http://www.businesstimes.com.sg/real...gh-in-december

HDB resale prices fall 0.4% to 41-month trough in December

SRX flash figures show resale volume is down 4.1%; analysts cite tighter mortgage servicing ratio limits

By Lee Meixian

[email protected]@LeeMeixianBT

9 Jan


HDB resale prices fell 0.4 per cent to a 41-month low in December compared to November. Resale volume also fell 4.1 per cent to 1,295 units transacted in the traditionally slow last month of the year.

This was according to the latest SRX Property flash figures released on Thursday.

Analysts blame tighter mortgage servicing ratio (MSR) limits and capped demand from Singapore permanent residents, who can now only buy resale HDB flats three years after obtaining their status.

Year-on-year, December's resale prices fell a more pronounced 6.1 per cent, while volumes actually rose 28 per cent.

The higher year-on-year volume could be due to a sharp increase in supply of private and executive condo units, which saw upgraders sell their HDB apartments before moving to their new homes.

December's prices have fallen 10 per cent from their peak in April 2013 - "a significant milestone for the cooling measures, because a double-digit decline is psychologically much more worrisome than a single-digit drop in asset value for many home owners", said Jeremy Lee, co-founder and chief technology officer of SRX Property.

"A double-digit decline sounds worse and can cause people to become exponentially more uneasy about their financial positions," he added.

December's price drop was driven by four- and five-room flats, whose resale prices slipped 0.7 per cent and 0.3 per cent respectively. This came as no surprise to analysts, as the 30-per-cent MSR limits buyers' ability to afford larger flats. The resale prices for three-room flats stayed level, while those for executive flats rose 1.8 per cent.

R'ST Research director Ong Kah Seng noted that prices of executive flats seem to have improved of late. Their prices had softened considerably in 2013 due to waning demand, as their hefty price quantum made it challenging to get sufficient financing. But as prices fell further, it reached a sweet spot with buyers.

"Its generally wealthier buyers are now grabbing the opportunity to own an attractively priced executive flat. Such flats are no longer built. Such products also have volatile pricing as they are seen as a collector's item. Demand for them is fairly niche and possibly fickle," he said.

Prices in non-mature HDB estates also fell 0.9 per cent, compared to a 0.2 per cent increase for mature HDB estates. Non-mature estates refer to Bukit Batok, Bukit Panjang, Choa Chu Kang, Hougang, Jurong East, Jurong West, Punggol, Sembawang, Sengkang, Woodlands and Yishun.

Christine Li, head of research and consultancy at OrangeTee, said this was not surprising, given the abundant supply of flats in the non-mature estates that have just completed their five-year minimum occupation period and can now be sold.

SLP International executive director Nicholas Mak added that the large supply of build-to-order (BTO) flats in non-mature estates has also drawn demand away from the HDB resale market, thus dampening the prices of resale flats there.

In comparison, prices for flats in mature estates have managed to stay resilient due to their better locations and limited supply.

As housing-loan interest rates are expected to increase this year, the market is predicting HDB prices to fall between 4 per cent and 8 per cent. They may even inch upward slightly in the second half, subject to any tampering with the cooling measures, said R'ST Research's Mr Ong.

Like December, transactions could stay slow for January and February, with buying activity picking up only after the Lunar New Year.