Cooling measures affect HDB resale market, even as prices rise

Source: TODAYonline
by Imelda Saad Aziz

SINGAPORE - First, it was the private home market. Now, latest figures released Friday by the Housing and Development Board (HDB) showed that the Government's property cooling measures have also chilled the HDB resale market - even though prices continue to rise.

Transactions in the HDB resale market fell 10 per cent to 8,205 between July and September, down from 9,114 in the previous quarter.

The HDB said there was a 25-per-cent drop in monthly resale volume from August to September, compared to the previous month.

But in its statement, the HDB said that as most of the transactions for the third quarter were submitted to HDB before the measures, "the impact of the measures is not fully reflected in the data".

Over the same period, resale flat prices went up by 4 per cent, with median cash-over-valuation unchanged at $30,000.

The Government announced a slew of cooling measures on Aug 30, which tightened financing and restricted homeownership of HDB flats.

Said ERA Real Estate associate director Eugene Lim: "August was our (company's) highest month for the entire year in terms of volume of transactions as well as resale prices. After the announcement, September became our lowest month for the year."

Mr Lim said the market is experiencing a "mismatch of expectations" - with buyers, who are expecting prices to fall, unwilling to match the high asking prices.

Propnex spokesperson Adam Tan felt that the huge supply of Build-To-Order flats which came on to the market meant that first-time buyers had "alternatives to the resale flats".

In spite of the falling number of transactions, resale prices rose for the ninth straight quarter. But, observers expect the median COV to fall by the end of the year to around $20,000 when the full impact of the cooling measures is felt.

Mr Nicholas Mak, executive director at SLP International Property Consultants, expects COV to fall another 10 to 25 per cent by the end of 2011.

"I think there is less upside potential for COV in the near future," said Mr Mak.

Overall, analysts predict resale prices could fall by 5 to 8 per cent over the next six months. Correspondingly, they noted that valuations of flats are also beginning to slide, reflecting market conditions dictated by recent transactions of similar properties.

The HDB will be launching 1,320 BTO flats in Bukit Panjang and Sengkang on Oct 26. Another 2,200 new flats will be launched in Yishun and Punggol in November and December, respectively. Additional reporting by Saifulbahri Ismail