Source: Channel NewsAsia

Prices of resale HDB flats went up for the fifth consecutive quarter to surpass the 1996 peak by nearly 18%.

HDB’s flash estimate for the second quarter showed the Resale Price Index (RPI) rise 3.8% on-quarter to 160.9, surpassing the 1996 peak of 136.9 points.

Some analysts said the second quarter tends to see the strongest activity as many home buyers leave their flat purchases till after the Lunar New Year.

But others didn’t expect resale prices to rise so quickly, because of the government’s aggressive launch of new flats this year.

The government on Wednesday announced its single largest launch of HDB flats and said if demand continues it will add more units for sale, bringing the total to 16,000 for the whole of this year.

Analysts said this will help assure home buyers there are enough flats to go around, and will in the long-term, moderate prices of resale flats.

But over the next few months, they do not expect any let-up either in resale demand or price.

Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic, said: “In the HDB market, although the slowdown might be more in terms of the Cash Over Valuation, or the seller’s expectations, the buyers, I think, are fairly bullish because in a way, the HDB public housing market forms the very base, the cheapest form of housing to anyone in Singapore.”

Furthermore, analysts said mass market condominiums are still out of the reach of most buyers.

Despite a slowdown in sales in recent months, private home prices have remained firm, increasing at 5.2 percent in the second quarter.

This is slightly smaller than the 5.6 percent rise in the first three months of this year.

It is also one of the smallest rate of increases in the last 12 months.

ERA Asia Pacific’s Associate Director Eugene Lim added that developers “are not likely to cut prices to move sales, as most of them have strong balance sheets.”

Chris Koh, Director of Dennis Wee Group, estimated that private home transactions have gone down by about 20 percent in recent months.

He said: “You speak to some of us who do private property transactions, we will tell you, yeah, the market is correcting a bit.

“We’re not seeing a steep rise in prices anymore for the private market. Instead private property prices have only inched one, two percent up and you can see that it’s more or less starting to plateau out.

“If that happens maybe the HDB market will mirror it….but at the moment I’m not seeing that in the HDB market yet.”

Overall, market watchers expect resale prices for 2010 to increase by 8 to 15 percent.

On Thursday, the government announced three more land parcels for sale, which could yield about 1,300 residential units, including 460 Executive Condominium flats.

The Urban Redevelopment Authority will also launch another three sites later this month, which will include sites for residential purposes.

In total, the Government Land Sales (GLS) Programme for the second half of 2010 comprises 27 residential sites and four mixed-use sites where private residential housing can be built.

The total potential supply of 13,905 private residential units is the highest potential supply quantum from any half yearly GLS Programme since the Confirmed List/Reserve List system started in the second half of 2001.

Source: HDB InfoWEB

The Minister for National Development, Mr Mah Bow Tan, announced in Parliament today that HDB will be raising the Minimum Occupation Period (MOP) for the resale of non-subsidised HDB flats from 1 and 2.5 years to 3 years. The objective is to reinforce owner-occupation.

2. HDB flats are primarily meant to provide owners with a roof over their heads. They are not meant for speculation or short-term profit. Hence, lessees are required to stay in their flat for a minimum period before they may sell their flat in the open market. Currently, lessees of subsidized HDB flats, i.e. HDB flats bought directly from HDB, DBSS flats bought from private developers or resale flats bought with CPF housing grant, are subject to an MOP of 5 years. On the other hand, lessees of non-subsidised HDB flats i.e. resale flats bought without CPF Housing Grant, are subject to the following MOP:

a) Those who take an HDB concessionary loan – 2.5 years

b) Those who take a bank loan or do not take a loan – 1 year

3. To reinforce the principle of owner-occupation, the MOP for resale of non-subsidised flats will be increased to 3 years, regardless of whether the buyer takes an HDB loan, a bank loan or no loan at all. With the extension of MOP, the demand in the resale market will also more accurately reflect the interest from buyers who are buying flats for occupation.

4. The revised MOP policy will apply to resale transactions where applications are received by HDB from 5 Mar 2010 onwards. Existing lessees of non-subsidised flats will not be affected, i.e. the original MOP of 2.5 or 1 year continues to apply to them. There are also no changes to the MOP for subletting of whole flats.

THE resale prices of Housing Board flats have risen by 10 to 15 per cent in the past one to two years, despite the recession that began in September last year.

The HDB may have contributed to the spike when it decided to raise the valuation prices of its flats last year, saying it would help buyers as a lower cash-above-valuation payment would result.

The fact is, most buyers still ask for cash-above-valuation payment and the amount does not vary much from that before HDB increased the valuation tag.

When I helped a friend who wanted to buy a flat, the valuation of a four-room HDB flat in Tampines was about $300,000 in 2007 and early last year, with buyers asking for about $30,000 cash. The price was therefore $330,000.

I now hope to buy a resale HDB flat and the valuation of a similar flat is about $350,000 with a demand of about $20,000 cash above valuation.

While the cash request is slightly lower, the valuation price has leapt. The price of a four-room flat in Tampines is about $370,000 now, some $40,000 more than the price early last year – and this is largely due to the higher valuation price.

Instead of helping to stabilise prices, the HDB’s spike in valuation has been instrumental in increasing resale prices.

Source:  TODAYonline – Loh Chee Kong

More taking industry exams, but errant and unaccredited agents still a concern.

Flash estimates from the Housing and Development Board (HDB) released yesterday show the resale price index rising to 140 – a record level not seen since the current index started in 1990.

It beats the previous record set in the fourth quarter of last year when it hit just over 139.

Market analysts said they were caught off-guard by the turnaround, as many had been predicting 2 to 10 per cent declines in HDB resale flat prices for this year after a descent began in the first quarter – the first one since 2006.

Yesterday’s numbers have changed expectations, with analysts reversing their forecasts for HDB flat prices to hold or increase by up to 5 per cent this year.

Industry observers attribute the latest surprise figures to three factors.

First, talk of an economic recovery has gathered momentum, backed by the recent stock market rally and brisk private property sales. This has slowed the slide in private property prices islandwide.

Flash figures capturing sales prices in the first 10 weeks of the quarter, released by the Urban Redevelopment Authority yesterday, show prices falling 5.9 per cent in the second quarter, compared to a 14.1 per cent decline in the previous quarter.

The marked slowdown in the price decline is in line with rising transaction prices evident since the strong rebound in home sales since February, said Colliers International’s director for research and advisory, Ms Tay Huey Ying.

More bullish sentiment, coupled with the strength in HDB resale prices, has supported the private market, say analysts.

High HDB valuations is another key factor. HDB upgraders – buyers with HDB addresses buying private property – have been able to sell their units at high valuations and for tidy profits to fund private property purchases.

Banking executive Vic Cheow, 28, is one such HDB upgrader who recently sold a four-room HDB flat to buy a three-bed condominium unit in Jurong.

Due to the high valuations, buyers do not need to dig deep for upfront cash – otherwise known as cash-over-valuation – to purchase resale flats.

‘We found selling at a profit easier as a result of this,’ said Mrs Cheow.

ERA Asia-Pacific associate director Eugene Lim reports that the agency, which accounts for more than 40 per cent of the HDB resale market, saw transaction volumes surge 52 per cent in the second quarter compared to the first.

‘The feeling in the second quarter is the recession hasn’t been as bad as it seems,’ said Mr Lim. Many sellers have become more willing to negotiate and are realistic, especially those selling larger flats, he added.

The third factor, flagged by Chesterton Suntec International head of research Colin Tan, is that demand far outstrips supply. HDB launched 7,793 new flats last year and will launch another 3,700 in the first nine months of this year.

‘HDB may have ramped up the supply of new flats recently, but it’s not enough and it takes too long,’ said Mr Tan. ‘There is still a lot of pent-up demand from a needs-based group of people. And they have no choice but to pay high prices because they cannot wait.’

A Credit Suisse report released recently notes that total public and private housing supply for 2008 to 2012 is 16,000 on average per year – 42 per cent lower than the 10-year historical average.

‘This does not look excessive versus the annual average 24,000 household formations or marriages,’ said the report.

But, added Mr Tan, it seems ‘unnatural for prices to rise against the fundamentals of the economy’, which is still in recession.