Tag Archives: resale price

Striking a precious housing balance

FEWER applicants for new flats and five consecutive quarters of resale price falls have seen the Housing Board market going off the boil. The operative word is “going”, denoting an incomplete market correction. National Development Minister Khaw Boon Wan’s view that control measures for the sector as a whole should remain is the clearest word yet that real estate retains a capacity to cause an unwelcome wobble in the economy. Relative to the cumulative price run-up in the boom years, the considered judgment is that such cooling as has occurred has some way to go.

A planned 25 per cent reduction in the supply of build-to-order HDB flats next year, on top of a smaller trim this year, is a measured response in the sense that most people who currently need a flat have got one, although prices are only slowly coming off their peak. Young married couples and families wanting to live close together will continue to enjoy preference. This is pitching close to the golden mean.

But mindful of the last bout of frothiness, when cash over valuation became a burden to buyers, one could not be certain that the supply contraction will produce the desired price stability within a reasonable period. (In new and resale private housing, industry expectations of 10-15 per cent falls to more sensible price levels have not eventuated.)

Things are never that simple in real estate, especially in public housing planning. The HDB works to a gestation of four to five years, beginning with the number crunching of existing stock, marriage rates, foreigners granted residency and, yes, even emigration outflow to an extent. Anything could happen in the interim to necessitate a review.

Preserving a balance between holding fair value for existing owners and keeping prices reasonable enough for intending buyers and upgraders is part logic, part intuition. Singapore has seen extremes, sometimes unavoidably.

In the booming 1990s, HDB applicants had to contend with long queues despite strong supply. Finicky buyers undecided about location and flat-type waited for up to seven years. The Asian currency crisis that struck shortly after caused the market to seize up, leaving what became a dead stock of 30,000 flats. It took years to clear the surplus.

Disruptions can occur at any time. Unease about the current global growth slowdown is a reminder that asset volatility can be managed up to a point only. Imponderables include terrorist strikes and spikes in interest rates.

The HDB maintains a small buffer stock to act as a stabiliser, but even this is subject to variables. Hence, it would be a tall order to expect planners to always strike a perfect balance between supply and demand, and between affordability and eroding asset values.

HDB resale prices resuming uptrend: SRX

Resale prices for HDB flats are showing signs of picking up, with latest data pointing to a 2-per-cent rise in the last two months, according to the Singapore Real Estate Exchange (SRX).

The median resale price for HDB flats islandwide increased to S$438,800 in the last two months from S$430,000 in the first quarter of the year, the SRX said yesterday.

The SRX is a consortium of 11 leading property agencies including ERA, Savills and OrangeTee.

Mr Tan Kok Keong, director of research and consultancy at OrangeTee, said prices would remain resilient for the rest of the year but would likely see slower growth.

“I will expect low single-digit increase for the rest of the year,” he said.

The SRX figures suggest the market is resuming its uptrend after official data from the HDB published in April showed resale prices rising at their slowest pace in five-and-a-half years.

The HDB’s resale price index (RPI) rose 0.6 per cent in the first three months of the year from the fourth quarter of last year, lower than the 1.7-per-cent increase in the previous quarter and at the slowest pace of growth since the third quarter of 2006.

Analysts said a slew of recent Government measures had helped to stabilise the RPI, including the ramped-up supply of new Build-to-Order (BTO) flats, the increased allocation to second-timers for such flats, as well as the higher income ceilings for direct purchases.

But property agency DWG noted earlier that “the litmus test for the HDB resale market will come three to four years down the road when these BTO flats and ECs are completed and there is a real urgency for these home buyers to sell their existing HDB flats within six months.”

Meanwhile, the private resale market is also on track for a stronger second quarter.

SRX data showed prices for private resale non-landed in the core central region rose 5.9 per cent over the last two months to S$1,733 per sq ft from S$1,636 per sq ft.

Source : Today – 2012 Jun 8