HDB resale flat prices plunge to 2.5-year low: SRX

SINGAPORE — More heat has been let out of the Housing and Development Board (HDB) market, with resale prices falling last month to the lowest in two-and-a-half years, dragged down by the double whammy of the Hungry Ghost Festival and the prolonged effects of repeated rounds of property curbs.

Last month, overall resale prices slipped 1.1 per cent from July, the seventh consecutive month-on-month decline, down to their lowest level since January 2012, said a flash report by the Singapore Real Estate Exchange (SRX). The fall was due mainly to lower prices for three- and four-room flats, which fell 2 per cent and 0.9 per cent, respectively.

Meanwhile, prices of five-room and executive flats rose by 0.8 and 1.5 per cent, respectively, the SRX said.

Analysts said the Mortgage Servicing Ratio (MSR), which limits the quantum of housing loans to 30 per cent of borrowers’ gross monthly income, remained the largest contributing factor to the price decline as it affects buyers’ ability to take higher loans.

But because demand and prices for larger flats were more severely hit previously, prices may have reached a level with which buyers are comfortable enough to return to the market, thus providing support to five-room and executive flats.

“When the MSR was first enforced, it hit the bigger flats most because people could not get as much of a loan as before,” said Mr Nicholas Mak, executive director of SLP International Property Consultants. “It’s a case where prices have fallen to more affordable levels in some locations and managed to attract more buyers back.”

Figures by the SRX showed that the number of previously-owned four- and five-room flats transacted last month rose to 542 and 308 units, respectively, from 519 and 278 units in July. However, sales of three-room and executive flats fell to 393 and 84 units, respectively, from 442 and 103 units previously. The total resale volume last month was 1.1 per cent lower at 1,327 units, compared with 1,342 units the previous month.

“The slight fall in resale volume was quite possibly due to the Hungry Ghost Festival, when house buying activity tends to slow down, especially for the more superstitious,” said Mr Eugene Lim, key executive officer of ERA.

“Buyers and sellers are getting used to the revised resale procedure and are negotiating based on price and not cash-over-valuations anymore. The stable price environment will further reduce the fear of buying at excessive premium or selling at below market value. This will help boost resale volume over time,” he added.

As for resale prices, Mr Mak said values were likely to fall further over the next six to 12 months. Besides the MSR, an upcoming supply of Build-to-Order flats will also cause sellers to temper their price expectations.

Meanwhile, the rental market stayed stable in terms of prices and the number of new leases signed. Rents inched up a marginal 0.2 per cent last month from July, the SRX said, while rental volume was only two units up at 1,550 flats.

Analysts said HDB flats would continue to be attractive rental options, especially among tenants with monthly budgets of S$3,000 and below and newly minted permanent residents, who are not allowed to buy HDB resale flats in their first three years.

However, the competition from flats due to be eligible for rental and private properties approaching completion amid the tightening of foreign labour will also put pressure on rents.