HDB's flash estimate of the Q3 2013 Resale Price Index (RPI) is 205.1, a decline of 0.7 percent over the second quarter this year. This is the first decline since Q1 2009.
Responding, Mohamed Ismail, CEO at PropNex Realty said: “This reversal of price growth is expected given the slew of measures announced this year such as the TDSR (Total Debt Servicing Ratio), reduction of the MSR (Mortgage Servicing Ratio) and the reduction of the maximum loan tenure, which have all impacted buyers’ purchasing power.”
He noted that the reduction of the MSR to 30 percent of a borrower’s gross monthly income has affected price affordability.
“Demand has also been sapped by the release of new BTO flats and PRs having to fulfill (the) 3-year requirement before they can purchase a resale flat, resulting in the resale market effectively serving only the upgraders and limited PRs now, resulting in the weakening of price and volume of transactions. It is also believed that the larger oncoming supply has created a ‘balancing effect’ in the resale market—gradually softening the price growth to a more sustainable level,” Ismail added.
Looking ahead, HDB resale price growth for the entire year is expected to be less than one percent to “possibly a negative growth”, reckons Ismail. “Moving into 2014, the HDB resale market can expect negative price growth possibly at the range of negative three to negative five percent.”
Meanwhile, the housing board is on track to launch 25,000 BTO flats this year. To date, it has released 20,161 units under BTO exercises and 4,455 balance flats.
Next month, HDB will offer 4,950 new flats for sale and an additional supply of about 3,000 balance flats will be made available.
Nikki De Guzman, Junior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email firstname.lastname@example.org