The last quarter of 2011 ended on a good note as resale Housing Development Board (HDB) home prices charted a slower growth.
(Analysts predict weakened resale HDB prices this year. Image courtesy of Singapore Tourism Board.)
Yesterday, HDB released estimates indicating that resale unit prices rose 1.7% in the final three months of the year (ending December 31). In contrast, Q3 2011’s resale home prices upped by more than twice this percentage at 3.8%. Interestingly, the year-end growth rate mirrored that of the start of last year, where prices rose at 1.6% in Q1.
As such, industry experts do not expect strong resale prices for 2012, with some even predicting a further moderation and even a correction, due to two main factors. The first of which is the heightened uncertainty of the global economy, compared to that of last year. Analysts said an economic downturn could result in a correction in home prices.
The second factor is the series of property market cooling measures introduced by the Government over the past two years, which have restricted home ownership and tightened financing. The most recent set of measures, in particular, have imposed heavy tax duties on private homes that, experts tell The Straits Times, would probably have a “trickle-down” effect on the public homes market.
PropNex chief executive Mohamed Ismail said to The Straits Times that Q4 2011’s figure marks a turning point for the HDB market. “Price stabilisation will set in and possibly even a price correction of not more than 3% [could happen] in the HDB resale market.”
ERA Realty key executive officer Eugene Lim also attributed the price moderation to HDB’s aggressive supply of new homes, and to some extent, the Board’s move to raise the income ceiling for new flats.
Last year HDB pushed out a record-setting 28,043 flats for sale to cope with the strong demand; 25,196 new flats were offered under the Build-To-Order (BTO) scheme, while the remaining 2,847 homes went under its Sale of Balance Flats exercise. August last year also saw HDB pushing the monthly income ceiling up from $8,000 to $10,000 for its BTO units, and from $10,000 to $12,000 for its executive condominium units.
“More first-time buyers would have moved from the resale market to the new flat market,” explained Lim to The Straits Times. Indeed, HDB reported that since its policy change to bump up the income ceiling, about 2,991 applicants (or 8%) to its two recent sales launches were found to be in the $8,000-10,000 income bracket.
In the meantime, property agencies that the paper spoke to said that cash premiums—known as cash-over-valuation (COV)—paid to resale HDB sellers above a flat’s valuation, have been decreasing. PropNex reported a drop of around $5,000 in median COV in December last year, to $25,000-45,000 across all flat types. Similarly, ERA Realty said the median COV of its transactions have stabilised at $30,000-40,000 in Q4 on average with no further rises—similar to what it experienced in Q3. “COVs are likely to remain soft, and could dip $10,000-15,000 in the coming six to nine months,” said Ismail to The Straits Times.
The new year will see HDB continue to ramp up its supply of new homes. It announced yesterday that it would be offering another 25,000 flats across the island in 2012. In the current month of January, 3,890 BTO units will be launched in the estates of Choa Chu Kang, Punggol, Sengkang and Tampines.
HDB will release more detailed data for Q4 2011 later this month.
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Related Categories: HDB and Public Housing, HDB
Tags: BTO, Build-To-Order, cooling measures, global economic uncertainty, HDB, HDB resale, Housing Development Board, Income Ceiling, public housing prices in Singapore, resale price, Singapore resale HDB market
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