HDB flash estimate shows 0.9% dip in resale prices for 2018

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/ EdgeProp Singapore
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January 2, 2019 9:33 PM SGT
The flash estimate for the HDB resale price index indicated a 0.2% quarterly decline in 4Q2018. This follows the 0.1% dip in the preceding quarter. For the whole of 2018, prices have dropped by an estimated 0.9%, notes Eugene Lim, key executive officer (KEO) of ERA Realty Network.
According to Lim, the concern over depleting leases of older resale HDB flats which had been in the spotlight in early 2018, was dispelled somewhat, following Prime Minister Lee Hsien Loong’s National Day Rally speech, where he introduced VERS (Voluntary Early Redevelopment Scheme) and the new HIP (Home Improvement Programmes) II.
The Lease Buyback Scheme has also been expanded to include all flat types with effect from January 1, 2019. (Photo Credit: Samuel Isaac Chua/EdgeProp Singapore)
Buyers are therefore waiting for the release of more detailed information on how the proposed programmes will be implemented. Hence, it’s premature to say whether there will be “any change of mindsets towards older resale HDB flats that are affected by depleting leases”, Lim adds.
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The Lease Buyback Scheme has also been expanded to include all flat types with effect from January 1, 2019.
ERA’s Lim expects HDB resale demand to be resilient in 2019. He attributes this o several factors: Beyond VERS and HIP II, Minister for National Development Lawrence Wong has also announced that the government is looking into increasing the flexibility of CPF usage for the purchase of flats with shorter leases. The HIP I and II show the government’s commitment to maintaining the conditions of older HDB flats.
The cooling measures have had a greater impact on the private residential market, and could have driven some buyers to the HDB resale market instead, especially those who have a tighter budget, notes ERA’s Lim.
Resale flats are the only way for buyers to pick a flat in a location of their choice (Photo Credit: Samuel Isaac Chua/EdgeProp Singapore)
“Resale flats are still an attractive option for homebuyers,” he adds. "They are the only way for buyers to pick a flat in a location of their choice." There are housing grants available for first-time family buyers of up to $120,000, including a $30,000 Proximity Grant, $50,000 for Family Grant and $40,000 Additional Housing Grant. Processing time has also been shortened with the new Resale Portal.
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There is also no income ceiling for buying resale flats, if no grants are taken and if a buyer does not take an HDB loan, according to Lim. As such, there has been instances of million dollar resale flats, with some buyers willing to pay top dollar for flats with exceptional attributes and location. “However, these high-priced transactions remain the exception rather than the norm,” he says. “Majority of resale HDB flats that have been transacted are supported by valuation; and this points to a very stable public housing market.”
ERA expects HDB resale prices to increase very marginally by up to 1% in 2019.
Christine Sun, head of research & consultancy at OrangeTee & Tie, sees the decline in overall HDB resale prices as “moderate”. She attributes it to more “non-standard flats” reaching MOP (minimum occupation period) of five years, including executive apartments, terraced houses, those built under the DBSS (Design, Build and Sell Scheme) and flats at Pinnacle@ Duxton, which was the first high-rise HDB project within the CBD. “These flats were sold at relatively attractive prices which could have offset the general price decline observed for some older, standard HDB flats in selected mature estates,” she adds.
With more HDB resale flats reaching their MOP in 2019, Sun expects to see greater downward pressure on resale prices. “The market may still see some respite from fewer HDB BTO flats being launched for sale this year and the government possibly allowing buyers to use more CPF to purchase older HDB flats,” she adds.
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OrangeTee & Tie’s Sun therefore, expects HDB resale price trend in 2019 to be in the range of 0 and -2%.