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Thread: Home prices continue slide in Q1

  1. #1
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    Default Home prices continue slide in Q1

    http://www.businesstimes.com.sg/prem...de-q1-20140402

    Published April 02, 2014

    Home prices continue slide in Q1

    Declines expected to set tone for rest of the year, say industry players

    By Lynette Khoo [email protected]


    [SINGAPORE] Prices of both private homes and HDB resale flats continued their slide in the first quarter of this year based on the government's flash estimates, and this is expected to set the tone for the rest of this year.

    The drop in resale flat prices - by 1.5 per cent, for the third consecutive quarter, according to HDB's Resale Price Index (RPI) - is starting to be seen as holding HDB upgraders back from taking the leap into private property.

    But it is still the current cooling measures and more competitive pricing by developers that have been the main drag on private home prices.

    URA said yesterday that its private residential property index fell 1.3 per cent islandwide over the first three months, after a 0.9 per cent decline in the fourth quarter. This was in tandem with the decline in sales transactions, with just 1,676 caveats lodged in the first quarter, down from 4,260 a quarter earlier.

    "The subdued market in the first three months of 2014 appears to have set the tone for the rest of the year," said Chia Siew Chuin, director of research and advisory at Colliers International. "Overall, private home prices are expected to continue to soften, with the full-year decline possibly in the region of 5-8 per cent."

    Alice Tan, head of consultancy and research at Knight Frank, noted that the private homes market is now at an inflexion point in terms of prices.

    "The downward fall could persist towards the second half of this year as the property cooling measures and TDSR (total debt servicing ratio) ruling continue to bite market sentiment," she said, pegging an average of 3-4 per cent decline in private home prices for the full year.

    Prices of non-landed homes declined across all regions, with those in the core central region (CCR) sliding further for the fourth consecutive quarter - 1.3 per cent, after the 2.1 per cent decline in Q4. In the outside central region (OCR), prices dipped 0.3 per cent, after a one per cent decline in Q4.

    Private home prices in the rest of central region (RCR) fell the most in Q1, 2.8 per cent, against a 0.4 per cent rise in the previous quarter, as fewer transactions were made.

    Prices of landed homes slipped 0.6 per cent in Q1, after a one per cent decline in Q4.

    Loan curbs, including the TDSR, additional buyers' stamp duty and sellers' stamp duty, have hit private home buyers, particularly those who are already highly leveraged or own one or more properties, said ERA Realty key executive officer Eugene Lim.

    "Moderating prices in the HDB resale market also diverted buyers' attention away from the private market. Upgraders are unable to sell their HDB flats at a high price and buy a private property."

    Demand for HDB resale flats has been dampened by the huge supply of new build-to-order (BTO) flats. HDB said yesterday that it would roll out 3,060 more BTO flats in May in Bukit Batok and Woodlands. And 3,000 more flats will be offered in a concurrent Sale of Balance Flats exercise.

    The HDB resale market has also been daunted by the loan cap and the recent overhaul of the resale process, property consultants say.

    Since August last year, the loan limit under the mortgage servicing ratio for HDB resale flats has been lowered from 35 per cent to 30 per cent. New permanent residents are also made to wait for three years before buying a resale flat.

    While the median cash-over-valuation for resale flats has touched down to zero of late, HDB overhauled its resale process in March, requiring buyers to sign the option to purchase before getting a valuation.

    Ong Kah Seng, director at R'ST Research, said: "Owners who really have to sell their flat are generally keen to sell it at valuation price or even below valuation price since there would be negligible contribution to their personal liquidity with such low COV prevailing in the market."

    "There is a potential for prices to continually fall after Q1 2014 because prices are still at near record-high levels and have yet to significantly contribute to improved buyers' affordability even though COV is probably negligible going forward."

  2. #2
    Join Date
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    Default Home prices continue slide as loan curbs bite

    http://www.straitstimes.com/premium/...-bite-20140402

    Home prices continue slide as loan curbs bite

    Private home prices fall 1.3%, while HDB resale prices sink another 1.5%

    Published on Apr 02, 2014

    By Melissa Tan


    THE housing market downturn worsened in the first quarter of the year as loan curbs bit deeper and a possible oversupply of new homes loomed larger.

    Private home prices fell 1.3 per cent in the January to March period from the three months before, according to Urban Redevelopment Authority (URA) flash estimates out yesterday.

    This was sharper than the 0.9 per cent drop in the fourth quarter last year and caught analysts by surprise.

    Prices were also 0.8 per cent lower than they were a year earlier, notching up their first year-on-year decline since the third quarter of 2009.

    In the HDB resale market, prices sank for a third straight quarter - not seen since between 2000 and 2002 when prices dropped for eight straight quarters.

    They lost another 1.5 per cent in the first three months this year after sinking 1.5 per cent in the fourth quarter last year.

    The weakness in the overall residential market has spurred questions of how low prices would have to drop before the Government relaxes its property market cooling measures.

    "The pace of price decline has been gradual, but if transaction volume continues to be significantly impeded by all the cooling measures in place, the magnitude of price declines may eventually increase," noted JLL Singapore research head Ong Teck Hui.

    Analysts said yesterday that home prices are likely to keep on falling this year, with no immediate abatement in sight.

    The price drop in the first quarter was largely due to buyers tightening their belts owing to tough curbs on home loans under a total debt servicing ratio (TDSR) framework, analysts added.

    "The subdued market in the first three months of 2014 appears to have set the tone for the rest of the year," said Colliers International research head Chia Siew Chuin. "There appears to be little respite for the private residential property market at least in the short term."

    R'ST Research director Ong Kah Seng said "developers will definitely have to continually cut prices".

    Prices of non-landed private homes fell islandwide, led by the city fringe, which tumbled 2.8 per cent in the first three months this year, an about-turn from the 0.4 per cent rise in the fourth quarter.

    "Sellers have lowered expectations and developers are holding back new launches and are trying to clear previous projects," said OrangeTee research head Christine Li. Most of the city fringe units sold in the quarter were, therefore, resale, of which some were "priced similarly to mass market projects", she added.

    The 281-unit The Hillford in the city fringe, which launched and sold out in January, was excluded from the price calculations, the URA said yesterday.

    As for the city centre, prices fell for a fourth straight quarter. They slipped 1.3 per cent in the first quarter after falling 2.1 per cent in the preceding three months.

    The suburbs fared slightly better, with prices dipping 0.3 per cent in January through March compared with the 1 per cent drop in the quarter before.

    Analysts said yesterday that prices would likely continue to soften and could fall by 5 to 8 per cent over the course of this year.

    Given market weakness and a potential oversupply of completed homes, some have called for some property curbs to be modified.

    "I think it would be timely to tweak the additional buyer's stamp duty while maintaining the TDSR which was intended to ensure buyers' financial prudence," said PropNex chief Mohamed Ismail.

    This year, 17,540 private homes and 2,367 executive condominium (EC) units are expected to be completed. Another 24,153 units, including ECs, are set to be ready next year.

    [email protected]

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