Hot, robust and pulsating. Three words market watchers have used to describe the resale flat market this year, and it looks like they will be saying the same next year.
Resale prices for Housing & Development Board (HDB) homes could go up by between 3 and 8 per cent in 2013, and cash-over-valuations, or COVs, could rise 5 to 10 per cent, analysts told The Business Times.
Prices for resale units gained 3.9 per cent in the first nine months of the year, the HDB's latest statistics showed. That is down from 10.7 per cent last year and 14.1 per cent in 2010, but prices are still at a record high.
Full-year growth could clock in at between 5 and 7 per cent, the consultants said.
Meanwhile, COVs have resumed their ascent after stabilising in the first half of the year. The median for this cash premium is now $34,000, based on the Singapore Real Estate Exchange's latest report, $2,000 shy of the record set last year.
A record number of more than 27,000 Built-to-Order (BTO) flats will be released this year, bringing the total to some 83,000 since 2009. The HDB also increased the allocation of BTO flats and executive condominiums (ECs) to second-time buyers in March.
Analysts are expecting between 22,000 and 27,000 BTO units for next year.
Sales volume for pre-owned homes fell from over 32,000 in 2010 to about 25,000 in 2011 and around 19,000 in the first nine months of 2012, he said.
"The fresh supply of resale flats is quite low," said Eugene Lim, key executive officer at ERA Realty.
One reason is the policies introduced in 2010 that required owners of private homes to sell them off if they buy HDB units, and extended the Minimum Occupancy Period (MOP) from three to five years.
This has made upgraders reluctant to sell as it meant they could not buy an HDB flat in future.
Property measures introduced this year were a mixed bag.
Restrictions on the number of shoebox units in private residential developments could chase demand back to resale flats.
Low borrowing rates this year continued to spur interest from second-time buyers and permanent residents (PRs) for whom monthly instalments can be lower than rents.
Analyst said that most of the same factors that contributed to the buzz this year will remain relevant next year.
The supply of resale flats will remain tight even as more BTO units roll out. A commitment to a new flat now means the unit is effectively eliminated from the market for eight years: assuming three years of construction followed by a five-year waiting period.
But there could be some relief as new flats and ECs released in 2010 near their completion.
Owners of both private and HDB homes could also offload their flats if they are unable to rent them out, or if yields are unattractive.
But ERA's Mr Lim added that rising prices for mass market private homes may keep upgraders away, who will instead look for a flat with a good location or just stay where they are.
Where housing policy is concerned, caution seems to be the watchword, with the consultants not advocating drastic measures.
Source: Business Times –27 December 2012
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