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HDB resale prices fall to 2-year low: SRX

In June, HDB resale prices dipped 0.6 per cent compared to May, affecting 3-, 4- and 5-room flats, according to the Singapore Real Estate Exchange.

SINGAPORE: The resale prices for Housing and Development Board (HDB) flats fell to a two-year low after it slipped 0.6 per cent month-on-month in June - the fifth consecutive months of declines, according to the Singapore Real Estate Exchange.

According to the SRX HDB flash report released on Thursday (July 10), June's HDB resale prices marked a new two-year low since April 2012. Compared to the peak in April 2013, prices for resale flats have declined by 6.8 per cent, SRX said.

Thomas Tan, executive director of REMAX, said: "From the supply perspective, HDB has released quite a fair bit of BTO thus far, so that will literally take demand away from the resale market. That explains the volume being low as well, besides the prices.

"From the demand end, HDB has also implemented policies like Mortgage Servicing Ratio... your affordability is capped at 30 per cent of your income."

Chris Koh, director of Chris International, attributed the fall in resale prices ot a change in procedure when selling resale flats. He said: "On top of that, this year in March, we had a change in procedure, in terms of the selling of HDB resale flats. Today, they will negotiate a price and then do the valuation.

"So we saw a lot of buyers being very conservative. When they make the offer, they make it low, for fear that the valuation is unable to match the price that they are offering. So the offers come in low, and if the owner accepts it, then you have a lower transacted price and therefore there's this dampener on prices."

The SRX report revealed that the price drop affected 3-, 4- and 5-room flats, which saw a price decline of 0.6, 0.8 and 0.3 per cent, respectively, compared to May. Executive flats, however, saw a rise in price by 1.3 per cent.

Mr Koh added: "We must acknowledge that HDB is not building any more executive flats. So people who are holding executive flats, not many want to sell them.

"So sometimes when a flat comes onto the market, you'll be surprised that many buyers are keen to buy it and if this flat is in a good location, or sometimes in a nice high level with panoramic views, buyers are willing to pay a premium for it."

In June, 1,315 HDB flats were sold, five less than the 1,320 transacted units in May, SRX added.


Rental volume and prices also fell for June. An estimated 1,590 HDB flats were rented out in June, and this was a 2 per cent decrease from May's 1,622 units. Rental prices fell 1.1 per cent on-month, reaching a new low since January 2012, the report stated.

TOX STILL NEGATIVE

The overall median Transaction Over X-Value (TOX), which measures whether people are overpaying or underpaying the SRX estimated market value, remained at a negative S$4,000 for June.

The majority of HDB towns - 18 out of 26 estates - saw negative median TOX in June. Among HDB towns with more than 10 transactions, the lowest median TOX are in Hougang, Punggol and Sembawang, at negative S$9,000, negative S$8,100 and negative S$8,000, respectively.

Mr Tan added: "They could be thinking of letting go of their current HDB flats because the projects which they bought, the condos which they bought could be reaching TOP (Temporary Occupation Permit). So they could be releasing the units in the market now... Once you see more supply in the market, definitely you'll see a downward pressure in terms of the prices."

Bucking the trend is Geylang, which was the only town with a positive median TOX of S$1,500, SRX said.


For the rest of this year, some property analysts expect HDB resale flat prices to continue to decline before stabilising -- possibly softening at 5 to 8 per cent for the whole of this year. However, they added that a sharp drop is unlikely as economic fundamentals are still sound.

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