Resale flat prices up 1.6% in Q1

Resale flat prices up 1.6% in Q1
Apr 26, 2011

Resale prices of public flats experienced a slight increase in the first quarter, as the three rounds of cooling measures announced by the government made a cumulative impact.

The Housing & Development Board (HDB) Resale Price Index (RPI) rose 1.6 percent quarter-on-quarter in Q1, down from a 2.5 percent growth in the previous quarter. This was coupled with a four percent drop in resale transaction volumes to 6,228 deals in the first quarter, as well as a nine percent decline in median Cash-Over-Valuation (COV) levels to S$21,000.

“The cooling measures have certainly been effective in both eradicating investors’ speculation in the HDB resale market as well as encouraging owner-occupation for resale flats,” said Mohamed Ismail, Chief Executive of PropNex.

Mr. Ismail refers to the inhibitive measures of the reduced loan-to-value (LTV) ratio on additional mortgages to just 60 percent, announced by the government in January and the stamping out of HDB home ownership by private property owners and investors.

“This more gradual growth for the RPI looks set to continue,” he noted, “as we (PropNex) can see growths of up to 2.6 percent in our median resale prices for April 2011 from 1Q11.”

However, he said that while the RPI is expected to grow more sustainably, “the COV levels which have been bottoming out over the last few months look set to increase,” citing PropNex data for this month, which records a 12.1 to 23.8 percent increase in COV levels from the first quarter.

Based on the transaction volume history for PropNex over the last few months, Mr. Ismail expects the transaction volume to exceed 7,000 for the second quarter this year. He also believes that it is still a good time to acquire resale flats, as prices are expected to increase in the coming quarters.

“Although COV levels may rise in 2Q11 after dropping in 1Q11, the levels are still reasonably low.”

“First-time buyers and young couples who are looking for flats below the median resale price and COV can look for four-room flats in Bukit Panjang and Woodlands.

However, Mr. Ismail warned that if the supply of resale flats does not increase quickly enough or remains limited due to the Minimum Occupation Period for both first-timers and non-first-time buyers, the increased demand for HDB resale flats may push COV levels up even further.

Info courtesy -