Saturday, April 2, 2011

HDB resale price rise slow but transactions are up in Q1 2011

If you want to predict HDB resale flat price moves and buy resale HDB flat in Singapore you should check HDB resale flat price index[1]. HDB releases this data quarterly and it has just released the flash estimate of the 1st Quarter 2011 Resale Price Index (RPI) yesterday (April 1st 2011). According to HDB, the prices increased of 1.6% quarter-o-quarter in the first quarter of 2011.

HDB resale units are HDB units sold by owners in the secondary market not by HDB. Singapore citizens and Singapore PRs can buy these units. Even bought from the secondary market, public housing rules apply to these units like 5 years minimum occupancy. With the rounds of cooling measures, new rules are applied like an HDB resale unit purchaser cannot have a private unit even abroad.

There is definitely a slow down in the price increase and it can be correlated to property market cooling measures. You can compare the price index rises with the 4 property cooling measures:

  • September 2009
  • February 2010
  • August 2010
  • Jan 2011

HDB Resale Price Index
Year Quarter Index % change from the previous quarter
2011 Q1 174.8 1.60%
2010 Q4 172 2.50%
2010 Q3 167.8 4.00%
2010 Q2 161.3 4.10%
2010 Q1 165 2.80%
2009 Q4 160.8 3.90%
2009 Q3 145.2 3.60%
2009 Q2 140.2 1.40%
2009 Q1 138.3 -0.80%
HDB Property Price Index

You can clearly see that although first two rounds of property cooling measures were not very effective on HDB resale market, last two (starting with the August 2010 measures) were very effective. This is not a suprise since the August 2010 measures had the most effective rules related to HDB resale flats. For example, by August 2010 if you own an HDB and want to buy private property, you must have lived in your flat for 5 years. This makes HDB resale buyers with the intention to buy private property soon think twice. Previously there were no restrictions. And if you are a private3 property owner who wants to buy an HDB flat, you need to sell your private property within 6 months of buying your HDB. This includes private property abroad! Previously there was no restriction.

But there is a wind blowing against these HDB market cooling measures now which increased the number of transactions in HDB resale market in the first quarter of 2011: unreachable prices of mass market condo units makes resale HDB flats attractive even with the restrictions imposed on them:

"PropNex chief executive Mohamed Ismail said higher prices and lower sales volume, particularly in cheaper suburban condos, could signal that HDB upgraders are deciding against buying private homes and returning to the HDB resale market for their home purchases. If the trend is strong, it may put upward pressure on HDB resale prices in the coming months, he warned. This would counteract the impact of government moves last August to restrict financing and home ownership for the HDB market."
The Straits Times

Will HDB prices fall in 2011? Or will they still go up? There are 2 conflicting powers now in the market and it looks like although the price increase is slow, increased interest in HDB resale units will probably help HDB sellers to resist a significant price falls. The demand will determine the trend and we will need to see whether number of people dropping from private home market will increase or not in the coming months.

[1] - Flash Estimate of 1st Quarter 2011 Resale Price Index

This blog article is to provide general information only and should not be treated as an invitation to buy or sell any property or as sales material.  Users of this report should consider this report as a one of the many factors in making their investment decision. Users should make reference to other sources of information and specific investment advice to obtain a more objective view of the property market. Asia Singapore shall not be responsible for losses suffered.

No comments:

Post a Comment