Gentle decline of HDB resale prices ‘a sign of bottoming out’

SINGAPORE — Prices of Housing and Development Board (HDB) flats fell for the ninth consecutive quarter, but the decline is the gentlest yet and analysts say it could be a sign that the market is bottoming out soon.

Flash figures released by the HDB today (Oct 1) showed that the Resale Price Index (RPI) was 134.6, a decline of 0.3 per cent from the previous quarter. The decreases this year have been smaller than those seen last year, with prices falling 0.4 per cent in the second quarter. In comparison, the index fell 1.5 per cent from the preceding quarter in the third quarter of last year.

Analysts said the property market cooling measures — such as the loan curbs and tightened restrictions on permanent residents buying resale flats — continued to make their impact felt, but prices are unlikely to fall by much going forward.

Said Mr Ismail Gafoor, chief executive officer of PropNex Realty: “We continue to expect resale prices to fall for the next quarter of the year, but prices may have reached a bottoming-out level as this is the lowest decline in more than two years.”

ERA key executive officer Eugene Lim, noting HDB resale prices have become relatively stable over the past three quarters, said: “The continued very marginal decline indicates that the market may find its footing soon.”

This year so far, HDB resale prices have only decreased 1.8 per cent from the RPI reading of 137 in the fourth quarter of last year. “Comparatively, over the same period last year, prices declined by 4.6 per cent,” he said.

The Build-to-Order and Sale of Balance flats exercise in November — which will see 12,000 HDB flats come onto the market — could also affect resale demand, he added.

Mr Nicholas Mak, head of the research and consultancy department at SLP International Property Consultants, said the expectations that prices would continue to decrease also weakened market sentiment. “(Buyers) adopted the wait-and-see approach, which further dampened the buying demand,” he said.

With more homes being completed next year, HDB resale prices could fall about 3 per cent for the whole year, said Mr Ismail.

Mr Lim expected resale prices to be down about 2 per cent overall for the year. “Compared with the 5.5 per cent decline over the whole of 2014, this is indeed good news for many a HDB home-owner,” he added.

Mr Mak said if the Government was to leave the current cooling measures unchanged next year, housing prices across the board may even fall faster. “Market demand will be adversely affected by rising interest rates and the slower economic growth that would translate to slower wage appreciation and a weaker job market,” he said.

The HDB’s full report for the quarter with more housing data will be released on Oct 23.