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Thread: HDB, private home prices slide in 2014

  1. #1
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    Default HDB, private home prices slide in 2014

    http://www.straitstimes.com/archive/...-2014-20150124

    HDB, private home prices slide in 2014

    Values of both types of home fell for full year, for the first time in 13 years

    Published on Jan 24, 2015 1:19 AM

    By Cheryl Ong


    FOR the first time in 13 years, both public and private housing prices lost ground for the full year in 2014 - and analysts expect even steeper price falls this year.

    Cooling measures sent values of private properties down 1.1 per cent in the fourth quarter, taking the full-year slide to 4 per cent, the Urban Redevelopment Authority said yesterday.

    Prices of HDB resale flats fell 1.5 per cent in the three months ended Dec 31, HDB data showed yesterday. For the full year, HDB resale prices sank 6 per cent.

    This is the first time since 2001 that both public and private home prices have fallen over a full year.

    The stagnating market is likely to worsen this year, analysts said, though not dramatically.

    Since the third quarter of 2013, HDB resale flat prices have fallen more quickly than those of private homes. That is set to continue as a surging supply of new public flats and buyer curbs weigh on the market. The HDB's move to ramp up its building programme to meet demand from first-time buyers will flush the market with 16,900 Build-To-Order (BTO) flats this year, said HDB, after 22,455 were offered last year.

    A mortgage servicing ratio, which limits monthly housing payments at 30 per cent of the buyer's gross monthly income, has hit many, while newly minted permanent residents can buy an HDB flat only after three years.

    "HDB sellers are more willing to compromise because of their weaker bargaining position as some may need to dispose of their flats before moving into their new homes," explained Dr Lee Nai Jia, head of research at DTZ Singapore. "Developers, in contrast, have enjoyed healthy profits from the previous years and are in no hurry to slash prices, lending support to the private market."

    The private market faces a "perfect storm" of factors that point to further softening in prices.

    An overhang of new home completions at 24,796 units this year looms over the market amid tightened immigration policies.

    Vacancy rates at private homes rose to 7.8 per cent in the fourth quarter, up from 7.1 per cent in the preceding quarter - which in itself was a nine-year high. This was exacerbated by a sharp fall of 3 per cent in rentals in the last quarter over a 0.9 per cent increase in the preceding quarter.

    Expectations are also high for the United States Federal Reserve to hike interest rates in the second half of the year, posing more risks to highly leveraged home owners in a flailing rental market.

    "These headwinds are expected to persist through the year, amid uncertainty in the global economic arena," said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

    It is against this backdrop that buyers might decide to "wait and see" this year, said Ms Christine Li, research head at OrangeTee.

    A Ministry of National Development spokesman said yesterday that "property market cooling measures are intended to keep the market stable and sustainable" and that the price decline over the past year has been "mild".

    Market watchers have placed their bets on a slip of 5 to 8 per cent for both HDB and private home prices this year.

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    http://www.businesstimes.com.sg/real...5-volume-up-27

    Prices of Q4 resale HDB flats down 1.5%, volume up 2.7%

    By Claire Huang

    [email protected]@ClaireHuangBT

    24 Jan


    RESALE prices of Housing & Development Board (HDB) flats fell 1.5 per cent in Q4 2014 quarter-on-quarter, even as resale transactions of such flats rose 2.7 per cent, from 4,513 cases in Q3 to 4,635 cases in the October-December period.

    This brings the HDB resale prices down 6 per cent for the entire year of 2014, according to data released by the HDB on Friday. This is the same as the flash estimate published on Jan 2. Despite the rise in resale volume in Q4, the number of resale transactions for the full year fell 4.3 per cent from 2013 to 17,318.

    Describing 2014's resale volume as "the new historical low", Eugene Lim, key executive officer of ERA said the decline in resale HDB prices and transaction volume was a direct result of tighter Mortgage Servicing Ratio requirements and the reduction of maximum loan term for HDB mortgages to 25 years from 30 years - both of which reduce the loan quantum that a would-be HDB flat buyer is able to obtain.

    Other factors that contributed to the lower demand for resale HDB flats include the large number of new BTO flats and flats sold by HDB via the Sale of Balance Flats (SBF) programme, as well as the three-year wait-out period before newly minted permanent residents can buy resale HDB flats, Mr Lim added.

    In 2015, resale flat transactions are expected to recover slightly, but resale flat prices will fall by up to 4 per cent in the first six months of the year, said Ong Kah Seng, director of R'ST Research, who added that more flats will be put up on the resale market as more private residential properties and executive condominiums are completed.

    And as more flat owners move into their completed suburban condominiums, public flat rents are expected to fall by up to 7 per cent in 2015, he said.

    On resale flat prices, Mr Lim projected a steeper fall of 5 to 8 per cent this year, adding that resale volume may rebound.

    On the leasing front, subletting approvals rose 16.2 per cent, from 8,923 cases in Q3 to 10,365 cases in Q4. ERA's Mr Lim said that demand for HDB rental flats below S$2,500 a month will remain strong and that the average quarterly subletting volume may hover around 9,000 units this year.

    In 2015, HDB will offer 16,900 build-to-order (BTO) flats, which will include flats in new areas such as Bidadari and Punggol Northshore. The BTO exercises will be conducted quarterly from February 2015.

    Additional reporting by Lee Meixian

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