Raised EC income ceiling hits private resale market

SINGAPORE — The number of non-landed private homes resold last month fell 4.7 per cent from September a year earlier, breaking a 10-month streak of year-on-year increases, hurt by rising competition from executive condominiums (ECs) following the revision in the income ceiling for the hybrid housing type.

A total of 446 non-landed private homes were resold last month, SRX Property estimated in its monthly flash report released today (Oct 13).

This was down from 468 units in the same month last year and down 10.6 per cent from the 499 units resold in August. Resale prices slipped 1.2 per cent last month from September a year earlier and 0.1 per cent from August.

Mr Eugene Lim, key executive officer of property agency ERA, said the drop in volume was mainly due to fewer transactions in the Outside Central Region (OCR), or suburbs, where the number of homes that changed hands plunged 27.3 per cent from the previous month.

Based on the available data, it was also the first time this year that there was a year-on-year drop in resale transaction volume, he noted.

“This could be due to stiffer competition from ECs given the recent rise in the income ceiling,” he said.

In August, the Government announced increases in the monthly household income ceilings for new Housing and Development Board (HDB) flats and ECs for the second time since 2011. They have been increased by S$2,000 each to S$12,000 and S$14,000 for HDB flats and ECs, respectively.

The month-on-month drop in prices was mostly in homes resold in the Rest of Central Region, or city fringes, and the OCR, with declines of 1.4 per cent and 0.9 per cent, respectively.

These were broadly offset by the gains in the Core Central Region (CCR), or city centre, which bucked the trend by rising 2.8 per cent from the previous month, the SRX Property data showed.

Mr Wong Xian Yang of OrangeTee Research said the marginal overall month-on-month decline showed that sellers were increasingly holding out.

“It may suggest that sellers are getting more resistant to lower prices. Some sellers may be holding on to prices, hoping for tweaks in cooling measures,” he said.

Mr Lim said the CCR segment may be enjoying buyer support as there have been no new launches within the area for some time, but he added that the overall market will extend its gradual decline.

“For the whole of 2015, resale prices are expected to decrease by about 2 per cent based on the SRX resale price index, as loan restrictions and policy measures continue to be in place,” he said

Looking ahead, Mr Wong expects more headwinds for the private residential market.

“There is uncertainty in the global economy, rising interest rates, upcoming property completion leading to a lot of supply. In the short to medium term, the market is expected to remain soft, barring any tweaks to the housing policy,” he said.

Mr Lim expects resale volume to total about 6,000 units for the whole of this year. The market is set to come up against competition from several new private condominium and EC projects to be launched before the end of the year, including Thomson Impressions and Principal Gardens this month, The Andrew Residences next month and Wandervale EC in December.