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HDB Resale Prices Up, Private Home Prices Down in 1Q2012

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by Ernie B. Calucag

Resale prices of public flats rose slightly in the first quarter of this year, while private home prices fell for the first time since the second quarter of 2009.

The Housing and Development Board’s (HDB) Resale Price Index (RPI) has risen from 190.4 in 4Q2011 to 191.6 in 1Q2012, an increase of 0.6 per cent over the previous quarter.

The HDB offered 8,076 flats under the Build-To-Order (BTO) exercises and another 3,825 flats under a Sale of Balance Flats exercise in the first quarter.

“HDB resale market prices have reached its peak due to its continued strong demand for HDB resale flats. However, with the release of more BTO flats in the coming months, resale prices are not expected to increase significantly, moreover, buyers are becoming reluctant to pay high COVs (cash over valuations),” said Mohamed Ismail, CEO of PropNex Realty.

The HDB said it is committed to offer 25,000 Build-To-Offer (BTO) flats this year. In May 2012, HDB will be offering another 4,640 BTO flats for sale in Choa Chu Kang, Kallang/Whampoa, Punggol and Sengkang.

“Overall, the HDB price increment will be muted with no significant growth in the coming months. It is predicted that the resale prices are likely to experience a plateau effect for the second half of 2012. The RPI has consolidated its high prices and growth will be less than 3 per cent,” added Ismail.

Subletting transactions rose 10 per cent from 6,039 cases in 4Q2011 to 6,653 cases in the first quarter.

The total number of HDB flats approved for subletting rose to 41,200 units in the first quarter, compared with 40,000 units in the previous quarter.

COV, the cash premium that home buyers pay upfront, fell across all categories – confirming earlier figures provided by real estate firms.

According to PropNex data, the median COVs declined to S$25,000 in 1Q2012 from S$32,000 from 4Q2011. They expect that COVs will continue to remain within the range of S$20,000 to S$30,000 going forward.

Resale transactions fell 0.5 per cent, from 5,921 cases in the 4Q2011 to 5,892 cases in the first quarter of this year. However, during the months of March and April, Ismail said there was a healthy increase in HDB resale transactions as more HDB owners are taking the opportunity to upgrade to executive condominiums (ECs) and mass market condominiums now that HDB prices are at its peak.

He expects the overall volume of HDB resale transactions to increase by 5 per cent in 2Q2012.

Meanwhile, prices of private residential properties fell marginally by 0.1 per cent in the first quarter of this year, compared with the 0.2-per cent increase in the previous quarter.

This was the first quarterly fall in prices since 2Q2009, the Urban Redevelopment Authority (URA) said on Friday.

Prices of non-landed properties in core central region (CCR) and rest of central region (RCR) both fell by 0.6 per cent in the first quarter, compared with the 0.5 per cent and 0.1 per cent respective increase in the previous quarter.

For outside central region (OCR), prices increased by 1.1 per cent, compared with an increase of 0.6 per cent in the previous quarter.

“The marginal decline in private residential price index shows that home prices are stabilising. The lack of new launches and softer prices of resale properties in OCR and RCR caused both price indexes to fell by 0.6 per cent QoQ each,” said Petra Blazkova, Head of Research, Singapore and South East Asia at CBRE.

Rentals of private residential properties registered a lower rate of increase compared to the previous quarter. Rentals increased by 0.3 per cent in the first quarter, less than the 0.4 per cent increase in the previous quarter.

URA also said that there a total of 6,526 new private homes sold in 1Q2012, highest number of new homes sold in a quarter. Likewise, the 1,557 executive condominiums (ECs) sold during the quarter was also the highest since the return of ECs in 4Q2010.

“The record sales volume could be attributed to high liquidity and low mortgage interest rates as well as the record number of projects launched in 1Q2012,” said Blazkova.

In the first quarter, developers launched a total of 6,903 new private homes and 1,864 ECs, also a record high supply. Most of the projects were from the Government Land Sales programme in 2011, and developers have shortened the turnaround time to launch them.

“Going forward, we expect home prices to continue to ease under the pressure of the property measures. Developers will continue to focus on selling mass-market homes and ECs,” commented Blazkova.