POSTED: 25 Oct 2013 10:46 | UPDATED: 25 Oct 2013 23:24 | CNA


HDB Resale Price Index (RPI) fell by 0.9 per cent in the third quarter of this year.

This was a slightly bigger drop than the flash estimate of 0.7 per cent released earlier this month.

The last time resale flat prices dipped was at the start of 2009, when the recession hit.

Prices have been on the upward trend since and reached a peak in the second quarter of this year, when prices went up by 0.5 per cent.

The volume of resale transactions has also gone down.

There were 5,235 transactions in the second quarter, and this fell 13 per cent to 4,529 in the third quarter.

It is also a 27 per cent drop compared to the same period last year.

Analysts say one reason for the drop is the ramped up supply of Build-To-Order (BTO) flats.

Next month, HDB will offer about 4,950 BTO flats in areas such as Bukit Batok and Hougang. Another 3,000 balance flats will also be on offer concurrently.

In all, HDB say it is on track to launch 25,000 BTO flats for the whole of this year.

Steven Tan, Managing Director of OrangeTee, said: “There was a shift in buying demand from HDB resale flats to BTO flats. Many buyers were enticed by the affordable pricing of BTO and the attractive CPF housing grants. Singles are also allowed to buy BTO flats.”

Another reason is the new restriction imposed on permanent residents (PRs), who have to wait three years before being allowed to buy a resale flat.

Mr Tan added: “This policy actually caused quite a big impact because PRs are the buyers who are willing to pay a higher price for the resale flats.”

Loan restrictions introduced earlier in the year could have also played a part.

But some analysts say events beyond Singapore’s shores have also affected investor sentiments in the third quarter.

In particular, the announcement in May that US federal authorities are considering tapering its monetary stimulus programme sparked concerns of global interest rate hikes.

However, this decision has since been postponed.

Colin Tan, Director and Head of Research & Consultancy at Suntec Real Estate Consultants, said: “The US Federal authorities are thinking of unwinding their monetary policy, or having a looser monetary policy, which means there’s this fear of interest rates hikes.

“This fear that investors have is that when interest rates go up, prices might come down. I think in that sense, most investors decided to wait on the sidelines and this has also affected HDB investors.

“Most upgraders would want to keep their HDB flat because of the ruling that once you sell you can’t get back in. So some of these HDB investors may start to have cold feet, because there (were) three months of very weak sentiments.”

In the rental market, subletting transactions also fell, slipping 5 per cent from 7,891 cases in the second quarter to 7,505 cases in Q3.
Some property analysts expect the HDB resale price growth for this whole year to come in around zero to one per cent.

This is down from 6.6 per cent last year, and double digit growth in the two years before that.

– CNA/xq/gn