http://www.businesstimes.com.sg/real...ne-slows-in-q1

Rate of HDB resale price decline slows in Q1

HDB flash estimates show resale prices fell 1% in the quarter - the smallest decline in 11/2 years

By Lee Meixian

[email protected]@LeeMeixianBT

2 Apr


RESALE prices of public housing flats fell one per cent in Q1 2015 from Q4 2014, according to flash estimates released by the Housing and Development Board (HDB) on Wednesday.

This was the seventh straight quarter of price decline, culminating in a 9.2 per cent drop in resale price index over seven quarters, noted SLP International executive director Nicholas Mak.

But the one per cent price decline is actually the smallest decline in the past 11/2 years - a possible sign that the pace of HDB resale price decline may be slowing down, he said.

ERA Realty key executive officer Eugene Lim said this will offer existing HDB home-owners some comfort, but "we will need to monitor the coming quarters for more conclusive interpretation as the first quarter was a slow quarter due to the Lunar New Year festivities".

He added that transactions have started to pick up only in March and the March-to-July period would be instrumental in setting the pace for the year before the Hungry Ghost Month leads to a slowdown in transactions again.

"It is encouraging that the rate of decline has slowed down. The price decline is likely to continue as the loan curbs continue to bite," he said.

HDB resale prices have been hit by the government's cutting of the mortgage borrowing limits to 30 per cent, shortening the maximum loan term for HDB mortgage loans to 25 years, and imposition of a three-year wait for new permanent residents before they can buy resale HDB flats.

Allowing singles to buy two-room build-to-order (BTO) flats in non-mature estates, and the increased BTO and sale of balance flat supply in recent years, have further tempered resale flat demand.

Further, the climbing three-month Singapore interbank offered rate (Sibor), to which mortgages are pegged, also holds buyers back.

"The Sibor has gained more than 50 basis points so far this year, exceeding all the annual increases since 2005. It rose above one per cent for the first time in more than six years. As a result, the mortgage rates for home-owners have risen, which would further dampen real estate investment demand this year," said SLP's Mr Mak.

Ong Kah Seng, director of R'ST Research, also pointed to what he called "the Pinnacle effect". A handful of transactions in The Pinnacle@Duxton in Q1 may have propped up average resale flat prices, he said.

Data that he compiled showed five-room units there reselling at around the S$1-million mark in Q1.

But he hastened to add that record prices at the Pinnacle were probably a limited contributor to the moderating price fall in Q1, which was more likely a reflection of more stable resale flat market conditions and buyers' interest.

SLP's Mr Mak expects HDB resale prices to fall 4 to 6 per cent this year, assuming no major changes to HDB housing policies.

Ismail Gafoor, PropNex Realty CEO, expects HDB resale volumes to range from 19,000 to 20,000 units (2014: 17,318), fuelled by lower asking prices on the back of more home completions and the continued cooling measures.

More detailed public housing data for the full quarter of Q1 2015 will be released on April 24.

HDB on Wednesday also said that it will offer about 4,040 BTO flats in Clementi, Punggol North, Sembawang and Tampines this May. About 5,000 flats will be offered in a concurrent sale of balance flats exercise.