(SINGAPORE) Prices of resale flats should stabilise in a year or so as the Housing & Development Board (HDB) releases a record number of new flats into the market.
This was according to National Development Minister Mah Bow Tan, who spoke on the sidelines of HDB's 50th anniversary celebrations at Tampines yesterday.
Resale flat prices have been climbing in the last few quarters and they rose 4.1 per cent in Q2 from Q1 to a new high.
There is an 'imbalance' in the resale flat market, Mr Mah said. With the economy doing well, demand for resale flats from both first-time buyers and upgraders has been strong.
'I hope that with HDB pushing out a record number of flats, this imbalance will be addressed over the medium term,' he said. There should be stability 'maybe in another year or so'.
HDB will be launching 16,000 build-to-order (BTO) flats this year, 80 per cent more than in the previous year. Another 4,700 flats from executive condominium projects and the Design, Build and Sell scheme are potentially coming up.
It would be hard to say how resale flat prices will move in the short term, Mr Mah said. 'The economy for the first half was very strong, but all indications are that it may not be so smooth going in the second half.'
If the economy cools, 'the demand for housing will also slow down,' he said.
Accompanying the rise in resale flat prices was a hike in cash premiums which buyers pay. The median cash over valuation (COV) across all resale deals in Q2 was $30,000, up from Q1's $25,000.
Rising COVs are a concern but they are determined by demand and supply in the market and the government cannot intervene, Mr Mah said.
He advised first-time buyers to turn to the BTO market 'where there is zero COV, where the prices are lower, where the flats are of newer designs,' he said.
Source: Business Times, 26 Jul 2010