HOME buyers rushed to the HDB resale market in the second quarter and sent sales up as much as 60 per cent over the first quarter, according to property agencies.
These buyers, ranging from young couples to permanent residents and families upsizing or downsizing their homes, have propped up the resale market amid the recession.
They have also contributed to the surprising turnaround in HDB resale flat prices. Flash estimates stated that they rose 1.2 per cent in the second quarter to hit a record high after dipping 0.8 per cent in the first quarter.
Industry observers point to the recent improved market sentiment and low mortgage rates as key factors luring buyers.
The economic downturn has also delivered sellers a reality check, meaning buyers no longer have to fork out high amounts of upfront cash, known as cash-over-valuation, to buy a resale flat.
While agencies differ over the level of sales in the second quarter, they all agree that activity has rocketed.
Data from the Housing Board's website captured by C&H Realty ahead of official figures due at the end of the month showed a 9 per cent rise in sales transactions for the second quarter compared to the first.
Agencies say the actual figure is much higher due to the large number of transactions done in the last month or so when sales activity picked up across the public and private markets. This would not have been registered by HDB in time.
Property agencies HSR Property Group, PropNex, ERA Asia Pacific and C&H Realty - which together account for almost the entire HDB market - told The Straits Times that sales transactions had surged by between 52 and 60 per cent in the April to June period compared with the preceding three months.
Surprisingly, larger flat types which fast lost popularity when the recession started came back into favour.
HDB data showed that five-room flats climbed 18 per cent, while C&H Realty saw transactions soar 75 per cent, with most done in the past month.
Executive flats enjoyed almost a 20 per cent rise in sales volume, said HDB data.
PropNex chief executive Mohamed Ismail said prices of bigger flats have come down since their peak. HDB valuations have also caught up, so the cash-over-valuation sum needed to buy a resale flat is very low or zero, he added.
Businessman Melvin Chua, 39, is one such home owner who felt that the time was ripe to upgrade.
He recently sold his four-room flat in Jalan Membina at $550,000 and last month, bought a five-roomer for about $638,000 in the same estate.
The same unit would have cost more than $700,000 last year, said Mr Chua, who is married with one son.
'Larger flats, like my new home, have been selling below valuation, so I felt it was a good deal,' he added.
But smaller flat types - the three- and four-roomers - still dominated by market share, thanks mainly to young couples, PRs and downgraders, say agency bosses.
All agencies showed that sales transactions were high for suburban, mature estates such as Woodlands, Jurong West and Tampines.
'This is due mainly to the fact that comparable HDB flats in these estates are generally more affordable compared to other central estates,' said C&H Realty managing director Albert Lu.
Agency bosses noted that the spike in sales has prompted agents to return to the business - a turnaround for an industry that suffered an exodus of staff last year when the recession set in.
The strength of the HDB resale market has spilled over to the private sector, where sellers of resale flats - the HDB upgraders - have been snapping up mass market condo units, say analysts.
But sustaining such a level of sales depends on the economy's performance over the rest of the year, said ERA Asia Pacific associate director Eugene Lim.
'The momentum will sustain, provided there are no unforeseen circumstances,' he said.
'For now, the uncertain outlook will continue to keep pressure downwards despite high demand, and deter sellers from jacking up asking prices if they are serious about selling.'
Source: Straits Times, 4 July 2009