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SG HDB resale prices grow at slower pace

Property Here - Sunday, April 28, 2013

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By Romesh Navaratnarajah:

The HDB Resale Price Index (RPI) climbed 1.3 percent to 205.5 in the first quarter of 2013 from 202.9 in Q4 last year. But this signifies a drop from the 2.5 percent growth seen in the last three months of 2012.   

Resale transactions also declined by 23 percent to 4,335 units in Q1 from 5,631 in Q4 last year. 

Mohamed Ismail, CEO of PropNex Realty, attributed weaker Q1 growth to the five percent ABSD, the additional five percent cash outlay for permanent residents (PRs) purchasing a resale flat and the revised Mortgage Servicing Ratio (MSR). 

“The latest revised MSR has impeded many potential buyers from the ability to buy as it had reduced the quantum that they can borrow. With this latest policy introduced in January, home sellers are cautious of the risks as they may not be able to secure sufficient loan for their next home purchase.”

“We are starting to see the desired effects of moderation in the HDB resale market.”

Although prices are moderating, it is unlikely to drop due to a lack of supply, low mortgage rates and strong demand, added Ismail.    

“Overall, HDB resale price increase for the entire 2013 will be between four percent to five percent, as demand for resale flats will be reduced due to singles being able to purchase BTO flats directly from HDB, the introduction of MSR and the ramp up supply of BTO flats.”

Moving forward, the housing board plans to launch 25,000 Build-to-Order (BTO) flats this year, of which 7,244 units have already been released in the first three months of the year. 

For the next BTO exercise in May, HDB will release 4,850 flats for sale in Hougang, Woodlands, Sembawang, Jurong West and Choa Chu Kang. At the same time, another 3,000 flats will be made available under the Sale of Balance Flats exercise.

 

Romesh Navaratnarajah, Senior Editor of PropertyGuru, wrote this story. To contact him about this or other stories email romesh@allproperty.com.sg