Featured Condo › Bumper supply takes its toll on resale HDB flats
In the first quarter alone, HDB released a total of 8,076 BTO flats into the market, in addition to another 3,825 flats which were offered under a sale of balance flats exercise. But buyers can expect the number of BTO launches to hit a generous 25,000 by year's end, HDB indicated.
The influx of supply is already starting to trigger signs of fatigue in the resale market with the statutory board's flash estimate of the first quarter's resale price index (RPI) rising an anaemic 0.6 per cent from the previous quarter, reflecting a slowdown from the 1.7 per cent increase in the fourth quarter last year. This also marks the lowest growth in the index since Q3 2006.
Said Eugene Lim, Key Executive Officer at ERA Realty Network: 'Resale prices are stabilising and cash-over-valuation (COV) is coming down. The main reasons are that prices have hit a ceiling and homebuyers are attracted by HDB's continued BTO launches of a variety of flats in a variety of locations.'
In addition, the recent policy change of setting aside 15 per cent of the BTO flats in non-mature estates for second timers has also drawn more home buyers away from the resale segment, he added.
Overall resale transaction volumes slid in the first quarter of the year, with larger units - comprising 5-room and executive flats - bearing the brunt of the fall.
Potential buyers of three-room flats usually with lower income relative to buyers of larger flats can now opt for a BTO flat which is more affordable while those who intend to buy a five-room or executive flat have an option of purchasing an executive condominium (EC) with the revision in income ceiling.
In the subsequent months, resale prices are expected to continue stabilising on the back of declining COV and the impact of recently implemented policies such as a raised income ceiling.
Notably, median COV has come down across all flat types during the first quarter and is expected to continue trending south in the coming months before stabilising at around $15,000 by the end of 2012, say two consultants.
A decline in HDB resale prices by year's end is expected should this downward trend continue, attracting back buyers who are not willing to wait for the completion of a BTO flat or those who simply do not meet the requirements to apply for one.
In the pipeline ahead, HDB will be launching 4,640 BTO flats in areas such as Choa Chu Kang, Kallang/Whampoa, Punggol and Sengkang next month.
Source: Business Times – 3 April 2012
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