Latest round of property-cooling measures will put a lid on price increases, say consultants
The Straits Times
January 26, 2013
EVEN as prices of resale flats hit new peaks in the fourth quarter of 2012, consultants say that prices should remain stable in the coming year, following the seventh round of cooling measures.
The Housing & Development Board's (HDB) Resale Price Index rose 2.5 per cent over the previous quarter to breach the 200-point price-index mark to hit 202.9 in the fourth quarter, resulting in a 6.6 per cent increase in resale flat prices for the whole of 2012.
According to HDB's data, Bukit Merah had the highest median resale price for a five-room flat at $765,000; Queenstown fetched the highest median price for a four-room flat at $710,000.
While this drives resale prices to a fresh peak, the price hike seen last year is lower than the 14.1 per cent rise seen in 2010 and the 10.7 per cent hike in 2011, said HDB.
Consultants concur that the seventh round of cooling measures - which include permanent residents (PRs) having to raise an additional 5-7 per cent for ABSD, restrictions on the Mortgage Servicing Ratios (MSR), not allowing PRs to sublet their whole flat and requiring PRs to sell their flat after purchasing a private residential property in Singapore - will put a lid on price increases.
Eugene Lim, key executive officer at ERA Realty Network, said he expects prices to remain stable for now, and that prices will moderate once cash-over-valuation (COV) transactions moderate.
According to ERA Research, overall median COV rose 11.67 per cent quarter on quarter to hit $33,500 in the fourth quarter. The median COV for a five-room flat was $38,000, up 15.15 per cent from the previous quarter, while COV for a four-room flat rose 16.67 per cent to $35,000.
According to Mohamed Ismail, chief executive officer of PropNex Realty, the latest cooling measures should lower COVs as buyers have to contend with the lower MSR, and PRs dish out more in terms of ABSD.
Specifically, COVs for bigger flats may face a downward pressure of 10-20 per cent, suggested Mr Ismail.
"This year, we expect HDB prices to remain flat, at best attaining only 3-5 per cent price growth," he said.
Ong Kah Seng, director at R'ST Research, said he expects the prices of HDB resale flats to be fairly stable, or see a maximum dip of up to 3 per cent. Prices will be supported by low interest rates and on-going buyers' interest in public housing, he said.
Resale transactions in the fourth quarter fell by about 14 per cent, from 6,560 cases in the third quarter to 5,631. For the full year of 2012, the total number of resale transactions was 25,094, a slight increase of about 2 per cent over 2011.
HDB said the cooling measures announced by the government on Jan 11 will help to moderate demand for HDB flats and stabilise resale prices.
In addition, some 110,000 new flats will also be completed in the coming years.
"HDB has ramped up its Build-To-Order (BTO) supply significantly over the past few years and we will keep up the pace of new flat supply into 2013. Coupled with the new cooling measures, this will help keep public housing affordable for Singaporeans," said HDB in a statement.
It plans to launch at least 23,000 BTO flats this year. The first batch of 3,346 BTO flats in Ang Mo Kio, Choa Chu Kang, Hougang, Kallang/Whampoa, Tampines and Yishun will be offered for sale later this month.
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