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HDB resale prices rise for first time in 2.5 years

SINGAPORE — Prices of Housing and Development Board (HDB) resale flats rose for the first time in 2.5 years in the last quarter of 2015, which market watchers say could be a sign that resale market prices are stabilising.

TODAY file photo

TODAY file photo

SINGAPORE — Prices of Housing and Development Board (HDB) resale flats rose for the first time in 2.5 years in the last quarter of 2015, which market watchers say could be a sign that resale market prices are stabilising. 

However, the prices — which had previously fallen for nine consecutive quarters — are not expected to significantly rebound this year, the analysts added. The steady supply of Build-to-Order (BTO) flats being injected into the market will help moderate demand for resale flats, but more than one quarter’s figures are needed to get a better sense of market sentiment, they added.

Based on flash estimates released by the HDB today (Jan 4), the Resale Price Index rose 0.2 per cent in the last quarter to 134.9. While HDB resale prices were down on the whole for 2015 by 1.5 per cent, this is smaller compared with the 6.2 per cent decline in prices seen in 2014.

Property analysts said the slowing decline in resale flat prices over the last few quarters had hinted that prices were bottoming out. Mr Alan Cheong, senior director of Savills Research and Consultancy Team, said: “Since 2014, the rate of decline (for the HDB resale market) has slowed down sequentially for every quarter … it has more or less bottomed out.”

Propnex Realty chief executive Ismail Gafoor said the resale market appeared to be “recuperating”. “The price points are very attractive for people … rather than waiting before they can collect their keys to a BTO (Build-To-Order) flat, they can select resale flats and get it quicker in an estate of their liking,” he said. 

Noting that the transaction volume in the resale market has also risen over the last two years, he is expecting the number of transactions to exceed 20,000 this year.

But OrangeTee senior manager of research and consultancy Wong Xian Yang pointed out that cooling measures, such as capping the Mortgage Servicing Ratio at 30 per cent of the buyers’ gross monthly income, remain in place. This would rein in demand, and consequently, prices. 

OrangeTee also estimates that around 18,000 to 19,000 HDB flats will be reaching their minimum occupation period this year, and this could feed into the resale market supply and temper prices, Mr Wong said.

Mr Nicholas Mak, head of research and consultancy at SLP International Property Consultants, said first quarter figures are needed to conclusively show that the resale market has turned the corner. “It is premature to celebrate the price recovery in the HDB resale market,” he said, noting price blips in previous years.

Mr Ismail expected price increases this year to be marginal at around one to two per cent, especially with an increased supply of BTO flats. The HDB has announced plans to launch 18,000 BTO flats this year – up from around 15,000 last year - with the first exercise in February in Bidadari, Bukit Batok and Sengkang.

Mr Cheong added: “There is still the counter-balancing effect of the BTO flats, which (are) not many in prime locations, but they still act as a deterrent. If price gaps are too wide and the resale market start to surge, the price deferential will turn people back to BTO market again.”

Prices in the resale market have not fallen far enough to cause people to turn away from BTO flats, he said. But should the BTO flat prices be too expensive, this might drive more demand in the resale market, and push up resale flat prices, he said.

More detailed public housing data will be released by the HDB on Jan 22.

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