Sunday, July 29, 2012

HDB resale prices hit new high in Q2

Business Times: Sat, Jul 28

RESALE prices for Housing & Development Board (HDB) flats hit a record high in the last quarter on the back of a 19 per cent jump in resale transactions.

According to the latest data released by HDB, resale transactions rose from 5,892 in Q1 to 7,011 in Q2, pushing the resale price index (RPI) up 1.3 per cent, to 194.0. This is despite the release of more build-to-order (BTO) flats by the government.

"With median cash over valuation (COV) prices hovering around $25,000, many home buyers may have found it affordable and timely to enter the HDB resale market instead of going for BTO flats which typically take about three years to complete," said ERA's key executive officer Eugene Lim.

"This is especially true for second-time buyers where the resale levy for three-room ($30,000) and four-room ($40,000) flats is higher than the prevailing median COVs," he added.

According to data provided by PropNex Realty, the median COV for a three-room flat as at Q2 is $20,250, while the median COV for a four-room flat is about $25,000.

Indeed, overall median COV prices have held steady at $25,000 over the past two quarters, compared to $35,000 in Q4 last year, said PropNex.

Part of the increased demand can also be attributed to buyers previously interested in shoebox units, said Ong Kah Seng, director, R'ST Research. "The craze for shoebox apartments in suburban locations eased in Q2 with heightened controversies about their untested investment potential and ample forthcoming supply. Together with fewer shoebox apartments released by developers, singles are reverting back to the realistic choice of HDB resale flats," he said.

There is also sustained demand from groups who do not qualify for BTO flats, including permanent residents (PRs), singles, and private property owners, pointed out Mohamed Ismail, chief executive at Propnex.

"We have also witnessed a tight supply in the resale flat market as prices have reached its peak in the HDB resale and private property secondary market. There is no impetus (for a potential seller) to sell his current property as he would have to fork out a larger sum of money and a bigger loan to purchase the next property," he said.

The highest median price fetched for a three-room flat was found in Central (which includes River Valley and Rochor areas) at $440,000; a four-room flat in Queenstown had the highest median resale price at $638,000; a five-room flat in Bukit Merah fetched $750,500; an executive flat category in Serangoon had the highest median resale price at $680,000.

HDB will offer an additional 4,200 new flats in Bukit Merah, Choa Chu Kang, Clementi, Geylang and Punggol. A project in Bedok planned for launch in July has been postponed to later this year.

"The BTO launches in Bukit Merah and Geylang are likely to be more popular than the rest," said Lee Sze Teck, senior manager, research and consultancy, at DWG. "The overall subscription rate is estimated to be between 1.5 and 2.0," he said.

Mr Lee expects HDB resale prices to increase by up to 5 per cent for the rest of the year, provided that COV and demand from upgraders and PRs remain stable.

Said PropNex's Mr Ismail: "With the 25,000 flats to be released in 2012, this may reduce the demand for resale flats. This more gradual growth for the RPI looks set to continue in the next two quarters with a price change of between 3-4 per cent."

Separately, the number of subletting transactions rose by about 3 per cent to 6,900 transactions Q2.

Said Chua Chor Hoon, head of DTZ Asia Pacific Research: "The number of HDB sub-letting transactions could rise by a smaller extent or fall in the next quarter as the government announced that PRs are only allowed to sublet HDB flats for only one year per application and this could lead to further increase in HDB rents and also in the OCR private residential market."

The total number of HDB flats approved for sub-letting rose to 41,800 units in Q2, compared to 41,200 units in Q1.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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