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HDB Resale Prices Up By 1.7%, Indicate Sign Of Stabilization

March 13th, 2012 · No Comments

The Housing and Development Board (HDB) resale market appears to be stabilising as prices climbed at a much less fast  pace in the fourth quarter from the last three months and as potential buyers and sellers look forward to new policy measures.

The HDB said that  its Resale Price Index increased by 1.7 per cent in the fourth quarter from the third to register a record high of 190.4. The rate of increase was less than half the 3.8 per cent in the past quarter and in line with the HDB’s preliminary estimate on Jan 3.

While the number of resale transactions increased  a slight 0.3 per cent to 5,921 cases in the fourth quarter, resale deals for the whole of last year was 24,633, a sharp 24 per cent decrease from 2010.

Mr Eugene Lim, key executive officer at ERA Realty Network, said the  widespread supply of Build-To-Order flats and executive condominium data had strike the HDB resale market. He observed that 25,200 BTO units were launched into the market last year so far  the largest number in the past 10 years.

He further declared that in 2012, the Government will launch another 25,000 BTO units.

As the BTO market in Singapore property  had been altered in order to turn into a “built ahead of order” system, the waiting time for a BTO flat is now about 2.5 years, compared to the previous four years, he said.

With a more inexpensive  price tag, smaller initial capital outlay, much  improved success rate and a shortened waiting time, there will be ample first-time buyers who will chose BTO flats over resale flats. The increased household income ceiling to S$10,000 has been a big advantage to first-timers eligible for BTO flats.

Looking ahead, the resale market is also encountering policy risks after National Development Minister Khaw Boon Wan  assured  to amend  existing balloting rules for BTO flats to  profit second-time buyers. If the new rules, which is  likely to be declared in March, raise  the number of BTO flats made available to second-time buyers substantially, the resale market will be  very much affected since second-timers consist of the majority of resale buyers, Mr Lim said.

Still, resale prices are not anticipated  to fall sharply. The longer minimum occupation period of five years, the low average completion rates between 2002 and 2010, and the condition that enforced  private property owners purchasing  resale flats to sell their existing homes within a period of six months have further affect the shortage of resale units, Mr Lim further stated.

Mr Mohamed Ismail, CEO of PropNex Realty, said: “Price stabilisation will set in and possibly even a price correction of not more than 3 per cent in the HDB resale market.”

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