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3rd QUARTER 2013 FLASH ESTIMATES - URA & HDB
Singapore Property Market News and Analysis


Latest Property Real Estate News - Published on 01/10/2013

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 3Q 2013, the private property price grew by a tame 0.4% Q-o-Q to 216.2, or half the growth registered in the previous quarter (In 2Q 2013, growth was 1.0%). URA’s preliminary estimates also showed that private residential property prices are going on a downward trend especially after the introduction of TDSR in all segments, registering drop in the price index compared to 2Q13.

In 3Q 2013, properties in both the RCR and CCR bore the brunt of the impact of the successive round of cooling measures as it slipped 1.1% and 0.5% respectively. In the OCR—where prices of non-landed private homes increased the most, price growth was up 2.1% Q-o-Q, albeit lower than the 3.8% growth recorded in 2Q 2013.

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% may prompt potential homebuyers to take a more discretionary view of home buying with the reduced affordability levels. We believe the Total Debt Servicing Ratio (TDSR) has reduced the purchasing power of some buyers and also slowed the purchasing process as loan assessments by banks take a longer time so buyers are unable to commit to purchases as quickly as before. Demand would have also softened due to the TDSR’s impact especially on buyers who already have other existing mortgages,” commented Mr Mohamed Ismail, CEO of PropNex Realty.

“However, projects with good location attribute and attractive price offers would be enticing draws for prospective buyers. Developers are also likely to be nimble with their pricing strategy as witnessed at the recent launches at Skyvue and Thomson Tree in order to avoid hitting buyer’s price resistance level, especially after the TDSR.

Moving forward, we expect the mass market segment to remain resilient as they are well-supported by genuine upgraders. We are cautiously optimistic that private property prices could rise by 2.5% for the whole year, with OCR properties to rise by up between 8 - 9 %. With more launches expected in the last quarter this year, we expect a healthy demand as long as developers priced them right,” commented Mr Mohamed Ismail, CEO of PropNex Realty.

3rd QUARTER 2013 FLASH ESTIMATES - HDB

Resale Housing Board (HDB) flat prices have slipped for the first time in more than 4 years, preliminary data shows. According to HDB's flash estimates released today, the resale price index dropped by 0.7%—the first time that the index declined since 1Q 2009 (when the index declined by 0.8%).

“This reversal of price growth is expected given the slew of measures announced this year such as the TDSR, reduction of the MSR and the reduction of the maximum loan tenure, which have all impacted a buyers’ purchasing power. The reduction of the mortgage servicing ratio (MSR) to 30% of a borrower’s gross monthly income 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 more than 40% to its current $18,000 in 3Q2013 compared to $32,000 at the beginning of 2013,” explained Mr Mohamed Ismail.

“Demand has also been sapped by the release of new BTO flats and PRs having to fulfil 3 year requirement before they can purchase a resale flat, resulted in the resale market effectively serving only the upgraders and limited 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 is expected to be less than 1% to possibly a negative growth. Moving into 2014, the HDB resale market can expect negative price growth possibly at the range of negative 3 – 5%,” concluded Mr 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 Singapore 310480
DID : (65) 6829 6968 / 98287834 | Main : (65) 6820 8000 | Fax : (65) 6829 6600
www.PropNex.com



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