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Resale HDB flats fast regaining interest amongst buyers
Singapore Property Market News and Analysis


Latest Property Real Estate News - Published on 27/07/2012

After moderating in the previous quarters, prices of HDB resale homes rebounded last quarter. HDB resale prices inched up 1.3% in 2Q12 to a new record high – rising more quickly than the 0.6% gain in 1Q12, according to the latest data released today.

The rebound in HDB resale flat prices can be attributed to “buyers being increasingly attracted to the resale market with cash over valuation (COV) prices easing, as well as the lack of supply in the HDB resale market.” explained Mr Mohd Ismail, CEO of PropNex Realty.

“HDB resale prices have remained resilient due to the real and sustained demand. Despite the increase in BTO supply to quell the demand for first timers, there are still demand from other groups who do not qualify; such as PRs, singles, private property down graders and existing HDB lateral down graders or upgraders.”

“We have also witnessed a tight supply in the resale flat market as many potential sellers decide to stay put in their current HDB property as prices have reached its peak in the HDB resale market as well as the private property secondary market (he cites the all time high 0.4% rise in the URA Private Property Index in 2Q12). There is no impetus to sell his current property as he would have to fork out a larger sum of money and a bigger loan to purchase the next property,” explained Mr Mohamed Ismail.

Stabilising COVs enticed buyers back into the HDB resale market

The stronger price growth exhibited in 2Q12 could be a result of decreasing cash over valuations (COVs), which encourages first-timers together with other homebuyers who could qualify, to consider purchasing which in turn led to the increase in the resale prices. Buyers may also have turned to resale flats after failing to get their preferred choice at the more than 12,000 HDB flats launched so far this year, leading to both resale activity and prices heading back up.

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.

Median COV    3-rm       4-rm       5-rm   Executive Overall
4Q 2011       $28,000 $33,000 $35,000 $50,000 $32,000
1Q 2012       $22,000 $26,000 $28,000 $40,000 $25,000
2Q 2012       $20,250 $25,000 $29,000 $40,000 $25,000

Source: Streetsine and PropNex

According to PropNex data, the media COV for 3-room flats now stands at about $20,250. This is good news for potential homebuyers of smaller HDB resale flats, especially the lower-income families and younger couples.

The overall median resale prices are still inching marginally upwards, according to PropNex compilation of 1Q12 results, the median resale prices of $333,000, $424,000, $500,000 and $604,888; compared to 2Q12 median resale prices of $338,000, $435,000, $508,000 and $609,500 respectively of the various towns.

“From the overall analysis of the demand and supply of HDB resale homes, in the short-term, it is unlikely that prices will change drastically. With the 25,000 flats to be released in 2012, this may reduce the demand for resale flats. This more gradual growth for the RPI looks set to continue in the next 2 quarters with a price change of between 3% to 4% in the HDB resale market in 2012,” remarked Mr Mohamed Ismail.

END

For media enquiries, please contact:

Carolyn Goh
Corporate Communications and Marketing Manager
P & N Holdings Pte Ltd (holding company of PropNex Realty)
480 Lorong 6 Toa Payoh #10-01 HDB Hub East Wing Singapore 310480
DID : (65) 6829 6968 / 98287834 | Main : (65) 6820 8000 | Fax : (65) 6829 6600
www.PropNex.com



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