HDB resale market shows signs of stabilisation

SINGAPORE — Housing and Development Board (HDB) resale flat prices and transaction volumes were little changed last month from April, the latest flash estimates by SRX Property showed yesterday in what analysts said might be signs that the market is stabilising.

HDB resale prices were flat in May compared to the previous month, but down 5 per cent from the same month a year ago, the SRX data showed.

Last month, 1,575 resale flats changed hands, a slight 2.2 per cent dip from April, but a 19.3 per cent surge from May a year earlier.

Property analysts said prices may have hit rock-bottom after two years of declines.

“While HDB resale prices have dropped 5 per cent year-on-year and declined about 11 per cent since the peak in April 2013, SRX’s HDB Price Index for March to May this year indicates that resale transaction prices have flattened out. This may be an indication that market prices have begun to stabilise,” said Mr Eugene Lim, key executive officer of real estate agency ERA.

Mr Wong Xian Yang, senior manager of research and consultancy at real estate agency OrangeTee, said: “Higher volumes were observed in four out of five months of 2015 in comparison to the corresponding months in 2014. The increase in volumes and increasing price resilience in 2015 lend strength to the proposition that the HDB market may be stabilising.”

Transactions stayed close to the 1,600 level last month in an indication that buyers are increasingly comfortable with prevailing price levels, said Mr Chris Koh, director of property firm Chris International.

“This is a good sign because this means the price decline has become significant enough to tempt buyers back into the market. I also think that if buyers have been waiting for two years for prices to fall, they should start coming back already,” he said.

The SRX report showed that prices of four-room flats registered the biggest decline of 0.9 per cent in May from a month earlier. This was followed by a 0.2 per cent slip in three-room flat prices. On the other hand, five-room and executive flats posted price increases of 0.7 per cent and 1.3 per cent, respectively.

Analysts expect overall HDB resale prices to hover around current levels in the coming months, as the upside potential remains limited by property and loan curbs such as the 30 per cent Mortgage Servicing Ratio cap and the three-year waiting period before new permanent residents are allowed to purchase flats.

“We also have a supply issue with more and more flats being made available for sale, so buyers will be spoilt for choice. This is why I don’t see prices going up in at least the next half-a-year. Whether prices will go down depends on external factors, but the second and third quarters are a generally good period for the property market,” said Mr Koh.

However, Mr Lim said resale volume may fall slightly this month with the HDB having launched the largest number of flats via the Build-to-Order (BTO) as well as the Sale of Balance Flats (SBF) exercises.“There were more than 5,300 flats to be sold via the SBF programme, and this would inevitably draw away some buyers from the resale market as most of the SBF flats are already either completed or are well under construction,” he said.

Mr Lim predicts total HDB resale transactions to total between 18,000 and 20,000 this year, with prices to decline by less than 5 per cent.