HDB’s flash estimate of 2008’s third quarter Resale Price Index (RPI) saw an increase of 4.2% over the previous quarter to 137.4. While this is just a touch lower than the previous quarter’s increase of 4.5%, it does reflect a continued strong demand for public housing in the resale market, especially in the face of the financial downturn.
The overall dip in cash-over-valuation (COV) attained for resale properties in the second quarter is also likely to have contributed to the slight dip in the RPI increase.
It is interesting to note, however, that 137.4 is now the highest mark reached by the RPI since the last quarter of 1996, which saw an RPI of 136.9.
This flash estimate is well within PropNex CEO Mohd Ismail’s earlier expectations for public housing to reach an overall price increase of at least 13% for 2008.
“With an increase of about 12.4% for the first three quarters, the public housing price increase will now probably be in the region of 15% for the whole year,” says Mohd Ismail.
“In fact, we can even expect to see this strong demand continuing into 2009, mainly because of the time lag to develop the BTO (Build-To-Order) and DBSS (Design, Build and Sell Scheme) flats, coupled with stronger demands from PRs due to higher rental costs.
On the private secondary market scene however, the 1.8% decrease over the last quarter to 174.3, beating the last quarter’s 0.2% increase as the all-time low for at least three years.
“The private property market has been hit hard in the last two quarters,” says Mohd Ismail. “Coming after the oil crisis and higher inflation rate, the Lehman Brothers bankruptcy and resulting financial turmoil has only increased the uncertainty of buyers in the market.”
However, he points out that while we may see fewer speculative buyers and high-end property purchases, this is a good opportunity for those with a long-term view for property investments.
“Though the 2% decline in the Core and Rest of Central regions is in tandem with the current market sentiment and cautious approach by investors,” he observes, “the Outside Central region held its ground as more HDB upgraders and middle-income upgraders are receptive to private properties priced below $1,000psf.”
For enquiries, please contact:
Mohamed Ismail (CEO) 9487 1414
Adam Tan (Corporate Communications Manager) 9006 8726