Despite the bumper release of 8,076 new BTOs and Sale of Balance flats in the first quarter this year as well as HDB’s commitment to speed up the queue process and chances for first-timers in getting their homes, the HDB first quarter 2012 results released still reflects the continued price increase.

A closer look at the HDB Resale Price Index (RPI) at 191.6 showed a marginal increase of 0.6% over 4Q2011, marking the lowest growth (since 3Q2006) and a dip of 1.1% from 4Q2011. This result is as expected, as we begin to see HDB resale prices stabilizing.

“HDB resale market prices have reached its peak due to its continued strong demand for HDB resale flats. However, with the release of more BTO flats in the coming months, resale prices are not expected to increase significantly, moreover, buyers are becoming reluctant to pay high COVs. Overall, the HDB price increment will be muted with no significant growth in the coming months. It is predicted that the resale prices are likely to experience a plateau effect for the second half of 2012. The RPI has consolidated its high prices and growth will be less than 3%,” commented Mr Mohamed Ismail, CEO of PropNex Realty.

“A more detailed analysis of the PropNex data showed that the median Cash-Over-Valuations (COVs) are showing a declining trend in 1Q2012, to an overall $25,000 depicting a reduction of $7,000 from 4Q2012. Bigger flats are still commanding higher COVs due to its limited supply. It is not likely that the COVs will drop significantly, given that the economy is doing well while demand for resale flats remains strong, it is expected that COVs will continue to remain within the range of $20,000 to $30,000. Homes near amenities are likely to command higher COVs,” explained PropNex CEO Mr Mohamed Ismail.

    2011    3-rm    4-rm     5-rm  Executive Overall
1Q2011 20,000 22,000 23,000 31,000 22,000
2Q2011 28,000 33,000 35,000 45,000 32,000
3Q2011 30,500 38,000 40,000 55,000 36,500
4Q2011 28,000 33,000 35,000 48,000 32,000

   2012     3-rm     4-rm     5-rm Executive Overall
1Q2012 22,000 26,000 28,000 40,000 25,000

_{Median COV Q-on-Q, Source: PropNex Data}

HDB resale transactions experienced a slight dip of 0.5% as these resale flats remain popular with those who are not willing to wait in the queue and for the completion of BTO flats and for those who do not meet the requirements. However, according to PropNex data, the recent months of March and April 2012 indicated a healthy increase in these HDB resale transactions as more HDB owners are taking this opportunity to upgrade to ECs and mass market condominiums especially when HDB prices are at its peak.

Mr Ismail expects the overall volume of HDB resale transactions to increase by 5% in 2Q2012. Indeed, HDB is making available a wide array of public housings to meet the demands of Singaporeans and it is clear that the HDB resale market is closely monitored for its affordability.

END

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