HDB,
private home prices up slightly
HDB resale prices rise 1.3% in
second quarter, private home prices up 0.4%
Experts say the slowdown in the HDB resale market at the
start of the year that led to lower COVs has enticed buyers back
into the resale market. -- ST PHOTO: ALPHONSUS CHERN
By ESTHER TEO
AND DARYL CHIN
AFTER a quiet start to the year, prices of both private and
public homes rebounded slightly last quarter, even as the battle to
keep a lid on prices rages on.
Housing Board (HDB) resale prices inched up 1.3 per cent
in the second quarter to a new record high - rising more quickly
than the 0.6 per cent gain in the three months before, according to
preliminary data released yesterday.
The 0.6 per cent first-quarter rise had been the smallest
since the first quarter of 2009 and had sparked talk that prices
had hit a ceiling and might even correct down the road.
The dip in private home prices in the first quarter was
also shortlived with prices inching up marginally by 0.4 per cent,
reversing a 0.1 per cent fall in the first three months this
year.
Experts say the slowdown in the HDB resale market at the
start of the year that led to lower cash premiums paid for resale
flats - also known as cash over valuations (COVs) - has enticed
buyers back into the resale market.
Some private property owners may have decided to cash out
of their suburban condos to buy HDB flats instead, leading to an
uptick in resale deals, they add.
DWG's senior manager of research and consultancy Lee Sze
Teck noted that median COVs for five-room flats, for example, were
27 per cent lower in the first quarter from the quarter before,
according to his agency's sales.
Buyers may also have turned to resale flats after failing
to get a unit at the more than 8,000 HDB flats launched in March
this year, leading to both resale activity and prices heading back
up, he said.
Some owners of older mass market condos might have also
decided to take profit and move to HDB estates to be closer to
their children, ERA Realty key executive officer Eugene Lim noted.
They are mostly older retirees.
The proportion of HDB resale purchases by those with
private home addresses has risen to about 30 per cent from 25 per
cent for all of last year, according to ERA's transactions, Mr Lim
said. This suggests more private home owners have taken the
opportunity to cash out of the bull run of mass market home prices,
which spiked 55 per cent in the past three years.
Still, despite this uptick in market activity, HDB resale
prices are expected to flatline or even dip towards the end of this
year.
PropNex chief executive Mohamed Ismail said prices have
peaked and are unlikely to see substantial rises as buyers are
becoming reluctant to pay high COVs.
"The (index) has consolidated its high prices and growth
will be less than 2 per cent in the next quarter. I would not be
surprised to see a negative growth in prices towards the end of
2012."
DWG's Mr Lee expects resale HDB prices to increase by
about 5 per cent for the rest of the year.
Overall median COVs, however, are also expected to hold
steady. COVs hovered at about $26,000 in the first two quarters,
well down from $35,000 in the fourth quarter of last year.
One reason, said Mr Lim, is rising HDB flat valuations,
which are catching up with selling prices. "Valuations are based on
previously transacted prices, and since the selling price of resale
flats is not growing exponentially, cash premiums seem to be
holding steady."
He cited a three-room flat in Potong Pasir valued at
$360,000 in May and sold with a $60,000 COV at $420,000. A month
later, in June, a similar flat was valued at $380,000, a difference
of $20,000.
On the private front, experts also remarked on the
resilience of the market, which has stood its ground despite a slew
of cooling measures since September 2009.
The 0.4 per cent increase has yet again sent overall
prices of private homes to a record high on the back of low
interest rates and plenty of available loan funds.
Investor appetite for real estate also remains strong
partly owing to turmoil in stock, foreign exchange and commodities
markets, said International Property Advisor chief executive Ku
Swee Yong.
City centre home prices inched up 0.6 per cent, reversing
a dip of 0.6 per cent in the previous quarter while city fringe
home prices were flat. Home prices in suburban areas rose 0.4 per
cent, down from a 1.1 per cent gain.
However, Colliers International research and advisory
director Chia Siew Chuin sounded a note of caution. Rising price
resistance and the onslaught of a fresh land supply may ease demand
for private homes in the next six months with prices expected to be
relatively stable with marginal upside for the rest of the year,
she said.
Slowdown in rise of prices in
suburban areas
BY AMANDA TAN
PRICES of suburban flats are still rising but the pace has slowed
as buyers resist paying top dollar in a market flooded with new
homes. Experts reckon the 'price stalemate' will continue
throughout the year.
Ms Chia Siew Chuin, director of research and advisory at
Colliers International, said yesterday: "The increasing price
resistance in the mass-market segment should help to moderate any
price increases for the next two quarters."
Numbers from the Urban Redevelopment Authority yesterday
show the trend clearly: Private homes outside the central region
recorded a rise of just 0.4 per cent in the three months to June 30
compared with a 1.1 per cent increase in the first quarter.
PropNex chief executive Mohamed Ismail refers to it as a
"price stalemate".
Buyers are less willing to accept high prices,
particularly after the introduction of the additional buyer's stamp
duty last December, he noted.
He said the high prices mean new launches now take longer
to sell as buyers are more selective and price sensitive. Projects
priced below $900 per sq ft are very well-received and garner keen
interest from HDB upgraders, he said.
For instance, sales at The Luxurie in Sengkang slowed
after A Treasure Trove in nearby Punggol was launched, sources
said.
The Luxurie was more than $1,000 psf on average while the
Punggol estate was going for below $900 on average.
The best-selling projects in the second quarter - Ripple
Bay, Flo Residence and Palm Isles - were priced between $850 and
$880 psf, noted Mr Joseph Tan, CBRE's executive director for
residential.
Developers also ramped up marketing, offering cash
rebates, discounts, lucky draws and celebrity endorsements, he
said.
The ample supply of new launches in the heartland,
especially in the north-east and Pasir Ris, helped slow rising
prices as well, said Mr Eugene Lim, ERA Realty's key executive
officer.
Caveats lodged also showed that the volume of
transactions in the suburbs dropped 8 per cent, from 5,031 in the
first quarter to a preliminary 4,634 in the second.
Knight Frank's head of consultancy and research, Mr Png
Poh Soon, reckons prices for the year will be up between 0.5 and 1
per cent over last year.
Despite upcoming supply from the latest Government Land
Sales programme, people are still buying at the new launches, in
case new cooling measures are imposed. "(Thus), we expect sales
volume to achieve a new record in 2012 with more than 20,000 units
sold by year end," Mr Png said.
Top of the news, The Straits Times, Tuesday, July 3 2012, Pg
A3
