Monday, April 5, 2010

Curbs against speculation hit HDB resale sentiment

Agents report drop in number of purchase enquiries and applications

Recent government measures to curb speculation in HDB flats appear to have affected sentiment in the resale market, at least for now.

Property agents BT spoke to recount cases of buyers walking out of deals shortly after the new rules were announced. A few also observed a drop in the number of purchase enquiries or applications.

The evidence is anecdotal and some agents believe that this is just a kneejerk reaction which will dissipate after buyers have had time to digest the news.

‘Every time there is a change of rules, people will wait and see where the market is heading – whether prices are coming down or going up – before they enter the market again,’ said C&H Realty managing director Albert Lu.

‘Normally there would be a holding back period, maybe two to three months. After that things will be back to normal.’

The government introduced a slew of changes to HDB rules early last month. Key among these was the extension of the minimum occupation period for non-subsidised HDB resale flats to three years. Previously, buyers with HDB loans had to stay 2.5 years in their flats before selling them, or just a year if they used bank loans or had no loans.

HDB had found a growing proportion of flat owners selling their homes within three years of purchase. Many genuine home seekers were worried about speculation driving resale flat prices up.

HSR executive director (agency) Jeffrey Hong said that resale transaction volumes for his firm remain healthy despite the rule change. But right after the news broke, ‘a handful’ of buyers who had signed the option to purchase form backed out of the deals, forfeiting at most $1,000 in option fees.

Some might have expected resale flat prices to fall and decided to delay their purchases, he reckoned. But prices did not soften and his agents managed to sell the same flats to other people ‘very quickly’, he added.

An agent who declined to be named made a similar observation – some home seekers were in ‘active negotiations’ with owners or had even agreed to buy the flats, but changed their minds on the day the government announced the new measure.

Another agency head said that since the rule change, calls from potential buyers to his agents have fallen by as much as 50 per cent in some cases. The number of flat viewings has also dropped.

HDB flash estimates for the first quarter show the number of resale transactions dropping to 8,500 from 8,926 in Q4 2009. But it is not clear when the decrease set in, and if the policy change had a role to play.

Asked if last month’s measures have affected the resale market, HDB told BT: ‘It too early to say as these measures were announced just about a month ago.’

There are other real estate agencies which say that the rule changes have had no impact so far. ERA Asia-Pacific associate director Eugene Lim noted that it is ‘business as usual’, while PropNex CEO Mohamed Ismail said that his firm has not seen any kneejerk reaction.

Dennis Wee Properties director Chris Koh made similar observations. ‘Genuine buyers don’t really care if it is one year or three years,’ he said, referring to the extended minimum occupation period.

He added: ‘Private property prices are too high today. Once the gap between private property and HDB flats widens…people have got no other option but to go to the HDB market.’

According to government estimates, HDB resale flat prices were 2.7 per cent higher in Q1 than in Q4. But for private residential property, prices rose 5.1 per cent over the same period.

Source: Business Times, 5 Apr 2010

No comments:

Post a Comment