HDB resale deals at 16-year low

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
#1
The Straits Times
www.straitstimes.com
Published on Apr 27, 2013
HDB resale deals at 16-year low

But prices still inching up; analysts see trend continuing for rest of year

By Daryl Chin Property Correspondent

THE number of resale Housing Board flats changing hands has hit a 16-year low, as the latest round of cooling measures bites in.

But prices are still inching up, in a trend that property analysts believe will continue for the rest of the year.

Figures released by the HDB yesterday showed that there were 4,335 transactions in the first quarter of this year - the lowest figure since 1997, when the HDB started revealing the numbers.

On average, the first three months of every year have seen 8,000 transactions.

Resale prices increased by 1.3 per cent this year. While this was more than the 0.6 per cent rise in the same period last year, it was much slower than the 2.5 per cent registered in the last quarter.

Analysts attribute the slowdown to the latest round of cooling measures, chiefly the cap on how much of their income buyers can use to pay off their mortgage.

Since January, loan payments to banks, which previously had no restrictions, have been capped at 30 per cent of a borrower's monthly household income. The cap has also been cut from 40 per cent to 35 per cent for an HDB loan.

With the smaller loans, some buyers can no longer afford to upgrade to larger flats. Which explains why three- and four-room flat sales made up the bulk of the first quarter's transactions, at 66 per cent.

"Permanent residents are doubly affected as they can only borrow from banks, and are also hit by the additional 5 per cent tax for their first home," said PropNex chief executive Mohamed Ismail.

SLP International's head of research Nicholas Mak added that the strong supply of new flats also drew some heat away from the resale market.

The Government launched a record 27,000 new flats last year, and plans to release 25,000 more this year. Demand for resale flats will also be hit by the Government's decision to allow singles to purchase new flats from July.

Mr Ismail said overall median cash premiums above a flat's valuation have already dropped slightly from $33,000 to $32,000 in the first quarter of this year. He expects it to drop to $25,000 by year-end, with premiums for larger flats taking the biggest hit.

HDB's figures also revealed a jump in the number of people renting flats. Subletting transactions rose 15 per cent over the previous quarter to 7,410. The number of flats approved for rent also rose 1.8 per cent to 44,274.

R'ST Research director Ong Kah Seng believes this shows people with urgent housing needs are choosing to rent rather than buy.

"HDB owners are also holding on to their flats, even as they go for their private property, as it has twice the rental yield of up to 6 per cent," he said. "This tight supply of HDB flats, coupled with demand, has led to rising prices."

With demand turning away from larger to smaller flats, prices for the latter will also continue to be driven up, added Mr Ismail.

Analysts expect prices to increase by about 5 per cent throughout this year, spurred on by a low interest rate environment.

In the private sector, the increase in home prices continued to slow in both the landed and non-landed segments.

Prices went up just 0.6 per cent in the first quarter, down from 1.8 per cent in the period before, according to the Urban Redevelopment Authority.

darylc@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Reply


Forum Jump:


Users browsing this thread: 1 Guest(s)