With affordability being a key consideration especially after the imposition of the additional measures in January, homebuyers continued to be drawn to the relatively more affordable mass-market homes in the Outer Central Region (OCR). In 2Q 2013, price increase in the OCR contributed to the lion’s share of price increase as the private property price index increased to 214.9, or up 0.8% from Q-o-Q in 1Q 2013. Overall, market sentiments remained relatively upbeat despite initial chills brought on by the successive rounds of market cooling measures. URA’s preliminary estimates also showed that private residential property prices still remained on the up-trend.
In 2Q 2013, high-end luxury homes in the CCR bore the brunt of the impact of the successive round of cooling measures as it slipped 0.2% (the first time CCR prices have declined since 1Q 2012), whereas non-landed homes in the RCR was up a 0.2%. In the OCR—where prices of non-landed private homes increased the most, price growth up 3% Q-o-Q, which doubled the 1.4% quarterly growth recorded in 1Q 2013.
“The continued climb in private home prices suggests that market fundamentals have not been overly compromised by the cooling measures as they are still able to generate sufficient sales momentum to thrust prices forward. Certainly, the various sweeteners dangled by developers to entice and encourage commitment by buyers also helped to prop up home prices”, commented Mr Mohamed Ismail, CEO of PropNex Realty.
Impact of the latest Debt Servicing Framework by MAS
“The latest new debt servicing framework introduced by MAS with loan interest rates pegged at 3.5 per cent, may prompt potential homebuyers to take a more discretionary view of home buying with the reduced affordability levels. This tougher new rule on property financing is not likely to affect the private property prices as developers are not prepared to bring down prices immediately.
Transaction volume will likely to be affected and for the entire 2013, I expect overall prices to increase by up to 3%. On the other hand, OCR properties are expected to increase by up to 7 - 8%,” concluded Mr Mohamed Ismail.
2nd QUARTER 2013 FLASH ESTIMATES - HDB
Price appreciation of resale Housing Board (HDB) flats have slowed by more than half in the 2Q 2013 compared to the preceding quarter, preliminary data shows.
According to HDB's flash estimates released on today, the resale price index rose by a mere 0.5%, the lowest Q-o-Q growth since 1Q 2009 (when the index declined by 0.8%). The gradual rising trend is predicted to continue, although at an even slower pace given the slew of cooling measures announced in January and the move to unpeg new flat prices from resale units.
“The reduction of the mortgage servicing ration (MSR) from 50% to 30% has taken its full effect on resale prices – which saw the lowest increase since 2009, as affordability was hit. The overall median COV (according to PropNex data) had dropped to $26,000 for 2Q2013, the lowest in the last 4 quarters”, explained Mr Mohamed Ismail.
“Demand has also been sapped by the release of new BTO flats, as a result, the resale market is effectively serving only the upgraders and permanent residents now, resulting in the weakening of price and volume of transactions. It is also believed that the larger oncoming supply has created a ‘balancing effect’ in the resale market—gradually softening the price growth to a more sustainable level. Overall, HDB resale price growth for the entire 2013 will be at approximately 3%,” concluded Mr Ismail.
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