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HDB resale market stirs but analysts say sentiment still weak

SINGAPORE — The resale market for Housing and Development Board (HDB) flats stirred last month as sales and prices picked up from February, showed preliminary data released yesterday by the Singapore Real Estate Exchange (SRX), but analysts said sentiment would probably be weak for the rest of the year because of loan curbs and higher supply.

Coloured HDB flats at Rochor Centre. Today file photo

Coloured HDB flats at Rochor Centre. Today file photo

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SINGAPORE — The resale market for Housing and Development Board (HDB) flats stirred last month as sales and prices picked up from February, showed preliminary data released yesterday by the Singapore Real Estate Exchange (SRX), but analysts said sentiment would probably be weak for the rest of the year because of loan curbs and higher supply.

A total of 1,319 resale HDB flats changed hands last month, up 40 per cent from February in the highest monthly volume registered since last October. Analysts attributed this to transactions being carried out at close to or below valuation, although the HDB has shifted the focus away from cash-over-valuation (COV) premiums from March 10 by accepting valuation requests from buyers only after they obtained the option to purchase.

Mr Steven Tan, Managing Director of property agency OrangeTee, said: “I don’t think many have started to negotiate prices based on recent transactions yet, as those sellers who have asked for valuation reports could still proceed with the negotiation of COV as long as their valuation reports have not expired. As a typical valuation report is valid up to three months, many transactions are not really affected by the changes yet.”

Mr Alan Cheong of property firm Savills said: “On the ground, we have sensed that there is a decline in COV and there is a possibility that because of that, buyers are rushing back in.”

COVs fell to zero in February for the first time since 2006, but because of the policy change, the numbers are no longer published from March onwards.

The rebound in volume was also due to buyers and sellers returning to the market after the Chinese New Year holidays, said Mr Eugene Lim, Key Executive Officer of ERA Realty.

As volume surged, HDB resale prices rose 0.3 per cent, rebounding from the 1.8 per cent decline in the previous month. Prices of three- and four-room flats rose by 0.5 per cent and 0.8 per cent respectively, while those of five-room and executive flats fell by 0.2 per cent and 0.7 per cent respectively.

However, year-on-year, overall HDB resale prices were still down 4.9 per cent last month, which analysts attributed largely to loan curbs, in particular the tightening of the Mortgage Servicing Ratio last August.

“Bigger units face more challenges in today’s market. Buyers can only use up to 30 per cent of their monthly income to service a HDB loan, which significantly reduces their ability to afford bigger flats,” said Mr Jeremy Lee, co-founder of SRX.

On the supply side, more than 6,000 HDB upgraders are expected to take possession of their Build-to-Order flats this year and will have to sell their existing homes within six months, Mr Lee said.

“This does not include those who upgrade to private property. Overall, the supply of HDB flats will continue to increase and there will be downward pressure on prices,” he said.

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