- POSTED: 26 Jul 2014 00:50
Prices have continued to fall in the private home and HDB resale markets in the second quarter of this year.
SINGAPORE: Prices have continued to fall in the private home and HDB resale markets in the second quarter of this year. But more units were sold in both markets, according to the Housing Development Board (HDB) and the Urban Redevelopment Authority (URA).
This is the fourth consecutive quarter that HDB resale prices have fallen. Despite that, more transactions were made with about 4,389 resale flats sold. This is a 16 per cent increase compared to the previous quarter when 3,781 resale flats were transacted. Analysts say the increased activity is due to a lack of major festivities in the second quarter, and individuals getting familiar with the new resale procedure introduced in March.
The HDB adjusted its resale procedure in March to encourage buyers and sellers to focus on recent transaction prices instead of Cash-Over-Valuation (COV) figures. HDB now only accepts valuation requests, after buyers have been granted an Option to Purchase (OTP) by the sellers.
"They are not talking about the COV anymore," said ERA Realty Network's Key Executive Officer Eugene Lim. "In fact, when most buyers go house hunting, they will do their homework and look at resale transaction data. (So) you will now see more transactions getting more realistic prices.”
The double-digit growth however, is hardly something to ‘shout about’. "The Q1 transaction numbers were at a historical low,” said Lim. “So any rebound in the second quarter will seem to be a significant jump; 4,300-plus per quarter is actually pretty low. Traditionally, in the days before the cooling measures came into place, we typically would see between 5,000 to 6,000."
Transactions could possibly pick up later this year, as lower prices may entice buyers to upgrade to a larger flat, says PropNex's CEO Mohamed Ismail Gafoor. But the overall number of resale flats sold is likely to remain low this year, with the launch of more Build-to Order flats and another Sale of Balance Flats exercise by the HDB in November. ERA says resale transactions will be lower than last year's "historical low" of 18,000 units, while PropNex estimates that the number will hit around 17,000 units.
There was also no respite for prices in the private residential market. Prices dipped for the third straight quarter. In the second quarter of 2014, prices fell by 1 per cent, and price decline was observed across all segments of the private residential property market.
High-end non-landed properties were the hardest hit, with prices falling 1.5 per cent (after the 1.1 per cent decrease in the previous quarter). Homes in the suburbs saw prices decline 0.9 per cent, which is significantly more than the 0.1 per cent decline in the previous quarter, according to the URA. Prices in the city fringe area, meanwhile, dropped 0.4 per cent after decreasing by 3.3 per cent in the previous quarter.
"Overall private home prices have moderated by only 2 per cent for the first half of the year, and mass market home prices are only seeing 1 per cent moderation. So I think the current price moderation is acceptable for now," said Knight Frank's Consultancy and Research Director Alice Tan. "I think if we see another price fall of 5 per cent and beyond for the second half of the year, this would then cause some form of concern."
But developers sold more private homes between April and June. Excluding executive condominiums, 2,665 units were sold in the second quarter of 2014, compared to the 1,744 units sold in the first quarter. "There have been some key project launches (in the second quarter of this year). And the sales performance of these projects have been very encouraging mainly because the prices offered are reasonably attractive." said Tan.
Observers say prices will continue to be a key factor in driving sales, and developers are likely to take a cautious stance in future land bids. The Monetary Authority of Singapore said on Thursday (July 24) that it is too early to ease property cooling measures.
"The bulk of the transactions since (the Total Debt Servicing Ratio) ruling came into place, were priced between S$800,000 and S$1.2 million," said Mr Lim. "So if you were a developer, you would probably need to rethink your product and price strategy now. You would expect that for every land sale that goes on to the market now, there will be a moderated number of bidders. And generally everyone will be a bit more cautious to avoid over-bidding."
Excluding executive condominiums, more than 8,000 units will be completed in the second half of this year while another 21,948 units are expected to come on stream in 2015. The URA estimates that 23,876 units will be completed in 2016.