For the 5th consecutive month a drop has been seen in resale prices for HDB properties. From May to June the figure was recorded at 0.6% which has marked a new 2 year low since April of 2012. This equates to a drop of 6.1% from one year ago as well as a fall of 3% year to date if going by Singapore Real Estate’s data which took into account unit rental information and any pre-caveat resale transactions.
A downturn could be seen, in resale figures for last month, in 3, 4 and 5 room resale flats. However, executive HDB flats saw a 1.3% rebound in resale prices for month on month in June. It has been forecasted by property consultants that HDB resale prices will show a further 8% softening for the entire year of 2014.
0.6% drop in HDB resale prices at a 2 year low
ERA’s key executive office, Eugen Lim, has stated that there would continue to be a fall in prices a bit further before seeing stabilization due to recent measures affecting the market. He further adds that they are not expecting to see a steep drop because the fundamentals of the economy are sound at this time.
Last month’s resale market saw a total of 1,315 flats being sold, according to data from SRX, in comparison to the 1,320 transacted units for May. However, when compared to May of 2010 when 3,649 flats saw a change of owners, it is a 64% lower peak.
At this time the HDB resale market is still being plagued by the same elements.
Eligible HDB Buyers Shrinking due to Loan Measures
The pool of eligible buyers has shrunk down due to a 3 year waiting period being imposed on new permanent residents wishing to buy resale flats and the 30% reduction in the MSR of what a borrower can use of their monthly income when applying for a mortgage. Meanwhile, there has been a rise in the competition of the large supply of build to order flats.
When comparing last month to the previous month we have seen fewer transactions in the residential sector with around 1,590 HDB flats being rented out in the month of June, a figure that is down from May’s figure of 1,622.
According to SRX, a fall in HDB rental prices had an overall figure of 1.1% for June from May, which is a new low since January of 2012. Mr. Lim has stated that a lower rental demand has occurred due to curbs on foreign workers which could see the volumes and rents staying low.
Mr. Lim further adds that he expects there to be more competition on the rental market as we see the 5 year MOP (minimum occupation period) on BTO flats being reached. This means that these flats can then be rented out bringing an increase in the available supply during a period where demand is generally slow.