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: Channel News Asia, 1 Jul 2010