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Steepest increase of HDB resale prices so far, with signs of stabilization
Singapore Property Market News and Analysis


Latest Property Real Estate News - Published on 29/10/2012

 HDB resale price index (RPI) continued its upward momentum by inching up 2% in Q3 to reach 197.9 points, which is a new record high – rising more quickly than the 1.3% gain in Q2, according to the latest data released by HDB today. This also represents the sharpest rate of increase for 2012 so far.

Chief Executive Officer of PropNex Realty, Mr Mohamed Ismail, said “The 2% increase in the resale price index came as a bit of a surprise, in the wake of a greater oncoming supply of BTO flats since last year and the moderation of HDB resale prices in the first two quarters of this year. The possible reason for the growth is that the demand is still strong for public housing, and that the supply of BTO flats takes a few years to be ready for move-in. Thus, the demand for resale flats is mainly by those who prefer not to wait. Moreover, there is also continued strong demand from buyers who are ineligible for BTO flats such as permanent residents, singles, second-time buyers such as private property down graders and existing HDB lateral down graders or upgraders who require housing immediately and are unable to wait for BTO units to be built”.

“We have also witnessed a tight supply in the HDB 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 0.5% rise in the URA Private Property Price Index in Q3). Due to the widening price gap between HDB resale flats and private properties, prospective buyers who were eyeing private properties could also be put off by the inflated prices, and enter the HDB resale market instead”, explained Mr Mohamed Ismail.

“Despite the rise in HDB resale prices, we believe that the HDB RPI is slowly heading towards stabilisation as it has increased by only 3.9% in 2012 so far, compared to a much steeper growth of 8.5% at the same time last year”.

Lower resale transaction volume due to the lower supply

It was noted that resale transactions fell by about 6% from 7011 cases in 2Q12 to 6,560 cases in 3Q12; homeowners would prefer to rent out their HDB flats then to sell them. HDB flats are viewed as a valuable asset by most Singaporeans and they do not have an incentive to sell and upgrade as private residential market prices are at its all-time high too. The lower supply that had led to a lower transaction volume, had caused the overall resale prices to rise. COVs hovered between $25,000 and $28,000 in the first two quarters, before rising to $30,000 in Q3, which represents a 20% increase Q-on-Q.

                 3-room   4-room 5-room   Executive Overall
1Q 2012 $23,000 $30,000 $30,000 $42,888 $28,000
2Q 2012 $21,000 $25,000 $28,000 $40,000 $25,000
3Q 2012 $25,000 $30,000 $32,000 $40,000 $30,000
Source: Streetsine and PropNex

According to PropNex data, the overall median resale prices (MRP) continued its upward trend by rising from $435,000 in Q2 to $443,000 in Q3, or by a marginal 1.8%.

                    3-room    4-room    5-room   Executive    Overall
1Q 2012 $332,500 $425,000 $502,000 $607,500 $420,000
2Q 2012 $337,000 $431,000 $503,000 $608,000 $435,000
3Q 2012 $347,000 $440,000 $520,000 $605,000 $443,000
Source: Streetsine and PropNex

“The upward trend of the HDB resale prices will continue until the end of the year as economic growth and employment levels are positive. In the short-term, it is unlikely that prices will change drastically as the government continues to flush the market with ample supply of flats (the HDB recently upped the supply of BTO flats by 2,000 to a record 27,000 units) this year to rein in resale prices and to meet strong first-timer demand. As such, we expect the upward pressure on HDB resale prices to abate with the onset of higher supply.

“However, it would take some time before the effect of the increased supply is felt. As such, we expect the RPI to go up by another 1 to 2% in the fourth quarter to hit approximately 5 to 6% for the entire 2012,” concluded 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 S(310480)
DID : (65) 6829 6968 / 98287834 | Main : (65) 6820 8000 | Fax : (65) 6829 6600
www.PropNex.com



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