's associate director, Mr Eugene Lim.

Experts say the impact of the gloomy economic outlook has seeped into the HDB market, reflected in the significant drop in the median cash-over-valuation portion for resale deals.

It fell from $19,000 in the third quarter to $15,000 in the fourth - a drop of 21 per cent - and back to levels last seen around the third quarter of 2007.

Demand was also down: Fourth-quarter resale deals fell 24 per cent to 6,186 transactions, while the number of resale deals for the whole year dipped 3 per cent from the figure in 2007.

Despite the relatively large fourth-quarter drop, property experts expect fairly strong demand as the continued economic slowdown will bring new buyers.

'If the economy does not improve, there will be more downgraders and increasingly cautious home buyers in the wake of retrenchments and tighter budgeting,' said PropNex chief executive Mohamed Ismail.

If the recession drags on, prices may fall, albeit marginally, said ERA's Mr Lim, although C&H Realty's Mr Lu said they could just level off.

'This is about the peak for HDB (resale) prices, but they won't fall immediately because there is demand and valuations are still holding,' he said.

Median sub-let rents remained steady and owners are still keen to rent out their homes.

The total pool of HDB flats approved for sub-letting grew from 21,400 units in the third quarter to about 22,200 units in the fourth.

But demand has been hit. While sub-letting deals for the whole of last year grew by 20 per cent, the number of such deals for the fourth quarter fell 7 per cent to 3,690.

JOYCE TEO

[mr funny]

http://www.todayonline.com/articles/298580.asp

Weekend, January 24, 2009

Public housing market slows

Surprise drop of 24% inQ4 volume, but analysts say HDB demand intact

Cheow Xin Yi

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IT WAS a drop that caught most analysts by surprise — raising fears of a demand downtrend amid a souring economy, even in the traditionally resilient public housing market.

After a strong showing in the first three quarters, the number of Housing and Development Board (HDB) resale flat transactions plunged 24 per cent in the last quarter of 2008 to 6,186. That brought the total transaction volume last year to 28,419 — or 3 per cent lower than in 2007.

Prices, on the other hand, have continued to climb, but at a much slower pace. he HDB resale price index rose 1.4 per cent in the fourth quarter, down from 4.2 per cent in the third quarter.

The widening gap in price expectations between buyers and sellers in a weakening market is one of the reasons for the decline in volume, said ERA’s Asia Pacific associate director Eugene Lim, who noted the longer time needed to negotiate a deal.

“Opportunistic buyers would offer below valuation ... while sellers still want to have as high a cash-over-valuation (COV) as possible. So the haggling will take time,” he said.

Already, the overall median COV values have decreased about $4,000 — or about21 per cent — to $15,000 in the fourth quarter. In fact, going by HDB statistics, a buyer of a five-room flat in Ang Mo Kio would only need to pay a median COV of $7,000 in the last three months, compared to $20,000 in the previous quarter.

But Ms Carol Loo, a 26-year-old prospective buyer, is biding her time and hoping for a good bargain. The insurance agent, who is getting married in August and plans to buy a resale flat in June, is confident that prices will drop further.

“Already, some agents are willing to drop the COV. A lot of people are affected by the economic crisis. Some owners will find that they can’t finance their mortgages and ... need to get it off their plate really soon. When it’s a fire sale, they are usually willing to go down below valuation,” said Ms Loo, who is looking for a flat in Pasir Ris.

Another reason for the low volume, said PropNex chief executive Mohamed Ismail, could be the lack of units put on the market by HDB upgraders due to the dearth of private condo launches in the fourth quarter.

While analysts say the fallout from the global financial crisis and economic downturn hurt buying sentiment in the fourth quarter, many think the HDB market will be largely resilient.

“HDB is the most affordable housing, so the base is there. It’s just a difference in expectations, that’s why sales have slowed. But support in terms of buyer interest is still there,” said ERA’s Mr Lim.

In fact, Dennis Wee Group’s vice-president, Mr Chris Koh, said the expected deterioration in economic conditions could ironically spur demand for HDB flats from private condo downgraders.

The Government’s move to increase the additional CPF housing grant for first-time HDB buyers to $40,000 from $30,000 in tandem with the raised household income ceiling to $5,000 from $4,000 will encourage low to middle-income young couples to buy their first flat through the resale market as well, said Mr Ismail.

[mr funny]

http://www.businesstimes.com.sg/sub/...15938,00.html?

Published January 24, 2009

Steep fall in transactions surprises many

HDB's Resale Price Index rose just 1.4% - a marked slowdown from 4.2% in Q3. By Uma Shankari


THE public housing market - the only property segment still growing - suffered a sharp fall in transaction volume in the fourth quarter of 2008. HDB's Resale Price Index rose just 1.4 per cent - a marked slowdown from 4.2 per cent in Q3 and 4.5 per cent in Q2.

Analysts had expected price increases to moderate because the economy was losing steam. But what has taken some by surprise was the steep drop in transactions.

The number of resale homes sold fell 24 per cent, from 8,110 in Q3 to 6,190 in Q4 - the lowest Q4 volume ever, according to one analyst.

The poor showing meant total transaction volume for 2008 was 28,419 units - 1,926 fewer than 2007's 29,436.

The median cash-over-valuation (COV) amount in Q4 also fell, by $4,000 to $15,000. Sales involving COV constituted 85 per cent of all resale transactions, 4 per cent fewer than in Q3.

'ERA's resale transaction volume for Q4 was quite stable and that led us to predict resale volume of about 30,000 units for the whole of 2008. So the overall dip certainly caught us by surprise,' said Eugene Lim, associate director for ERA Asia Pacific. ERA says it has a 45 per cent share of the HDB resale market.

One of the main reasons for the dip could be that COV amounts have been falling. 'The days of transactions involving more than $50,000 COV are over,' said Mr Lim. Unusual exceptions are well-renovated flats with unobstructed, panoramic views.

With the economy likely to shrink further and more lay-offs on the way, home buyers have become sharper, analysts say.

They start by making offers below valuation, and many deals now are closed at valuation, or at most a COV of $5,000-$30,000.

Propnex chief executive Mohamed Ismail said that this is 'indeed a buyer's market'. The dip in 2008 transaction volume can be explained partly by the financial crash in October and partly by fewer launches, which led to fewer upgrading transactions.

Another reason for the dip could be that HDB plans to increase the supply of new flats in 2009. With this, buyers have more choice, so demand is taken away from the resale market.

Demand for public housing is still expected to grow this year, but probably not at the double-digit pace of 2007 and 2008. Mr Ismail expects the resale price index to grow 3-7 per cent in 2009, with smaller (three and four-room) flats accounting for 5-8 per cent growth and larger flats seeing slower one to 3 per cent growth.

'If the economy doesn't improve there will be more downgraders and increasingly cautious buyers in the wake of retrenchments and tighter budgets,' he said. 'But we should still see growth because demand exceeds supply.'

The public housing sector is also expected to get a boost from the Government's Budget announcement on Thursday that it will widen the Additional CPF Housing Grant (AHG) for first-time home-buyers.

To ensure that public housing remains affordable for first-timers, the Government has decided to increase the maximum grant to $40,000, from $30,000. At the same time, the household income ceiling will be raised from $4,000 to $5,000.

An extra 2,700 first-time buyers will benefit from the enhanced AHG every year, taking the number of beneficiaries of the scheme to 8,000 a year.

Analysts reckon that this will boost demand from first-timers who look to the resale market rather than waiting for new homes to be completed by HDB.

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