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HDB resale market growth slows down
Singapore Property Market News and Analysis


Latest Property Real Estate News - Published on 25/04/2011
MEDIA RELEASE
FOR IMMEDIATE RELEASE (25 April 2011)
HDB resale market growth slows down
The cumulative impact of the cooling measures announced by the Government on 30 August 2010 and 13 January 2011 are clear from the 1Q11 results released by HDB today.
The HDB Resale Price Index (RPI) saw a minimal increase of just 1.6% for 1Q11 Q-on-Q, down from a 2.5% growth the previous quarter. This reined in growth was coupled with a 4% drop in the resale transaction volume to 6,228 cases and a 9% decrease in median Cash-Over-Valuation (COV) levels to $21,000, from 4Q10 to 1Q11.
“The cooling measures have certainly been effective in both eradicating investors’ speculation in the HDB resale market as well as encouraging owner-occupation for resale flats,” explains PropNex CEO Mr Mohamed Ismail. He refers to the inhibitive measures of the reduced Loan-To-Value ratio on additional mortgages to just 60% announced by the Government in January to further cool the property market, as well as the stamping out of HDB home ownership by private property owners/investors.
 
Gradual Growth Coupled With Rising COVs
“This more gradual growth for the RPI looks set to continue,” continues Mr Ismail, “as we (PropNex) can see growths of up to 2.6% in our median resale prices for April 2011 from 1Q11.
“However, while the RPI is expected to grow more sustainably, the COV levels which have been bottoming out over the last few months look set to increase,” he says, referring to PropNex data for April 2011, which records a 12.1% to 23.8% increase in COV levels from 1Q11, as seen in the table below.
 
3-Room
4-Room
5-Room
Executive
Overall
1Q11
$16,000
$20,000
$20,000
$30,000
$20,000
April 2011
$21,000
$22,766
$25,000
$37,000
$23,000
*PropNex Data
Mr Ismail also expects the transaction volume to exceed 7,000 for 2Q11, based on the transaction volume history for PropNex over the last few months.
 
Still Good Time To Buy Resale
Given the slower increase in the RPI and the fact that COV levels are still relatively low, Mr Ismail feels that it is still a good time to buy HDB resale flats, as prices are expected to increase in the coming quarters.
“Although COV levels may rise in 2Q11 after dropping in 1Q11, the levels are still reasonably low,” he says. “First-time buyers and young couples who are looking for flats below the median resale price and COV can look for 4-room flats in Bukit Panjang and Woodlands. In 1Q11, a 4-room flat in those estates cost about $369,000 and $356,000, inclusive of $20,000 and $18,000 COV, respectively. As a comparison, overall 4-room flats in Singapore for 1Q11 cost a median $394,000, including a median COV of $22,000.
However, he cautions that if would-be HDB upgraders continue to be priced out of the mass market private properties, and the supply of resale flats does not rise fast enough or remains limited due to the Minimum Occupation Period for both first-timers and non-first-time buyers, then the increased demand for HDB resale flats may push the COV levels up even further.
Regardless, Mr Ismail forecasts the HDB RPI to increase by about 8% altogether for 2011.
 
 
END
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