Property prices declined in Q3, according to HDB and URA flash estimates
Property observers say the price drop looks set to continue, with loan curbs remaining in place
SINGAPORE: Prices of resale flats fell by 1.6 per cent on-quarter in the third quarter of 2014, according to flash estimates from the Housing and Development Board.
HDB on Wednesday (Oct 1) announced that its flash estimate of the 3rd Quarter 2014 Resale Price Index (RPI) is 192.5, a decline of 1.6 per cent over the previous three months.
It is also the fifth straight quarter of decline. But property observers say the drop is "moderate" as overall price fall is in the single-digit range.
"We expect the index to weaken by between 5 and 6 per cent for the entire 2014. This can be considered a moderate rate of decline, compared to, for instance, when we were faced with economic recessions and financial crises, property prices then dropped 10 to 15 per cent or even 20 per cent in some cases," said SLP International Property Consultants Executive Director and Head of Research, Mr Nicholas Mak.
They say cooling measures such as the 30 per cent cap in the mortgage servicing ratio and the change in resale procedure have helped stabilise prices. Since March, the buyer can only obtain the valuation report after the deal is sealed and the Option to Purchase has been granted to him.
Real estate agency ERA Realty, which says it holds about 42 per cent of the HDB resale market share, noted that most of the transactions it handles are supported by valuation.
But property firm HSR says recently-completed executive condominium projects may have affected prices in the HDB resale market as buyers who are HDB upgraders would have had to sell their flats.
HSR said seven executive condominiums, with a total of almost 3,600 units, obtained their Temporary Occupation Permits during the past 9 months.
Looking forward, property watchers estimate that the HDB resale volume will settle at a new low of about 17,000 units this year, compared to last year's 18,000 units.
The RPI for the full quarter and more detailed public housing data will be released on Oct 24.
In its press release, HDB noted that about 4,290 BTO flats in Sembawang, Sengkang, Tampines and Yishun will be offered in November. In addition, about 3,000 flats will be offered in a concurrent Sale of Balance Flats exercise.
PRIVATE HOME PRICES CONTINUE TO FALL IN Q3
Prices of private homes have been falling for a year. In the third quarter of this year, prices fell by 0.6 per cent.
Homes in the core central region (CCR), continued to bear the brunt. Prices there fell 0.9 per cent, as buyers stayed away from these higher-priced properties due to loan curbs.
As for the suburbs, prices dipped by 0.2 per cent.
The city fringe, also known as the rest of central region (RCR), was the most resilient in the third quarter. Prices there dropped by only 0.1 per cent.
HSR International's Head of Singapore Projects Mr Alan Tan said that a large percentage of RCR property buyers would have originally thought of purchasing in CCR instead, but were deterred by the cash outlay as a result of the Total Debt Servicing Ratio (TDSR) and other measures.
"It is wiser for them to move to the RCR. That's why we call it city fringe - it is actually near to the city area, not exactly in the centre of the city area, but the amount of investment opportunities and activities that can happen there is quite great," said Mr Tan.
Observers say prices will continue falling, as long as current loan curbs remain in place. They also note any easing of the measures is unlikely to be soon, as Singapore's economy is in a good shape.
"Interest rates may be one of the considerations on when to ease the cooling measures, but it is not the crucial factor. The important factor is if the Government were to remove the cooling measures now - what are the possibilities prices could grow again at a robust pace," said Mr Mak from SLP International.
"The Government may have to wait for a situation where the chances of a strong rebound in property prices is unlikely to happen, then they will remove some of the cooling measures," Mr Mak added.
Mr Mohammed Ismail, Chief Executive of PropNex also said cooling measures will likely remain. "As long as borrowing costs stay low, the Government is unlikely to reverse the measures. With Total Debt Servicing Ratio being a long-term instrument and together with the Additional Buyers' Stamp Duty, it will continue dampen any speculative activity."