But overall rise for 2012 is lowest in 5 years due to supply of new flats
Jan 03, 2013
Prices of HDB resale flats unexpectedly accelerated in the last three months of 2012, rising at their fastest pace for the year.
Estimates from the Housing Board yesterday showed prices climbing 2.5per cent in the three months to Dec31, despite the festive period being a traditionally quieter one for property transactions.
This outstripped third-quarter growth of 2per cent, which itself was considerably higher than the second quarter's 1.3per cent.
But the board's numbers also showed that its resale price index rose an overall 6.6 per cent last year, its slowest pace in five years. In 2011, the index went up 10.7per cent, while in 2010, it surged 14 per cent.
This moderation, said analysts, is due to HDB's aggressive injection of new-flat supply. Last year, it rolled out a record-high 27,000 new Build-To-Order (BTO) flats, easing the pent-up demand that has helped resale prices soar 67 per cent in five years.
However, the acceleration of resale prices in the last quarter of 2012 showed that this effect is tapering off for now, said analysts.
The bulk of new flats are reserved for eligible first-time home buyers, and there is a wait of two to three years before they get their keys. With this group largely satisfied by HDB's ramp-up of BTO supply, demand for resale flats is now being sustained by first-time buyers who need to move in immediately, as well as second-timers, permanent residents and singles, said ERA Realty key executive officer Eugene Lim.
The latter three groups have limited or no access to new flats from HDB at present, though National Development Minister Khaw Boon Wan has said that more new flats for second-timers will be made available this year.
He also said that new flats for singles would be made available in some form this year.
A lack of resale flats being put up for sale is also behind the price-rise momentum, said Mr Lee Sze Teck, senior manager for training, research and consultancy at Dennis Wee Group.
Since 2010, when the minimum occupation period was raised to five years to discourage speculation, "there has been a gradual depletion of available resale flats for sale", he noted.
At the same time, another cooling measure forbids private-property owners from buying an HDB flat without selling their private home, while still allowing HDB owners to buy a private property and keep both.
This, coupled with rising rentals commanded by HDB units, made many hold onto their HDB flats to sub-let, said Mr Lee, rather than sell them when they buy another property.
The number of HDB units approved for sub-letting has surged 80 per cent from 24,000 in 2009 to 43,000 as of the third quarter of last year.
This shrinkage in resale-flat supply - sales transactions fell by a quarter to 25,000 in 2011 from 32,000 in 2010 - will likely ease only in two or three years when those waiting for new flats get their keys and release their current units to the resale market, said PropNex Realty chief executive Mohamed Ismail.
"Whatever can be done with the launch of new flats has been done," he added. "Price growth will stay strong for resale flats at least into the first half of 2013."
Last year, a Queenstown executive flat crossed $1 million for the first time, while seven other flats commanded more than $200,000 in cash-over-valuation.
Meanwhile, HDB said it would launch at least 3,000 more new flats this year than originally planned. In total, it will roll out at least 23,000 new flats in the coming 12 months, it added.
A first batch of 3,346 flats in Choa Chu Kang, Yishun, Hougang, Tampines, Kallang Whampoa and Ang Mo Kio will be offered for sale later this month.
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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