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HDB resale prices fall to almost 2.5-year low: SRX

SINGAPORE — The public housing market showed some signs of life with resale volume inching up slightly last month, but that was not enough to lift prices, which fell to their lowest in almost two-and-a-half years and analysts expect further softening as the cooling measures continue to dampen buyer sentiment.

The HDB rental market saw an uptick in activity with 1,601 new leases registered in July compared with June’s 1,574. TODAY FILE PHOTO

The HDB rental market saw an uptick in activity with 1,601 new leases registered in July compared with June’s 1,574. TODAY FILE PHOTO

SINGAPORE — The public housing market showed some signs of life with resale volume inching up slightly last month, but that was not enough to lift prices, which fell to their lowest in almost two-and-a-half years and analysts expect further softening as the cooling measures continue to dampen buyer sentiment.

Prices of previously-owned Housing and Development Board (HDB) flats slipped 0.9 per cent on-month in July, bringing the fall since the start of the year to 4 per cent and the weakest level since February 2012, revealed a flash report by the Singapore Real Estate Exchange (SRX).

It was also the sixth consecutive month of price decline.

The drop was seen across three-, four- and five-room flats, whose prices dropped 1, 1.8 and 0.4 per cent, respectively. But prices of executive flats were up 0.1 per cent.

Analysts said the downtrend was not a surprise given that the Government has indicated its intention to leave the various property curbs untouched for now.

“Loan restriction rules such as Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR) continue to dampen the demand for HDB flats as some potential buyers face limitations in their loan applications,” said Mr Nicholas Mak, executive director of SLP International Property Consultants.

“In addition, new permanent residents (PRs) have to wait three years from the date of obtaining their PR status before they can buy HDB resale flats, thus the demand for HDB resale flats is lower, while the supply is (increasing) as more and more HDB flats complete their five-year minimum occupation period.”

Resale volume saw a marginal improvement to 1,341 units last month from 1,315 units in June, SRX said.

The increase was probably due to the end of the June school holidays and FIFA World Cup season, noted OrangeTee head of research and consultancy Christine Li.

However, sales were weaker than the same period last year. “From a year-on-year perspective, the figure amounts to a drop of around 10 per cent. The monthly volume has plummeted by more than 60 per cent from its peak performance registered about four years ago,” said Ms Li, who expects demand to stay subdued and resale prices to depreciate by around 5 per cent for the whole of this year.

Meanwhile, the HDB rental market saw an uptick in activity with 1,601 new leases registered last month compared with 1,574 cases in June. That also failed to boost rental prices, which fell by 1.5 per cent to a three-year low, SRX said.

Analysts said prices are likely to stay soft as more flats will enter the supply pool. Figures provided by the HDB showed that the number of flats that will meet their minimum occupation period and be eligible for rental is expected to rise from the current 690,000 to around 750,000 by end-2016.

Ms Li said: “Due to the ongoing effort to enhance productivity and lower foreign labour supply, the HDB leasing market is predicted to remain tepid for a considerable period of time. Greater supply of private housing property means that a large amount of rented flats from upgraders will keep HDB rental increase at bay.”

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