Resale HDB
flat prices have fallen for the first time in more than four years as
tighter loan rules and ownership restrictions take their toll on the market.
According to estimates by the Housing Board released yesterday, the HDB resale price index fell 0.7 per cent in the typically strong third quarter.
This is the first quarterly dip since the first quarter of 2009, which saw Singapore enter a deep recession as a result of the global financial crisis.
It also occurs as HDB resale volumes fall to a 16-year low.
Stricter controls on home loans are a key factor in the slide, said analysts, coupled with the rising attractiveness of new Build-To-Order (BTO) flats which have siphoned demand away from the HDB open market.
“This reversal of price growth is expected, given the slew of measures which impacted affordability,” said PropNex chief executive Mohamed Ismail.
The proportion of a buyer’s gross monthly income that can be used to service mortgages for HDB resale flats has now been capped at 30 per cent.
Maximum tenures for loans taken from HDB and private banks were also reduced to 25 and 30 years respectively. Another new rule limited the total debt obligations of buyers to 60 per cent of their gross monthly income.
All these have forced buyers to exercise prudence in their home purchases, said experts.
“Due to a cut-off in access to large loans or ‘easy money’, there are very few buyers looking at investing in large or well-located flats,” said R’ST Research director Ong Kah Seng. “Previously, many buyers were interested in getting a larger flat where they could sublet spare rooms to defray monthly loan repayments.”
The pool of buyers in the resale market is also shrinking, said analysts.
More buyers are being enticed by a ramped-up supply of new BTO flats in attractive locations, especially with the introduction of bigger grants for middle- income earners.
Singles have also been allowed to apply for two-room BTO flats since July. And permanent resident households now have to wait three years from the start of their residency before buying a resale flat.
Overall cash premiums paid above a flat’s valuation have dropped from $35,000 in January to $18,000 now, with larger flats the hardest hit.
This year’s resale volume is the lowest since 1997, and experts see the downward trend persisting into the fourth quarter, which normally sees less activity.
The slowdown was also reflected in the private property market, which saw a smaller 0.4 per cent rise in prices than in the previous quarter.
Suburban home prices rose 2.1 per cent but the other regions registered price declines. —
The Straits Times / Asia News Network (Oct 2, 2013)
According to estimates by the Housing Board released yesterday, the HDB resale price index fell 0.7 per cent in the typically strong third quarter.
This is the first quarterly dip since the first quarter of 2009, which saw Singapore enter a deep recession as a result of the global financial crisis.
It also occurs as HDB resale volumes fall to a 16-year low.
Stricter controls on home loans are a key factor in the slide, said analysts, coupled with the rising attractiveness of new Build-To-Order (BTO) flats which have siphoned demand away from the HDB open market.
“This reversal of price growth is expected, given the slew of measures which impacted affordability,” said PropNex chief executive Mohamed Ismail.
The proportion of a buyer’s gross monthly income that can be used to service mortgages for HDB resale flats has now been capped at 30 per cent.
Maximum tenures for loans taken from HDB and private banks were also reduced to 25 and 30 years respectively. Another new rule limited the total debt obligations of buyers to 60 per cent of their gross monthly income.
All these have forced buyers to exercise prudence in their home purchases, said experts.
“Due to a cut-off in access to large loans or ‘easy money’, there are very few buyers looking at investing in large or well-located flats,” said R’ST Research director Ong Kah Seng. “Previously, many buyers were interested in getting a larger flat where they could sublet spare rooms to defray monthly loan repayments.”
The pool of buyers in the resale market is also shrinking, said analysts.
More buyers are being enticed by a ramped-up supply of new BTO flats in attractive locations, especially with the introduction of bigger grants for middle- income earners.
Singles have also been allowed to apply for two-room BTO flats since July. And permanent resident households now have to wait three years from the start of their residency before buying a resale flat.
Overall cash premiums paid above a flat’s valuation have dropped from $35,000 in January to $18,000 now, with larger flats the hardest hit.
This year’s resale volume is the lowest since 1997, and experts see the downward trend persisting into the fourth quarter, which normally sees less activity.
The slowdown was also reflected in the private property market, which saw a smaller 0.4 per cent rise in prices than in the previous quarter.
Suburban home prices rose 2.1 per cent but the other regions registered price declines. —
The Straits Times / Asia News Network (Oct 2, 2013)
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