http://www.businesstimes.com.sg/arch...h-srx-20140808

Published August 08, 2014

HDB resale flat prices dip for 6th straight month: SRX

By lee meixian

[email protected] @LeeMeixianBT


[SINGAPORE] As expected, HDB resale flat prices fell again for the sixth straight month to hit a low not seen since February 2012, going by figures from the Singapore Real Estate Exchange (SRX).

Prices slipped 0.9 per cent last month, after a 0.8 per cent dip in June - proof that June's fall in prices was not due solely to the school holidays and the World Cup distracting buyers from making home purchases, analysts said. They believe larger factors were at play, chiefly the loan curbs in the form of the mortgage servicing ratio (MSR), the total debt servicing ratio (TDSR), and loan tenures being capped at 25 years.

Since the beginning of this year, prices have declined 4 per cent. Consultants expect resale prices to fall up to 8 per cent for the whole of 2014, with the government continuing to emphasise that it is still premature to pull back cooling measures.

The HDB resale market is expected to take a hit also because a huge supply of new build-to-order flats, as well as balance flats, executive condo units and flats under the design, build and sell scheme (DBSS) are coming onstream.

R'ST Research's director Ong Kah Seng said a full-year price fall of between 4 and 8 per cent would still be considered a "soft landing". He believes resale prices are likely to stabilise from next year.

Resale volume improved by a slight 2 per cent to 1,341 flats sold in July's resale market, after the numbers contracted in May and June. Resale volumes are expected to shrink in August, during the "hungry ghost month", when fewer people would do house-hunting.

That said, demand may pick up slightly in the second half of the year as buyers find resale flat prices increasingly affordable, said Mr Ong.

Rental volume rose 1.7 per cent to about 1,600 flats rented in July, possibly because some flat owners are waiting out the price weakness by renting their flats out in the meantime.

ERA Realty's key executive officer Eugene Lim said flats are enjoying "fairly attractive returns" of 6 to 8 per cent, compared to the 2 to 4 per cent yields of private properties.

Rental prices were, however, 1.5 per cent lower than in June, marking a three-year low. Rents are expected to stay depressed in the HDB leasing market, as the government keeps up its efforts to trim the supply of foreign labour, said Christine Li, head of research and consultancy at OrangeTee.

A greater supply of both private homes and rented flats from HDB upgraders will also keep rent increases at bay, she added.