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SINGAPORE — The public housing resale market slowed further last month as both prices and transaction volume fell, with analysts saying the downtrend is likely to persist for the rest of the year as various property curbs and new supply continue to crimp secondary market activity.
Prices of previously-owned Housing and Development Board (HDB) flats dipped 1.2 per cent in May from the previous month, a Singapore Real Estate Exchange (SRX) preliminary report released yesterday showed, the fourth straight month of decline to the lowest since April 2012.
Mr Eugene Lim, key executive officer of real estate agency ERA, said the main cause for falling prices continued to be loan restrictions such as the Mortgage Servicing Ratio (MSR) of 30 per cent that limits the amount buyers are able to borrow. Those who are not eligible for a HDB loan will be subjected to both the MSR and the Total Debt Servicing Ratio of 60 per cent when they take a bank loan.
Other factors that have reduced or diverted the demand for resale HDB flats include the large supply of Build-To-Order (BTO) flats and the three-year waiting period for newly minted permanent residents to buy resale flats, he added.
Resale transactions last month dropped by 11.1 per cent month-on-month to 1,320 units, reversing the uptick in the previous two months, the SRX report showed.
“Resale volume may have fallen due to the launch of BTO and Sale-of-Balance (SBF) flats in May. SBF launches are popular as they offer flats in a variety of locations and in mature estates, with some (that) already underwent construction and some that are nearly or already completed,” Mr Lim said.
Around 3,383 leftover flats spread across 11 non-mature and 13 mature estates were put up for sale last month by the HDB, while another 3,070 BTO units in Bukit Batok and Woodlands were also on offer.
Ms Christine Li, head of research and consultancy at property agency OrangeTee, said: “The number of SBF units rolled out in this exercise is almost equivalent to the total number of resale flats sold in the past three months.”
Meanwhile, the large supply of BTO flats as well as the projected completions of many Design, Build and Sell Scheme (DBSS) and Executive Condominium (EC) units this year will put further strain on the resale market, analysts said. “It is expected that five DBSS projects and another 2,000 EC units will be completed this year, and typically second-timers will have to sell their existing HDB flats within six months of key collection. This increased supply, together with loan curbs, should keep HDB resale prices in check,” Ms Li said.
The slowdown in the resale market also resulted in some HDB owners opting to rent out their units while waiting for prices to turn around. This helped to raise last month’s rental volume by 1 per cent to 1,564 transactions, but rents dipped 0.3 per cent from the previous month, the SRX report showed.
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