$1m HDB flat
What it's all about
Home prices in Singapore continued to set new records this
month, with the sale of a Housing Board flat hitting the psychological $1
million mark.
A resale executive flat in Queenstown is in the process of
being sold for a mind boggling $1 million, beating a record set by a Bishan
executive maisonette when it sold for $980,000 barely a week earlier.
Just a few days later, it was reported that a 1,680 sq ft
HUDC maisonette along Shunfu Road was sold in July for $1.28 million, topping
last year's $1.22 million sum for a 1,668 sq ft HUDC flat in the same area.
What's the buzz?
THE record prices have raised concerns that the housing
market is still red hot, despite five rounds of cooling measures and the
aggressive roll out of new HDB flats.
Analysts attribute the high prices to private-property
downgraders who have cashed out and want to live in a flat of comparable size.
But they have prompted many to ask: Is this an alarming trend or are these just
outliers in a housing market where prices are stabilising?
Flash estimates from the Singapore Real Estate Exchange
showed that HDB median resale prices rose 1.8 per cent in the third quarter,
after rising 2 per cent in the second quarter.
In the wake of the record prices, National Development
Minister Khaw Boon Wan had urged Singaporeans not to be "traumatised"
by the sales.
It did not mean that home prices are all going to get
exorbitantly high, he said, and urged people to look at general prices for most
units.
Prices of new Build-to-Order flats have generally been
affordable, he noted, and dismissed the need for additional measures to cool
the housing market.
Why it matters
HOUSING prices have long been a hot political issue, though
the Government's moves to clamp down on speculation and foreign investment,
along with the promise to build 25,000 new flats this year, has taken the fire
out of it. But if more record prices appear, it could well re-ignite the issue.
With the United States Federal Reserve launching QE3 - a
third round of quantitative easing involving the printing of more money to
pump-prime the economy - a flood of hot money is expected to hit Asia's shores
again.
This money will be looking for appreciating assets like
property to invest in, and will also keep interest rates - and therefore
mortgage rates - depressed in Singapore.
And with no end in sight to the low interest rates, the
effect of QE3 could be to bring forward demand from prospective buyers who were
uncertain about the interest rate environment - thus driving up demand for
homes and pushing up prices further.
What's next?
IN HONG KONG, the central bank said it will limit the
maximum term on all new mortgages to 30 years, as part of further measures to
cool the property market.
In Singapore, many property analysts are predicting home
prices will continue rising, with some saying that more cooling measures will
be needed.
Others, however, believe that too heavy a hand could kill
the market, and plump for fine-tuning existing measures as the best way
forward.
Source: The Straits Times – 22 September 2012