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HDB resale prices shrink to two-year low

SINGAPORE — The public housing market softened further in June with resale prices falling for a fifth consecutive month to reach a two-year low, as cooling measures and loan restrictions continued to affect sentiment.

SINGAPORE — The public housing market softened further in June with resale prices falling for a fifth consecutive month to reach a two-year low, as cooling measures and loan restrictions continued to affect sentiment.

Prices of previously owned Housing and Development Board (HDB) flats slipped 0.6 per cent from the previous month to their lowest level since April 2012, a flash report by the Singapore Real Estate Exchange (SRX) showed yesterday. The decline, however, was slower than the 1 per cent on-month fall seen in May, mainly because of an increase in the prices of executive flats, analysts said.

The previously-owned executive flats segment was the only one to experience an uptick in prices, gaining 1.3 per cent last month from May, the SRX said. Prices of three-, four- and five-room flats were down 0.6, 0.8 and 0.3 per cent, respectively.

“The smaller price drop was due to the increase in prices of executive flats. Those that are upgrading to larger flats are capitalising on this period of stabilising HDB prices to make the move,” said Mr Eugene Lim, key executive officer of ERA.

The number of resale flats transacted was relatively flat at 1,315 units last month, only five homes short of that sold in May. Analysts said this could be an indication that the fall in demand is bottoming out.

“In the last three months or so we’ve seen prices reach a level where buyers are willing to come back into the market, that’s why we’re seeing volume stabilising,” said Mr Alan Cheong, senior director of research and consultancy at real estate agency Savills.

On the other hand, with measures such as the stricter Mortgage Servicing Ratio (MSR) and newly-minted permanent residents having to wait three years before being allowed to buy HDB flats still impacting on sentiment, the public resale market could be in for further price corrections.

“When more people realise that prices still have room to fall further, resale volume may drop because potential buyers may choose to wait for better deals,” Mr Cheong said.

Adding further pressure is an upcoming supply of build-to-order (BTO) flats that are expected to be completed in the coming years.

“Owners collecting the keys to their new BTO flats and private properties may have more urgency to dispose their flats in the resale market … Prices could continue to fall a bit further before stabilising as the measures continue to bite,” said Mr Lim, adding that resale HDB prices may decline by 5 to 8 per cent over the entire year.

The SRX said prices have dropped by 3 per cent since the beginning of this year.

Meanwhile, in the rental market, sustained weakness saw prices fall by 1.1 per cent from May to reach a new low since January 2012. Rental volume also dropped 2 per cent to 1,590 transactions, according to the SRX report.

Analysts said this segment could also come under pressure in the coming months as more BTO flats approach their minimum occupation period, meaning an increasing number of landlords will be competing for a shrinking pool of potential tenants.

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