Following cooling measures implemented in January, price appreciation of resale Housing Board (HDB) flats have slowed by more than half in the 2Q 2013 compared to the preceding quarter. According to HDB's resale price index released on today, the index rose by a mere 0.5% to 206.6 for 2Q2013. 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.
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 $606,000 $445,000
4Q2012 $348,000 $455,000 $530,000 $624,000 $457,000
1Q2013 $351,444 $450,000 $530,000 $635,000 $455,000
2Q2013 $355,000 $457,000 $535,000 $633,000 $458,888
Source: PropNex data
“Affordability for resale flats is affected by the new mortgage servicing ratio (MSR) policy, where HDB buyers could take on mortgages only where the monthly payments did not exceed 30 per cent of their income if the loan is from a private bank, and 35 per cent, if the loan is from HDB itself. The reduction of the mortgage servicing ratio (MSR) from 50% to 30% has taken its full effect on resale prices – which saw the lowest increase since 2009, as affordability was hit,” explained Mr Mohamed Ismail.
Median COVs to remain stable
“The MSR ratio also affected the buyers' ability to take higher loans, which will in turn affect their ability to pay COVs. Based on PropNex data, COVs overall dipped in 2Q 2013 as homeowners 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. This is clearly reflected by the subletting transactions rose 6% from 7,410 cases in 1st Quarter 2013 to 7,891 cases in 2nd Quarter 2013. The total number of HDB flats approved for subletting rose 1.0% from 44,274 units in 1st Quarter 2013 to 44,706 units in 2nd Quarter 2013.
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
2Q2013 $20,000 $28,000 $30,000 $45,000 $26,000
Source: Streetsine and PropNex
Data generated as of 26 July 2013
Resale transactions rose
The stabilizing prices had resulted in resale transactions rising by 21% to 5,235 cases in 2Q 2013 comparing Q-o-Q of 4,335 cases last quarter.
HDB resale flat prices are expected to further stabilize towards the end of the year, especially with the 25,000 BTO flats slated to be released this year.
“It is also believed that HDB resale market has found its footing after a record low volume of transactions in 1Q2013. 2Q2013 increased transaction volume had rebounded as homebuyers took a wait-and-see attitude after the MSR was adjusted. It is predicted that total volume of HDB resale transactions to be at 12,000 for the second half of the year and that COVs are likely to moderate further as homebuyers had to fulfil both the criteria of the revised MSR and the newly introduced TDSR, ” concluded Mr Mohd Ismail.
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