HDB resale prices from April to June lowest in 1.5 years

SINGAPORE — Resale prices of Housing and Development Board (HDB) flats registered a decline for the eighth straight quarter but although the second quarter’s 0.4 per cent dip is the gentlest in that time, analysts are not calling a bottoming out yet.

Flash estimates of the Resale Price Index released today (July 1) showed that prices from April to June were the lowest in one-and-a-half years. While analysts said signs are pointing to a stabilising HDB resale market, they expect prices to continue sliding at around the current rate or less until the end of the year, given that demand has been crimped by the Government’s property cooling measures and the strong supply of new homes.

Mr Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants, said: “The weaker demand has also affected market sentiments and the expectations of many market participants that prices would continue to decrease. This has in turn become a self-fulfilling prophecy.”

Other analysts also noted the “wait-and-see” sentiment of buyers and said more information on prices is now readily accessible. “Buyers will find the fair market value, as it’s all transparent right now, and they offer prices with technical assistance,” said Mr Donald Yeo, head of agency at DWG.

With the HDB saying that the supply of Build-to-Order (BTO) flats will be lowered to 15,000 flats this year — suggesting that supply is outstripping demand — and an influx of home completions starting next year, PropNex Realty chief executive officer Ismail Gafoor expects resale prices to continue to drop. He estimated transaction volume to fall between 19,000 and 20,000 units because of the lower asking prices.

On National Development Minister Khaw Boon Wan’s announcement last month of the raising of income ceilings for buyers of BTO flats and Executive Condominiums (ECs) — the new limits could be rolled out as soon as August or September — analysts do not foresee significant impact on the resale market.

Mr Eugene Lim, key executive officer of ERA, said some buyers may lean towards buying ECs instead of BTO or resale flats as “they would still be eligible for housing grants and ECs are basically the same product as mass market condos except for the eligibility conditions and five-year minimum occupation period”.

Buyers moving out of the resale market for BTO flats “may add a bit of downward pressure on resale flat sellers, but the impact is unlikely to be significant”, added Mr Yeo. Apart from the government policies, Mr Thomas Tan, principal trainer of Real Centre Network, also raised the possibility of resale prices being affected by rising interest rates.

In March this year, Singapore’s interest rates rose as the Singapore dollar weakened against a strengthening greenback. A softer Singapore dollar can put upward pressure on local interest rates as investors seek higher yields as compensation for holding a weakening currency. Higher interest rates may lead to higher mortgage rates for home-buyers, further dampening the HDB-flat market.