HDB resale prices continue to fall, albeit at a slower rate than in previous quarters, but analysts say the decline has not bottomed out.
Flash estimates issued by the HDB yesterday showed that the Resale Price Index (RPI) in the first three months of the year is at the lowest in one-and-a-half years, down 1 per cent compared with that in October to December 2014. In contrast, the quarter-to-quarter drops last year ranged between 1.4 per cent and 1.7 per cent.
But prices are expected to continue dropping, analysts said, given that property cooling measures, such as the Mortgage Servicing Ratio (MSR), are still damping demand.
On top of that, they noted that new flats are still being pumped into the market, giving buyers more choices. Yesterday, the HDB said 4,040 Build-to-Order flats in Clementi, Punggol North, Sembawang and Tampines will be up for sale next month, along with about 5,000 others in a concurrent Sale of Balance Flats exercise.
Mr Thomas Tan, executive director of RE/MAX Singapore, said the large supply of new flats is drawing first-time home buyers away from the resale market, causing the price softening. “The trend is expected to continue in similar fashion for the rest of the year, with (an) estimated 5 to 7 per cent overall decline,” he said.
PropNex chief executive officer Mohamed Ismail said he expects the coming quarters to have an overall percentage drop of 4 to 5 per cent due to the continued supply of BTO flats. He also noted that the first quarter of the year is “traditionally slower” due to festive seasons such as Chinese New Year.
The managing director of real estate firm Chestertons, Mr Donald Han, added that the market is still on a “slow slippery slope” and he does not expect a “drastic drop” in prices. “Financing-wise, there has been an impact on the demand side of the equation, (causing) downward (pressure) on HDB resale prices,” he said, referring to loan curbs such as the MSR, which caps mortgage repayments at 30 per cent of a buyer’s monthly gross income.
Agreeing, HSR International Realtors’ Head of Marketing & Training Donald Yeo also expects a “gradual and marginal” decline. “Home-sellers are more realistic about price and, for some, the completion of their new purchase may make them more inclined to accept genuine offers and let go of their flat for a lower profit,” he added.
Mr Chris Koh, director of Chris International, said that policy changes to make Singapore Permanent Residents wait three years before they can buy a HDB resale flat also impacted the market.
In December last year, Minister for National Development Khaw Boon Wan said a single-digit fall in the RPI this year would be manageable and a “very good development”.
“A soft single digit is something the human mind, and employers, employees, the environment and the economy can adjust to,” he had said then.