3Q2018 HDB resale index back in the red; private property index up 0.5%

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October 5, 2018 6:00 PM SGT
The 3Q2018 HDB Resale Price Index (RPI) dropped 0.2% q-o-q and 1% y-o-y. The index’s growth rate has returned to negative territory after a short-lived 0.1% uptick q-o-q in 2Q2018. By end-September, the index had contracted 0.8% in the first nine months of the year.
Meanwhile, the URA price index for private residential property continued to rise, albeit at a slower rate of 0.5% q-o-q in 3Q2018. This increase was mostly led by a 1.7% q-o-q rise in the prices of landed homes (see Table 3).
Based on the flash estimates for 3Q2018, it may appear that the HDB resale market has been harder hit than private housing by the latest round of property cooling measures that kicked in on July 6. Nicholas Mak, ZACD executive director points out, however, that the measures are aimed at the private housing segment and not public housing.
He attributes the decline in the HDB RPI for six consecutive quarters from 4Q2016 to 1Q2018 partially to the strong supply of new Buildto- Order HDB flats. Another reason could be the concern over the shortening leases and depreciating value of ageing flats.
Although the government has announced programmes such as Home Improvement Programme 2 and the Voluntary Early Redevelopment Scheme, the details of the latter are still unavailable and it will not be implemented for another 20 years.
As a result, the uncertainty concerning the value of ageing HDB flats lingers on, exerting a downward pressure on resale prices, says Mak. He expects the HDB RPI to see a drop in the range of 1% to 2% y-o-y.
In the non-landed property sector, the prime districts in the Core Central Region (CCR) price index saw a rise of 1.2% q-o-q in 3Q2018, compared with 0.9% in the previous quarter. The city fringe, or Rest of Central Region (RCR), saw a 0.8% q-o-q contraction, unlike the previous quarter, in which it saw a 5.6% growth, says Mak. Meanwhile, in the suburban segment, or Outside Central Region (OCR), prices rose just 0.1% q-o-q in 3Q2018 versus 3% the previous quarter.
The uncertainty concerning the value of ageing HDB flats lingers on, exerting a downward pressure on resale prices, says ZACD's Mak (Picture: Samuel Issac Chua/The Edge Singapore)