Condo resale prices flattish in October: SRX

Condo resale prices flattish in October: SRX

Resale prices of non-landed private homes stabilised in October, leading some in the industry to wonder if the total debt servicing ratio (TDSR) framework has exhausted its effectiveness in bringing prices down.

Resale prices rose a slight 0.4 per cent in October, compared to September. Prices in the city fringe and suburbs each climbed 0.6 per cent, while prices of city apartments fell 0.3 per cent, according to flash figures released by SRX on Tuesday.

Again, analysts cautioned against calling this a price recovery.

There is no change in the market fundamentals. The cooling measures and TDSR framework are still in place and the government has mentioned that it would not remove these curbs any time soon.

Overall prices are expected to continue on a downward trend, but the rate of decline seems to be decelerating. Barring any changes in current housing policies, a rebound in prices is not expected to happen in the short term. We expect prices to continue to edge lower.

Year-on-year, resale prices have dropped 4.5 per cent from October 2013, and 5.2 per cent since its recent peak in January 2014.

The latest flattish price movement came on the back of lower resale volume which slipped 2.2 per cent. About 451 units were resold in October, compared to 461 in September.

Some analysts say that prices are flattish or slightly higher in October because buyers who have been waiting for prices to fall further finally decided to conclude the deals ahead of the festive season, which would have further dwindled their options. TDSR will still be effective in controlling prices from increasing and will lead to some slide in prices after December.

Others say the market has adjusted to TDSR, thus explaining the slower rate of decline. TDSR, together with other cooling measures, is still very effective in tempering demand in the market and keeping prices from moving up.

The overall median "transaction over X-value (T-O-X)" also remained negative in October. The median T-O-X measures whether people are paying above or below the property's estimated market value, so a negative indicator shows poor market sentiment. The median T-O-X has been negative since October last year.

Source: The Business Times, 12 Nov 2014