Q3 HDB resale prices up again to hit record

Price gains in the public housing resale market are picking up momentum again. A 2 per cent quarter-on-quarter hike in Housing & Development Board's resale flat price index lifted it to a fresh record in Q3. This is the biggest Q-on-Q increase since the 3.8 per cent gain in Q3 last year.

The index rose 0.6 per cent in Q1 this year and 1.3 per cent in Q2. Year-to-date, the index is up 3.9 per cent, and after yesterday's Q3 flash estimates, market watchers expect it to end the year 5 to 6 per cent higher than 2011.

ERA Realty Network key executive officer Eugene Lim raised a flag on the pace of increase. The HDB resale price index is climbing much faster than the 1.5-2.5 per cent growth expected in Singapore's economy this year.

And with higher resale prices, property agents are reporting that the overall median cash over valuation figure has started to spiral up again.

Based on ERA Research's analysis of Singapore Real Estate Exchange data covering HDB resale transactions lodged by major property agencies, the overall median COV increased from about $26,000 in Q2 this year to $30,000 in Q3. This reverses the earlier trend, when the figure eased from a high of $37,000 in Q3 2011 to $33,000 in Q4 2011, $27,000 in Q1 2012 and $26,000 in Q2 2012.

Giving a split of the Q-on-Q increases in median COVs by flat types in Q3, ERA said the biggest hike of 18.18 per cent was for three-room flats, while the smallest rise of 9.14 per cent was for executive flats. "This is expected as population demographics have shifted and families are smaller," said Mr Lim.

The median COV for four-room flats rose 11.11 per cent Q-on-Q to $30,000 while that for five-room flats appreciated 14.66 per cent to $33,250.

The Housing & Development Board in its press statement yesterday stressed that it has been ramping up the Build-to-Order flat supply to meet the housing needs of first-time buyers. HDB will be offering 27,000 BTO flats this year, 2,000 units more than originally planned. Last year, it launched around 25,000 BTO flats. The supply has gone up from 8,000 units in 2008 and 9,000 flats in 2009 to 16,000 units in 2010. HDB is also offering some 7,200 units under Sale of Balance Flats (SBF) exercises this year, up from 2,800 units last year. The figures were 2,100 flats in 2009 (the year when SBF was implemented) and 1,600 flats in 2010.

ERA's Mr Lim finds it hard to predict HDB's resale price index next year as much will depend on the extent of an expected increase in the proportion of BTO flats allocated to second timers. He adds that although resale flats in mature estates are likely to continue commanding high prices, the launch of BTO flats in these areas in September and November will help prevent runaway price increases.

Source: Business Times – 2 October 2012