HDB resale prices down 0.5% in July: SRX

Divergence in direction of SRX and HDB indices in Q2 seen by consultants as signalling stabilising prices

By Lynette Khoo

[email protected]@LynetteKhooBT

Aug 7, 2015

THE 0.5 per cent drop in the resale prices of Housing & Development Board (HDB) flats in July from the previous month, based on SRX Property's latest flash estimates released on Thursday, still points to increased price stability of resale flats, though not necessarily a sooner sustainable price rebound, consultants say.

And with SRX revising its June index to reflect no change on a month-on-month basis, instead of a 0.1 per cent increase reported earlier, its HDB resale price index shows prices going up 0.2 per cent in April, before staying flat in May and June.

But final figures from the HDB last month showed an overall 0.4 per cent drop in resale prices in the second quarter, though both HDB and SRX use regression methods to compute price changes that account for quality differences in the units transacted.

Most consultants read the divergence in the second quarter as another sign of stabilising prices and stemming from the different ways property attributes could be treated for the respective indices.

R'ST Research director Ong Kah Seng noted that the divergence suggests that "we are approaching more of some uncertainty in price direction".

SRX's flash index for HDB resale prices in July represents a 4.3 per cent drop from a year ago and an 11.4 per cent slump from the peak in April 2013.

ERA Realty key executive officer Eugene Lim noted that while it was the first time SRX's HDB resale price index turned south in four months, the decrease was not very significant and was quite possibly due to month-to-month fluctuations.

"Currently, it seems that prices have found their support level and any price movement up or down is likely to be very marginal," he said. "The stable prices we are seeing in the resale HDB market are giving resale demand the much-needed boost."

Resale prices of three-room HDB flats in July remained flat while those of four-room, five-room and executive flats dipped 0.7 per cent, 1.2 per cent and 0.9 per cent respectively.

Based on SRX's sub-indices, HDB resale prices in non-mature estates last month fell 0.9 per cent compared to 0.1 per cent in mature estates.

The volume of HDB resale flats also declined in July. A total of 1,552 units were sold last month, down 9.2 per cent from 1,709 in June. July's resale volume was 15.6 per cent higher than a year ago and 57.5 per cent lower than the peak of 3,649 units in May 2010.

The fall in transaction volume is within expectations, Mr Ong observed, following a seasonally active second quarter. The loan curb under the mortgage servicing ratio continues to skew demand towards smaller resale flats. But he expects more four-room and five-room flats to be put up for resale this year amid an increase in the completion of private residential properties and executive condominiums, since four-room and five-room flat owners tend to form the majority of HDB upgraders.

SLP International executive director Nicholas Mak noted that the expected increase in the household income ceiling for eligible Build-To-Order (BTO) flat applicants may have a negative effect on the HDB resale market as it would attract some potential resale flat buyers to apply for BTO flats. "This would decrease the demand for HDB resale flats and delay the recovery of HDB resale prices," he said.

For the rest of the year, most consultants expect further downside in HDB resale prices that will bring the fall over the full year to between 1.5 per cent and 3.5 per cent.