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HDB Resale Market continues signs of moderation
Singapore Property Market News and Analysis

Latest Property Real Estate News - Published on 26/04/2013

Resale HDB flat prices grew at a slower pace in the first quarter of 2013, as demand adjusted to the slew of property cooling measures introduced in January 2013 and the increased supply of BTO flats. The HDB Resale Price Index (RPI) grew 1.3% to 205.5, compared to a 2.5% growth from the previous quarter.

“The latest revised Mortgage Servicing Ratio (MSR) has impeded many potential buyers from the ability to buy as it had reduced the quantum that they can borrow as the ratio is now being reduced to 30% of the borrower’s gross monthly income for private bank loans (originally 50% of the borrower’s gross monthly income) and 35% for HDB loans from previously 40% of the borrower’s gross monthly income. With this latest policy introduced in January, home sellers are cautious of the risks as they may not be able to secure sufficient loan for their next home purchase. The policy for singles as they can purchase BTO flats now and the 5% Additional Buyer’s Stamp Duty (ABSD) implemented had impacted the HDB resale market. PRs will now have to raise an additional 5% cash outlay to pay for the ABSD in their purchase of the resale flat, these are the contributing factors for the weaker growth in 1Q13. We are starting to see the desired effects of moderation in the HDB resale market,” explained Mr Mohamed Ismail, CEO of PropNex Realty.

COVs takes a dip as housing transactions drop

Cash premiums that buyers pay for resale HDB have fallen in the first three months of this year, on the back of a lower transaction volume. Based on PropNex data, the median overall cash-over-valuation (COV) for the first quarter of this year was $32,000, 3% down from $33,000 in the preceding three months.

Q/Yr          3-rm     4-rm     5-rm   Executive Overall
1Q2012 22,000 26,000 28,000   40,000   25,000
2Q2012 20,000 25,000 29,000   40,000   25,000
3Q2012 25,000 30,000 32,000   40,000   30,000
4Q2012 28,000 35,000 38,000   50,000   33,000
1Q2013 28,000 32,000 36,000   55,000   32,000
Source: PropNex data

“In addition, the MSR ratio also affected the buyers' ability to take higher loans, which will in turn affect their ability to pay COV. So, we are predicting that COVs to continue to decrease over the next few months and possibly reach $25,000 by the end of 2013, a drop of 25% from 4Q12. Despite lower COVs, overall median resale price (MRP) rebounded to $455,000 in 1Q2013, up 2.2 per cent from previous quarter’s $445,000,” commented Mr Ismail.

Q/Yr              3-rm         4-rm        5-rm      Executive    Overall
1Q2012 $333,000 $424,000 $500,000 $604,880 $422,000
2Q 2012 $338,000 $435,000 $508,000 $610,000 $434,000
3Q2012 $347,000 $440,000 $520,000 $601,444 $442,000
4Q2012 $348,000 $455,000 $530,000 $624,000 $445,000
1Q2013 $351,444 $450,000 $530,000 $635,000 $455,000
Source: PropNex data

Policy risks lingers

“Whilst the increase in price index has moderated in 1Q2013, we remain of the view that prices are unlikely to fall due to strong genuine demand and the lack of supply, strong liquidity and the low interest rate environment. Overall, HDB resale price increase for the entire 2013 will be between 4 to 5 % as demand for resale flats will be reduced due to singles being able to purchase BTO flats directly from HDB, the introduction of MSR and the ramp up supply of BTO flats ,” added Mr Ismail.


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

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