SINGAPORE'S residential property prices kept climbing in the first quarter, but recent frenetic increases in both private and public home prices are showing signs of moderating.
Preliminary estimates released by the Housing Board (HDB) yesterday showed resale HDB flat prices rose 2.7 per cent to a fresh record in the first quarter compared to the previous three months.
But the rate of increase was slower than the 3.9 per cent recorded in the fourth quarter of last year.
Another sign that things might be levelling off was the cash paid upfront by buyers above the valuation of a flat, known as cash-over-valuation (COV).
This figure stabilised at a median of $25,000 for the first quarter - up just $1,000 from the median of $24,000 in the previous quarter.
That rise was far more modest than the $12,000 leap in median COV amount from the third to fourth quarter last year.
Figures from the Urban Redevelopment Authority (URA) also showed private home prices climbing - but at a slower rate for the second straight quarter.
These prices were up 5.1 per cent in the first quarter, down from a 7.4 per cent increase in the previous quarter.
Industry analysts said yesterday the latest statistics suggest that current prices are encountering buyer resistance.
Further evidence of this trend: The number of resale flats that were sold slid 5 per cent to about 8,500 in the first quarter from the previous quarter.
ERA Asia-Pacific associate director Eugene Lim said his agency is experiencing a similar drop in sales volume.
Recent new launches by the HDB have taken some steam out of the resale market, he said. 'It simply makes more sense for first-timers to buy direct from the HDB as most, if not all, resale transactions involve COV.'
Although resale flat prices are expected to trend upwards for the rest of the year, the increases are expected to be marginally less, he added.
He estimates that this year could see a full year rise in prices of 5 per cent to 8 per cent.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the dip in sales volume could have been due to the Chinese New Year holiday and the effects of recent government cooling measures.
# Buyers of non-subsidised HDB resale flats must now occupy their property for at least three years before they can sell it. This is up from 2.5 years or one year previously, depending on the financing.
# The HDB has also imposed limits on the number of HDB flats in each block and neighbourhood that can be sold to non-Malaysian permanent residents to prevent foreigner enclaves from developing.
Chesterton Suntec International research and consultancy director Colin Tan said that the upcoming supply of new flats may continue to ease buying pressure in the resale market.
The HDB has so far offered 3,700 new flats for sale under its build-to-order system this quarter in a move to address supply concerns.
Another 1,200 flats in Punggol will be launched for sale this month, and the HDB said it will launch yet another 7,400 flats from next month to September.
The upcoming projects will be in areas such as Sengkang, Jurong West, Yishun, Bukit Panjang and Woodlands.
The HDB said if demand remains strong, it will launch more projects in the fourth quarter of the year.
Mr Mak noted that in the longer term, if HDB resale flat prices continue to moderate downwards, 'it could deflate the HDB upgraders' demand for private properties beyond the second half of 2010'.
CBRE Research executive director Li Hiaw Ho said that positive sentiment, a recovering economy and low interest rates 'will combine to sustain a favourable home-buying market'.
'But as supply begins to catch up with demand, (private home) price increases may assume a more moderate level in the second half of the year,' he said.
HDB also said that although resale prices have risen to a greater extent in recent years, the average annual increase for the whole decade is a moderate 3.5 per cent per year, which is in tandem with Singapore's economic growth.
Estimates by HDB and URA are compiled based on transactions lodged in the first 10 weeks of the quarter.
The statistics will be updated in four weeks' time.
Source: Straits Times, 2 Apr 2010