HDB resale prices inch up, but down 5.7% year on year

SINGAPORE — Resale prices of Housing and Development Board (HDB) flats inched up last month – the first increase in a year – but prices remained lower than a year ago, the Singapore Real Estate Exchange (SRX Property) flash report released today (Feb 5) showed. 

Prices were up 0.6 per cent last month from December. However, year on year, prices have dropped 5.7 per cent. Prices have also declined 9.4 per cent since they peaked in April 2013, with analysts saying the latest increase does not signal a reversal of the slump in the market, given property market cooling measures are still in place. 

According to the report, the January increase was driven by HDB four- and five-room flats, where resale prices rose by 1.1 per cent and 1.5 per cent respectively. On the other hand, resale prices for HDB three-room and executive flats fell by 0.9 per cent and 0.6 per cent respectively. 

The transaction volume of resale flats was 1,255, a 3.1 per cent decrease from the 1,295 units in December. Compared to the 1,088 units resold in January last year, resale volume last month increased by 15.3 per cent. 

Buyers continued to pay below the estimated market value for flats, with the overall median Transaction Over X-Value (TOX) at -S$1,000, although this was an improvement from the –S$4,000 in December. 

The figures come on the back of numbers released by HDB last month, showing that overall, HDB resale prices fell 6 per cent last year.

Property analysts said the slight pick-up in prices do not reflect a market rebound, and prices are expected to continue to fall. ERA key executive officer Eugene Lim said the price increase is part of the fluctuations associated with tracking prices on a monthly basis. 

On the other hand, HSR International Realtors research analyst Lin Zhiqin felt the price increase and rise in overall TOX for four- and five-room flats indicate that upgraders are entering the market, as prices for these flat types have fallen to attractive levels. 

Mr Lim, meanwhile, expects prices to be muted for at least the first half of this year. “In the absence of any tweaks to the Mortgage Servicing Ratio (MSR) of 30 per cent, buyers are inclined to be on the conservative side as the MSR limits their loan quantum,” he said. 

Property agency OrangeTee’s research and consultancy manger Wong Xian Yang noted that the outlook for the HDB resale market is likely to remain negative as price growth and demand are capped, given the tight MSR limits and the three-year waiting period for permanent residents planning to buying resale flats. 

Furthermore, market sentiment remains tempered, where many buyers are staying on the sidelines in hopes that prices will drop further, creating a stand-off between buyers and sellers, he said.  

Mr Nicholas Mak, executive director (research and consultancy) at SLP International Property Consultants said prices could continue to fall as the economic outlook for this year is expected to be similar to last year’s. 

He also cited signals given by the Government which suggests that resale prices will continue fall. In December, National Development Minister Khaw Boon Wan said he was in favour of a single-digit decline when asked what would be a meaningful price correction before cooling measures could be rolled back. Mr Mak said is suggestive of the authorities’ intention to let resale prices soften further. 

As for the fall in resale volume, property analysts noted that traditionally, January and February see fewer transactions with the onset of Chinese New Year. Mr Lim expects the pace to pick up from March and noted that the pace between March and May will set the tone for the resale volume for the rest of the year.