First dip in resale flat prices since 2006

BUSINESS ANALYSIS

Prices of HDB resale flats fell 0.8 per cent in the first quarter compared with the previous quarter, marking the first decline since 2006.

This was slightly worse than the 0.6 -per-cent fall estimated by HDB earlier this month.

Price increases in resale flats have been moderating since the third quarter of last year. The median Cash-Over-Valuation amount for resale transactions dropped to $4,000 in the first quarter, a plunge of 73 per cent from the fourth quarter of last year.

The number of resale applications rose by 4 per cent to around 6,400. 938LIVE

From TODAY, Business – Weekend, 25/56-April-2009

2007 homebuyers at risk

BUSINESS ANALYSIS

Tay Huey Ying

THE islandwide property price index registered a decline of 14.1 per cent in the first quarter, slightly steeper than the flash estimate of 13.8 per cent.

This is the worst quarterly decline to date. It's also worse than the 13.1 per cent quarter-on-quarter drop recorded in the third quarter of 1998 when the residential market was adversely affected by the Asian financial crisis.

Private home prices have now fallen for the third consecutive quarter, with a total decline of 21.2 per cent since peaking in 2Q 2008.

Based on the URA's statistics, the private home property index is now almost back to 1Q 2007's level. Hence, purchasers who bought their properties after 1Q 2007 are at risk of having the valuation of their properties fall below their purchase price. For those who bought their properties on the deferred payment scheme and have yet to secure a loan, this would limit the loan-to-purchase price ratio that they can secure from financing institutions.

Nevertheless, anecdotal evidence has thus far shown that a majority of such buyers are able to cough up the amount of purchase price not supported by valuation in cash. This has helped to keep the number of distressed sales at a controllable level.

Moving forward, although private home prices are expected to remain depressed, the rate of decline is forecast to moderate from the high of 1Q 2009, as developers have already marked down prices substantially in the quarter. Mass-market homes could see more gradual price corrections averaging in the region of 8 to 12 per cent over the next three quarters, as more sellers in the secondary market and developers of unsold units from earlier launches could be expected to adjust their prices to near-current levels.

The mid-tier and high-end segments could witness larger average price declines ranging from 10 to 15 per cent over the same period.

The writer is director for research and advisory at Colliers International.

From TODAY, Business – Weekend, 25/56-April-2009

Cash-over-valuation for your HDB flat? Think again

You may still be thinking of selling your flat, and becoming rich from the proceeds. Well, think again, because the forecast doesn't look like that. HDB flat price has peaked, and is now going the other direction... down.

Read on...

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Cheow Xin Yi
cheowxinyi@mediacorp.com.sg

THE public housing market, which is known for its resilience, has finally peaked, according to flash estimates.

In its first decline in three years, the Housing and Development Board’s (HDB) Resale Price Index fell 0.6 per cent in the first quarter of the year, after rising 1.4 per cent in the previous quarter.

Most analysts Today spoke to said they saw this as a reflection of the general deterioration in the economic and employment climate. “We have seen private property prices coming down and this has had a spillover effect on HDB. Once cash-over-valuations (COV) come down, transacted prices also become lower,” said Mr Chris Koh, Dennis Wee Group’s vice-president.

Another reason, suggested Mr Colin Tan, research director at property consultant Chesterton Suntec International, could be HDB’s pushing out more supply, making new flats more “reasonably priced” and driving down the demand for resale flats.

ERA’s Asia Pacific associate director Eugene Lim said larger flats, such as five-room units or those above $500,000, are taking longer to sell and coming in below valuation. “For larger flats, the days of transactions with COV are over,” he said.

The downtrend is good news for buyers, especially newly-weds, although ERA’s Mr Lim said resale prices are not likely to plunge. He expects HDB resale prices to come down by 5 to 10 per cent for the whole year, while PropNex chief executive Mohamed Ismail had a more optimistic estimate of 2 per cent.

Mr Lim added: “It has taken some time for (HDB prices) to move to a new peak. Similarly, the downtrend is reflective of the environment, but it will happen in trickles.”

Would a declining public market exacerbate the already shaky private sector, especially when recent transactions in the latter has depended on HDB upgraders?

“Theoretically, when people are getting less after selling their HBD flats, they’ll have less to splurge on private developments,” said Chesterton’s Mr Tan.

But Mr Koh from Dennis Wee Group feels that an HDB flat owner “would want to upgrade now in absolute terms”, as the savings from the purchase of a private property would be higher than the loss he would incur from selling his HDB flat, given the bigger drop in prices in the private market.

From TODAY, News
Thursday, 02-April-2009