HDB resale price index in 1Q2018 down 0.8% - a continuation of downward trend entering its fifth year

By Bong Xin Ying
/ EdgeProp Singapore |
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HDB’s flash estimate for 1Q2018 showed a 0.8% decline in resale prices of public housing flats. This is a steeper decline than the 0.2% dip in 4Q2017 and marks the latest quarterly decline since 2Q2013. The bigger-than-expected fall could be due to the seasonal lull during Chinese New Year, says Nicholas Mak, executive director of ZACD Group.
In addition, such a price decline can also be attributed to the steady supply of the new HDB Build-toOrder flats in 2017 and 2018. HDB will offer about 3,900 BTO flats in Sengkang, Tampines, Toa Payoh and Yishun in the May 2018 BTO exercise. Although the HDB resale price index is still falling, the government does not plan to reduce the supply of BTO flats for 2018.
Eunosville and the HDB flats in the vicinity of Eunos MRT station (Credit: Samuel Isaac Chua/EdgeProp Singapore)
The increase in supply of new BTO flats also comes with a shorter waiting time, and the introduction of the Re-offer of Balance (ROF) flats could have drawn some demand from the HDB resale market, notes Mak.
Also contributing to the continuous price decline into 2018 are a different group of sellers who are in urgent need to dispose of their properties within a stipulated time; second-timers who received their new keys with the completion of their BTO flats; new executive condominium upgraders who received the new keys to their homes; as well as those selling their HDB resale flats to upgrade to private property in 2018, notes Ismail Gafoor, CEO of PropNex Realty. This has inadvertently created a supply of resale flats, he adds.
Eugene Lim, key executive officer of ERA Realty, also points to a comment made in the previous year by by Lawrence Wong, Minister for National Development, that not all HDB flats would be eligible for the Selective En bloc Redevelopment Scheme, but will eventually have to be returned to the state at the end of the 99-year lease. “The increased awareness of this stark reality has made older resale HDB flats less appealing to home buyers who have longer-term considerations,” says Lim.
Gafoor reckons, however, that demand for HDB resale properties could increase in 2H2018 as en bloc beneficiaries of projects in the suburbs, including the large privatised HUDC estates, are expected to receive their collective sale proceeds. He therefore projects that HDB prices could rise up to 1% by year-end.
ZACD’s Mak is less optimistic. “In the absence of any major change in the public housing policies, the HDB resale price index is expected to slip 1% to 3% y-o-y for the whole of 2018,” he says. “Thus, the much-awaited recovery in the index may not occur this year.”
This article appeared in EdgeProp Pullout, Issue 825 (April 9, 2018).

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