HDB resale prices at 40-month low: SRX

Singapore

PRICES of HDB resale flats dipped 0.8 per cent last month to a 40-month low, going by flash estimates from the Singapore Real Estate Exchange (SRX). The monthly HDB resale price index published by SRX Property showed a 6.3 per cent year-on-year decline in HDB resale prices in November.

Property consultants are expecting a further softening of resale prices, given a large supply of homes entering the resale market from the 6,000 HDB upgraders selling their current homes and moving to their new Build To Order (BTO) flats next year and also with several executive condominiums being completed.

SRX Property's data, released on Thursday, also put the number of resale transactions last month at 1,350 units, 13.1 per cent lower than in October, and 63 per cent down from the peak of 3,649 units in May 2010.

PropNex chief executive Mohamed Ismail said: "The fact remains the same - whether you look at the HDB resale price index from SRX or HDB, even though each has a different way of computing its index - that there is relatively weak demand for public housing and people are taking a longer time, as long as six months, to secure a buyer."

Noting that the greater supply in the resale market comes from more people collecting their keys to new flats and being required to sell their current homes within six months, he said that this trend was being compounded by lower demand, resulting in the continued downward pressure on HDB resale prices.

"This is expected to continue for the next few months because the landscape of the HDB market is not expected to change in the next year, unless there is any tweaking of policies."

Based on SRX flash estimates, prices have declined 9.8 per cent since the peak in April 2013, a fall which SRX said was "nearly double" the perceived government target of a 5 per cent decline.

In November alone, HDB resale prices declined across all housing types. Executive flats marked the steepest month-on-month decline of 2.2 per cent, followed by four-room flats, with a 1.2 per cent slide.

SRX Property estimates that the median price at which buyers snapped up HDB flats in November was S$3,000 below its computer-generated market value.

ERA Realty key executive officer Eugene Lim said that the continued slide in HDB resale prices is expected, given that the mortgage servicing ratio (MSR) of 30 per cent affects buyers of all flat types; those buying larger flats may, however, be more affected.

He said: "The overall price decline for 2014 is within ERA's projection of not more than a 8 per cent decline. In the absence of any change to the current resale policies and loan criteria, we can expect resale HDB prices to continue their decline in 2015 by another 5-8 per cent for the whole year."

ERA is projecting total HDB resale volumes this year to be 17,000 units, historically the lowest annual level, but is hopeful that volumes may rebound next year as HDB scales down its BTO programme, Mr Lim said.

R'ST Research director Ong Kah Seng said that, notwithstanding the drop in HDB resale prices this year, people were not making a loss from selling their units. This "soft landing" will entail a stabilising of resale prices next year, he added.