Buyers return as HDB resale prices consolidate

Singapore

AS HDB resale prices fell in September, it also drew more buyers back into the secondary market.

SRX Property data released on Thursday showed resale transactions rose by 3.9 per cent, while prices slipped 0.4 per cent in September compared to August. About 1,504 HDB resale flats were sold in September, up from 1,447 units in August.

Property consultants say the price decline is considered very gradual and stable. So far this year, they have only fallen 2.3 per cent. This is much milder than the 6 per cent drop in HDB resale prices in 2014 shown by official data. The slow moderation of prices is expected to continue in the last quarter of the year. For the whole of 2015, consultants are expecting an overall decline of 2-3 per cent.

Total transactions for the entire 2015 could come in at 19,000 to 21,000 units. They currently stand at about 13,100 units, SRX Property said.

R'ST Research director Ong Kah Seng said that prices are stabilising. "There has been almost zero per cent change in resale prices for H2 2015. Each month, we see +/-0.5 per cent changes month on month. But all in all, the average longer-term effect is a flattish price trend for H2 2015. Q2 and Q3 this year have confirmed that buying interest has reached an equilibrium point."

Ismail Gafoor, CEO of PropNex Realty, said: "HDB prices are going through a period of consolidation with marginal price movements as compared to 2014 when overall resale prices slid 6.2 per cent. More buyers are entering the market as current price points are attractive enough for young couples and upgraders."

He explained that with resale prices island-wide having fallen below valuation prices, there is no more of that excess that resale prices used to have over valuation that had to be paid in cash. The less cash-rich would thus be more inclined to buy since their down payment can be wholly made using Central Provident Fund (CPF) savings and housing grants.

Factors explaining the higher number of transactions cited by Nicholas Mak, executive director at SLP International, include buyers returning to the market after the Hungry Ghost month, and new HDB housing policies announced at the National Day Rally, particularly the new Proximity Housing Grant and the higher income ceilings for the CPF Housing Grant for resale flats.

On the other hand, the price dip was likely due to supply and demand side measures, ERA's key executive officer Eugene Lim said, specifically the tremendous 25,000 or so build-to-order and balance flats offered by the HDB for the whole of this year, plus the mortgage servicing cap of 30 per cent for housing loans.

The still-mild correction in public housing prices has quelled most suspicions that there might be any significant policy changes for public housing in the next six to 12 months.