HDB resale flat prices up 14% last year ...

But rate of increase slowed, cooled by Government measures

by Joanne Chan
05:55 AM Jan 04, 2011

SINGAPORE - The red-hot resale market for Housing and Development Board flats saw prices go up by almost 14 per cent last year compared to 2009, according to HDB's flash estimates yesterday.

In comparison, prices went up by 8.2 per cent in 2009 compared to 2008.

But in a sign that the prices are cooling off, the rate of increase has slowed: Between October and December, the HDB Resale Price Index increased by 2.4 per cent, compared to 4 per cent in the third quarter.

The median Cash-Over-Valuation (COV) also fell $7,000 in the fourth quarter to $23,000, compared to the third quarter.

Over the same period, resale volume dipped by about 21 per cent to about 6,500 transactions.

Property analysts MediaCorp spoke to said the numbers point to a stabilising market, which had been cooled by measures introduced by the Government in August.

In particular, they noted that the new rule which disallowed private property owners to own a HDB flat at the same time has turned many away from the resale market.

Dennis Wee Group director Chris Koh noted that investors looking to profit from the resale market are thinking twice.

Said Mr Koh: "There has always been a group of people who buy and sell flats very regularly, every three to five years they change the address of their HDB flat. This group of people are also affected by the new measures ... They have to cough up 10 per cent cash, for example, instead of 5 per cent."

Analysts also attributed the decline in resale volume to the traditional year-end slowdown.

SLP International executive director of research and consultancy Nicholas Mak expects transaction volume to pick up in the first quarter of this year. Said Mr Mak: "There will be a slight increase but I don't think we will see a strong spike of above 10,000 units like what we've seen during the height of the HDB resale market boom."

Property firms attested to sellers asking for lower COVs.

Said Hersing Corporation senior group division director Mark Teo: "I believe the COV prices for the first quarter of this year are going to continue to go down further ... probably, by another $5,000 or $10,000."

Despite the falling COV, it will be a few more months before housing prices stabilise - as valuation is partly based on past transactions, Mr Teo noted.

The HDB reiterated that it has ramped up its new flat supply significantly to meet the demand from first-timer households. This year, it plans to offer up to 22,000 new Build-To-Order flats, subject to demand. Last year, the HDB offered 17,700 new flats under the BTO system and Sale of Balance Flats exercise.

Source: www.todayonline.com