2013 HDB resale flat deals hit record low Housing & Development Board (HDB) resale flat prices registered a drop in the fourth quarter of 2013 that was larger than estimated, leading to the first annual price decline in eight years. Transaction volumes for the year plummeted to the lowest level since HDB started compiling the data in 1997, as sales continued to weaken in the last three months of the year. Property consultants say they expect an even wider fall in prices this year, although transaction volumes may improve given how far they fell in 2013. The resale price index released by the HDB yesterday showed a 0.6 per cent fall in 2013, the first annual decline since 2005. A 1.5 per cent fall was posted in the fourth quarter from the third quarter. This is the second quarter in a row that resale flat prices have registered a drop. Some 4,001 transactions were inked in the last three months of the year, a 12 per cent drop from the third quarter. In total, 18,100 flats changed hands during the year, a 28 per cent fall from 2012 and the lowest number recorded in at least 16 years. Earlier this week, the HDB said it would offer 24,300 BTO flats this year. Also dampening demand is the change made to the mortgage servicing ratio (MSR) for HDB loans, which was tightened in August last year to bring it into line with loans from private banks. In addition, maximum loan tenures for HDB loans were reduced from 30 years to 25 years, and from 35 years to 30 years for private bank loans. Said Eugene Lim, key executive officer of ERA Realty: The MSR cap of 30 per cent and the maximum loan term of 25 years for HDB mortgage loans essentially reduce the loan quantum that a would-be HDB flat buyer is able to obtain, and therefore reduces his ability to buy higher-priced flats or larger flats that come with a larger price quantum. The governments move to allow singles to buy two-room BTO flats in non-mature estates also contributed to the demand drop for resale flats, especially for three and four-room units, added Mr Lim. He believes that prices will fall between 5 per cent and 8 per cent this year. The government is therefore unlikely to introduce further measures to rein in resale flat prices, he said. As prices are declining gradually but consistently, the government is unlikely to be introducing further measures as it is not their intention to have government policies causing any significant price declines over a short period, predicted Mr Lim. The consultants also expect cash-over-valuation (COV) to continue moderating this year. According to ERA Research, the median COV plunged to $8,000 in 2013 - a 76.4 per cent drop and the lowest since the second quarter of 2009, when the COV was $3,000. Overall, however, median COV is unlikely to dip to zero given Singapores growing economy and a tight employment market, said Mr Lim. The COV drop also means that home buyers who do not meet qualifying requirements to purchase BTO flats, or are unwilling to wait a few years for new flats to be completed, may be attracted to enter the resale HDB market again, said Mr Lim. He believes that the overall resale transaction volume for 2014 will be 5-10 per cent better than the historic low of 18,100 in 2013. Said Mr Lim: We may expect a pick-up in transaction volume possibly after the Chinese New Year festivities. Transaction volume in March, April and May are likely to set the pace for the rest of the year. Source: Business Times – 25 January 2014
Posted on: Mon, 27 Jan 2014 15:23:15 +0000
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