HDB’s resale price index (RPI) recorded a new high again in 4Q09 with a 3.9% increase to reach 150.8. The RPI has actually increased steadily for the last three quarters, at levels increasingly further above the previous peak of 136.9 in 4Q96.
“The economic downturn has definitely contributed to the increased demand by homeowners for HDB flats,” explains PropNex Realty CEO Mr Mohamed Ismail. “But the main reason for the continued growth of the RPI is limited supply.”
He explains that sustained demand for HDB flats in general was evidenced by the fact that all the Build-To-Order (BTO) projects last year were many times oversubscribed. Hence, while the Government is to be commended for speedily addressing the needs of the public, with an expected 12,000 new flats or more to be launched this year, the fact that resale flats offer immediate occupancy has ensured a steady demand for them in 2009.
“The RPI growth can also be linked,” adds Mr Ismail, “to the fact that HDB recorded a grand total of 37,205 resale transactions in 2009, a whopping 31% and 26% increase over 2008 and 2007, respectively.” PropNex Realty Pte Ltd accounted for almost 30% of all HDB resale transactions in 4Q09.
He notes, however, that the total number of resale transactions for 4Q09 declined 23% from 3Q09 to 8,926.
“Generally, the last quarter tends to be quieter,” explains Mr Ismail. “Furthermore, the steady launch of new BTO projects, the Government’s continued assurance of more BTO projects in the pipeline and the increased chances for first-time buyers of BTO flats, have all helped to assuage demand.”
Another contributing factor for a downward trend in the number of transactions could also be the increasing valuation and COV of resale flats.
Overall COV for 4Q09 went up by a full 100% from $12,000 in 3Q09 to $24,000 in 4Q09. The larger flats, 5-room and Executive saw the largest increases in median COV with 150% and 178% increases respectively. And the results are telling: the decline in the number of resale transactions for the larger flats in 4Q09 dropped 34% Q-on-Q, compared to a 18% drop for the same period for the smaller flats (3-room and 4-room).
However, Mr Ismail does not feel that COVs will continue to rise at such steep rates for 2010, and in fact predicts that overall median COV will not exceed $30,000 in the year.
However, given the continued demand for public housing and the fact that current transactions are well above valuation, he expects to see further growth of the RPI by 5–8% for the year 2010, up from 8.2% in 2009.
For enquiries, please contact:
Mohamed Ismail (CEO) 9487 1414
Adam Tan (Corporate Communications Manager) 9006 8726