RESALE FLAT PRICES TO MODERATE FURTHER : REPORT
Jul 31, 2013
Data released by the housing board for Q2 2013 revealed that prices in the resale flat market are easing, according to a report from wealth management firm Religare.
In Q2, the Resale Price Index (RPI) rose 0.5 percent to 206.6 compared to a growth of 1.3 percent in the previous quarter. Aside from it being the second consecutive quarterly decline, the RPI for Q2 is also the lowest since the start of the global financial crisis in Q1 2009.
"Analysts were unanimous in pointing out the particular impact of a tighter mortgage servicing ratio (MSR)," Religare said.
Banks were required to cut the MSR for HDB housing loans at 30 percent of a borrower's gross monthly income. Moreover, the MSR cap for loans granted by HDB was also trimmed from 40 percent to 35 percent.
"The MSR limit also meant lower loan quantum, which affected home seekers' ability to pay the cash-over-valuation (COV) premium. This pushed down median COVs to S$26,000 in Q2, nearly 19 percent lower than the S$32,000 in Q1. ERA data revealed a similar 18 percent drop in median COVs to S$27,000," the report added.
"The falling COVs and more stable prices enticed more buyers to the resale market, resulting in higher transaction volumes. The number of resale units jumped 21 percent to 5,235 cases in Q2 over the previous quarter, HDB data shows."
More homeowners also prefer to rent out their flats instead of selling them, pushing subletting deals up by six percent to 7,891 units in Q2, according to the HDB.
"With more supply to come in 2H 2013 and as demand continues to be diverted from the HDB resale market, analysts expect moderating prices. Some predicted price growth for the year at two to three percent," noted Religare.
Info courtesy - PropertyGuru
