Q3 Housing and Development Board Resale Prices Rise 2%

RESIDENTIAL MARKET

HDB resale prices in Q3 ratchet up another 2%

Prices of resale flats stayed at a record high in the third quarter, after having grown at the fastest pace of the year.

But while analysts expect the upward trend to continue, they do not forecast runaway prices.

The Resale Price Index (RPI) for Q3 stood at 197.9, an increase of 2 per cent over the previous quarter, data from the Housing and Development Board (HDB) showed yesterday. This was in line with earlier official estimates.

Resale prices had grown at a 1.3 per cent clip in the second quarter, and 0.6 per cent in the first quarter.

For the first nine months of the year, prices have gone up 3.9 per cent, the HDB said.

The number of resale transactions fell 6 per cent to 6,560 from Q2, after surging 19 per cent in the previous quarter, the HDB said.

On the demand side, analysts cited buyers who cannot or prefer not to wait for a new flat, second-time home buyers and those ineligible for Built To Order (BTO) units, such as permanent residents and singles, for driving up prices.

As the cost of resale flats have headed north, so too has the premium that buyers have to pay out of pocket. The median cash-over- valuation (COV) in Q3 rose between 15 and 20 per cent from the previous quarter to $30,000 overall, data from analysts showed.

HDB figures bear this out. For instance, the median COV for a five-room flat in Bishan in Q3 was $66,500, and that for a four-room flat in Queenstown, $55,000. In the previous quarter, the figure was $46,500 for such Bishan flats and $43,000 for Queenstown ones.

Eugene Lim, key executive officer at ERA Realty, agreed broadly with that reading, citing a low unemployment rate here and a growing economy.

Prices could also face pressure from the recent cap on home loan tenures, as homeowners may simply drop their plans to move, he said.

"That adds to the supply crunch of HDB resale flats."

That said, analysts do not expect growth for resale flat prices to reach the rates of the previous two years. They forecast overall increases of 5 to 7 per cent this year, compared to the 10.7 per cent last year and 14.1 per cent the year before.

The record 27,000 BTO units that the HDB is offering this year will help offset any sharp hikes, said Mr Lim

Source: Business Times – 30 October 2012